Routes News Magazine, Issue 6, 2014

routesnews ISSUE 6 VOL 10, 2014

The world air service development magazine

routesonline.com

IN THE SPOTLIGHT:

Chicago’s Rosemarie Andolino

Welcome to Chicago

SPECIAL REPORT:

20 years of World Routes

ANALYSIS:

US airline consolidation

routes-news.com Interviewed:

Airports:

Airlines:

Focus on:

Plus:

United’s Jim Compton & Brian Znotins

Gatwick, Bremen, & Edmonton

Fiji, Air Arabia & LATAM Airlines Group

LCCs in Asia-Pacific & Latin America

Aircraft recycling & Big data

EDITORIAL Joe Bates, Group Editor +44 (0)208 831 7507 joe@aviationmedia.aero Jonny Williamson, Senior Reporter +44 (0)208 831 7560 jonny.williamson@routes-news.com Justin Burns, Reporter +44 (0)208 831 7508 justin.burns@routes-news.com

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

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

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

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

routesonline.com

Editorial comment A

s you will read later on in this issue, our cover star, Chicago Department of Aviation commissioner, Rosemarie Andolino, certainly appreciates the value of World Routes.

Indeed, she appreciated it so much that she made it her mission to bring World Routes to the Windy City, and she meant business, because five years later here we are!

Her appreciation of the importance of the global gathering of the world’s route development community also makes it fitting that Chicago – the US’s third-largest city in terms of population – will celebrate the major milestone of becoming the 20th host of World Routes.

Routes is producing a special 20th anniversary book to mark the occasion, and I am sure that there will be plenty of opportunities to celebrate the event in Chicago.

For our part, we include a six-page report on the history of World Routes, and comments from industry leaders Tony Tyler (director general and CEO of the International Air Transport Association) and Angela Gittens (director general of Airports Council International) in this bumper event issue.

Elsewhere in the magazine we have features on the route development strategies of Air Arabia, LATAM Airlines Group and Fiji Airways, and in our

signature airline interview we hear from United’s vice chairman and chief revenue officer, Jim Compton, and VP of network planning, Brian Znotins.

Airports under the microscope include Athens, Bremen, Edmonton and Gatwick, while we find out more about the alliance between Aéroports de Paris (ADP) and TAV Airports.

In other news, we discover how the Arab Spring is still having an impact on air travel in North Africa; learn about the growth of LCCs in Asia-Pacific and Latin America; talk big data; and find out that old aircraft parts are being transformed into everything from lights to theme park rides.

We hope you’ll agree that no matter what you find interesting in the world of aviation, this issue has a story for everyone!

On a wider note, it has certainly been a busy and eventful year so far for the aviation industry with numerous big personalities – some of whom we talk to in this issue – making the headlines, as well as airline success stories and, of course, failures. That’s probably why we love it so much!

KEEP IN TOUCH

info@routes-news.com @routesnews facebook.com/routesnews

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

ROUTES NEWS 6, 2014

3

Contents

16

22

10 World news

22 A ll aboard

31 A irline o ne2one

26 U S report card

33 Airport one2one

13 Cargo news 15 On the move 16 World in motion

Commissioner of the Chicago Department of Aviation, Rosemarie Andolino, talks to Joe Bates about her delight at hosting World Routes and the economic benefits of new services to the Windy City.

35

Key executives from United Airlines discuss the carrier’s post-merger route network, the domestic and international fleet and how airports can get a piece of the action.

After a period of mergers and acquisitions, consolidation appears to have led US airlines back to profitability, writes ASM’s Mike St-Laurent.

Southwest’s vice president for network planning and performance, Andrew Watterson, reveals what travellers can look forward to in the coming months.

Routes News talks to Amit Rikhy, senior vice president, corporate development and asset management for Airports Worldwide.

35 A irport one2one

Head of airline marketing at Aruba’s Queen Beatrix International Airport, Jo-Anne Arends, shares her views on the Caribbean island’s ambitious development plans.

38 L atin style

Download the free app View all the latest issues; just search for ‘Routes News’ in the Apple or Android app stores. routes-news.com/app

routesonline.com

Jonny Williamson talks the football World Cup, operational restructuring and post-merger synergies with LATAM Airlines Group’s chairman of the board, Mauricio Amaro.

ROUTES NEWS 6, 2014

5

Take your piece of Vienna’s cake: Millions of Hungarian, Czech, Slovak and Austrian passengers.

Treat your airline with a luscious speciality, available only in Vienna: Thanks to our location in the heart of Europe we are the home airport for millions in 4 countries. For more details scan the QR code or visit www.viennaairport.com/cake

Contents

54

71

42 Advantage Gatwick?

CEO, Stewart Wingate, tells Justin Burns why the government must choose Gatwick when it comes to approving a new capacityenhancing runway for the UK.

51 To serve, to lead

Lucy Siebert discovers that creating a sustainable future for Fiji Airways is one of the key priorities for new CEO and managing director, Stefan Pichler.

54 Arabian plights

How are Tunisia, Morocco, Egypt and Libya faring in terms of route development four years on from the Arab Spring? Gary Noakes investigates.

58 Aviation hub 4.0

Air Arabia is proving a trailblazer when it comes to low cost aviation, as it opens its fourth hub and starts expanding into new markets.

Sarah McCay caught up with group chief executive officer, Adel Ali, to find out more.

routesonline.com

78

61 Back on track

A strong partnership with its airlines and an effective route development strategy ensure that traffic figures at Athens International Airport are on the rise again.

62 Upward trajectory

Nicole Nelson discovers more about the driving forces behind Edmonton International Airport’s fast-expanding route network.

67 A winning strategy

Bremen’s director of sales, marketing & communication, Florian Kruse, speaks to Jonny Williamson about the airport’s record-breaking year.

71 Serious intent

Big data could transform route development strategies, writes Matthew Parsons.

75 D ouble delight!

Holding a joint stand at World Routes 2014 is just one example of the growing bond between Aéroports de Paris and Turkish airport operator, TAV Holdings – Routes News investigates.

SPECIAL REPORT 20 YEARS OF WORLD ROUTES 1995-2014

78 Twenty up

Aviation has witnessed some game-changing trends and technology in the 20 years since World Routes began.

85 The power of competition

Angela Gittens, director general of Airports Council International (ACI), reflects on 20 years of World Routes.

87 Positive impact

International Air Transport Association’s (IATA) director general and CEO, Tony Tyler, provides his thoughts on the impact of aviation and the Routes phenomenon.

ROUTES NEWS 6, 2014

7

Contents

97

89 Growth spurt

The low cost carrier business model still has enormous potential in the Asia-Pacific and Latin America markets, says OAG’s executive vice president, John Grant.

107

122

107 History repeating itself

122 Events essentials

The quest for aviation sustainability has attracted the talents of one of the industry’s most famous names, Matthew Parsons reports.

97 Up-cycling an aircraft

115 Ripe for conversion?

102 Big ambitions

121 Arms open wide

From a theme park ride to films, or turning a fuselage into furniture, Mary-Anne Baldwin looks at innovative ways to re-use end-of-life aircraft.

Vladimir Kamynin, director for aviation business development at Airports of Regions, talks to Routes News about the growth strategy for its Russian regional gateways.

In time for a new B737-800 PTF conversion programme, Martin Roebuck examines the market for converted B737-800 aircraft.

Andrew Fraser, director of marketing, Tourism New Zealand, says social media’s embrace is vital to destination marketing.

All the latest news, views and developments from the global network planning community online, plus exclusive airline and airport interviews.

routes-news.com

routesonline.com

World Routes Chicago checklist; Meet the team: Host and project manager, Rebecca Teale, reveals Routes’ continuous improvement strategy and exposes what goes on behind the scenes at World Routes; Top Tips for...Effective Face-toFace Meetings: With more than 10,000 Face-to-Face meetings expected to take place during this year’s World Routes, we offer some guidance to ensure you get the most out of your 20 minutes; and all about the World Routes App.

126 View from the top

Chris Thompson, president and CEO, Brand USA.

The HUB, your weekly, central source of information for everything related to Routes and Routesonline, is delivered to your inbox every Friday.

It includes event updates, airline and airport profiles and news and analysis. Sign up to receive The HUB at www.routesonline.com/register/

ROUTES NEWS 6, 2014

9

World news

Alitalia gets a helping hand Etihad has agreed an investment deal to reinvigorate Alitalia as a competitive, sustainably profitable business. The recapitalised Italian carrier will now be able to invest in a comprehensive strategic business plan that will see long-haul routes from Rome and Milan, a revitalised brand and a greater focus on domestic trade and tourism.

Etihad’s €560 million investment gives it a 49% shareholding. “We believe in

Air France has announced plans to upgrade its Paris-CDG to Miami route to an A380 service from December 1. Throughout the 2014/2015 winter season, Air France will operate up to seven weekly frequencies to Miami from the French capital.

A proposed alliance between Singapore Airlines and Air New Zealand has received approval from the

10

ROUTES NEWS 6, 2014

Alitalia,” said Etihad president and CEO, James Hogan. “It is a great brand with enormous potential. As we revitalise the brand, the airline will increasingly embody all that we recognise as quintessentially Italian to create an airline of which Italians can be proud.”

While maintaining the relevance of short-haul routes, the proposed network plan focuses on the profitable growth of long-haul flying from both Rome Fiumicino and Milan Malpensa. This will

New Zealand Minister of Transport. The partnership will include increased frequencies between the two nations and reciprocal codeshare ties.

Hawaiian Airlines is expanding its service to the Bay Area with a new daily flight between San Francisco and Kahului Airport, Maui.

Due to commence on November 20, the non-stop

include flights to new destinations, increased frequency in certain existing markets and an enhanced network to Abu Dhabi, capitalising on the growing traffic between Italy and the United Arab Emirates.

While network integration and optimisation will deliver potentially strong revenue growth for Alitalia, the cost synergies inherent in the partnership will also provide substantial opportunities for the future.

route will give travellers increased access to the Hawaiian Islands from one of the largest North American markets.

The Australian Tourism and Transport Forum is hoping to attract more New Zealand and Asian arrivals through several proposed reforms. The reforms include reduced travel times, lower taxes, more direct flights

and the introduction of common visas.

Cathay Pacific plans to launch non-stop weekly flights to Sri Lanka’s capital city, Colombo. The direct flights will replace the Hong Kong-based carrier’s current service via Singapore. From October, Cathay will become the only airline to operate direct services between the two destinations.

routes-news.com

VISTARA UNVEILED

TSAL announces the brand name and livery of its new airline, Vistara.

ALL ABOARD

Scheduled passenger numbers rose 5.1% in 2013, says IATA.

GEARING UP

Touch down Chicago Emirates has begun a daily non-stop service from Dubai to Chicago O’Hare in order to deepen the ties between two of the world’s busiest airports.

Chicago becomes the airline’s ninth US gateway, following the launch of its Boston service in March.

Chicago Mayor Rahm Emanuel said the route was an important step in establishing Chicago as one of the top tourism destinations in the world and achieving a goal of hosting 55 million visitors by 2020.

Garuda’s long-haul expansion reaches London Garuda Indonesia is introducing a direct route to London-Gatwick from Jakarta via Amsterdam from September.

The new B777-300ER service will be offered five-times weekly and is the only direct connection between the two nations.

The route will also support the Indonesian government’s aim to see

trade between the two countries reach £4.16 billion by 2015.

Garuda’s president and CEO, Emirsyah Satar, stated: “The opening of the London-Jakarta service will help bolster bilateral economic activities in light of the growing trade transactions between the United Kingdom and Indonesia each year.”

Air China cuts its fuel costs Air China is pioneering a new system that has the potential to save millions of dollars in fuel costs. New software deployed on all of its international and domestic routes is capable of constantly updating key weather telemetrics for its

routesonline.com

flight management system (FMS). The system (FMS Wind Uplink) has been developed by SITA and allows Air China’s crew to adjust an aircraft’s route in-flight according to changing wind and weather conditions, enabling greater fuel efficiency.

VicFalls Airways granted Air Operators Certificate from Zimbabwe.

Take off

or not CUTTING BACK

KLM to discontinue Amsterdam–Harare flights in October.

IRAQI AIRSPACE

International airlines reroute flights amid safety and security concerns.

UP IN THE AIR

EU sanctions have led to Dobrolet’s temporary withdrawal from service.

ROUTES NEWS 6, 2014

11

Cargo news

Expanded cargo apron opens at Warsaw Chopin Able to accommodate six Code C planes (such as a B737 or A320), Warsaw Chopin’s new ramp will help the airport handle an increasing volume of freight. The airport handles more than 70% of Poland’s air cargo traffic, with the first half of 2014 seeing more than 27.3 tonnes of cargo pass through. In the same period, cargo volumes rose from 308 to 354 tonnes for domestic traffic (+14.8%) and from 22,700 to 26,900 tonnes for international flights (+18.4%).

Director of Chopin Airport, Michał Kaczmarzyk, said: “The investment project is the answer to [our] increasing demand for freighter handling facilities. Our cargo traffic is growing dramatically and we need more parking spaces for cargo jets.”

IAG introduces B787 on London-Chennai route IAG Cargo is introducing an upgraded service on its route between London and the burgeoning Indian city of Chennai. Currently operated by B777-200, the new B787 service will use advanced temperature control capability to make the aircraft perfectly suited to the shipment of pharmaceutical products and will help support India’s rapidly developing pharma market.

With India fast becoming one of its most important markets, IAG Cargo’s regional commercial manager for APAC, John Cheetham, noted that the upgrade would also benefit other industries, including shipments of laboratory equipment and machinery inbound to Chennai and large volumes of textiles outbound.

Sponsored by

routesonline.com

NEWS IN BRIEF Improved global trade and stronger business activity has seen global air freight markets growing 4.1% for the first six months of 2014, according to IATA. Carriers in Asia-Pacific and the Middle East have been the biggest beneficiaries of the improved market conditions, but the association warns that there are still a lot of risks out there – from conflicts and sanctions to potential national defaults and the fear of the Ebola outbreak.

Cargolux is considering launching a new Chinese-based subsidiary, according to newspaper reports. With the country’s rapidly increasing volume of e-commerce freight an enticing prospect, the cargo airline is also looking at utilising existing bellyhold space on domestic Chinese carriers as an alternative.

Etihad Cargo has launched a twice-weekly, A330-200F-operated service linking Abu Dhabi and Moscow Domodedovo. Russia has grown to become a key market for the carrier and the new service allows it to capitalise on the increasing trade between the country and the UAE. Virgin Atlantic Cargo has taken delivery of more than 800 lightweight air cargo containers as part of its ongoing sustainability programme. With the goal of reducing its aircraft Co2 emissions 30% within the next five years, Virgin’s new container is 16kg lighter than a standard unit thanks to its construction from composite materials.

ROUTES NEWS 6, 2014

13

On the

move Oman Air has welcomed Paul Gregorowitsch as its new chief executive officer (CEO). Gregorowitsch previously sat on the management board of airberlin, as well as holding similar positions with the likes of Martinair Holland NV and Air France-KLM. The new CEO joins at a time of growth for Oman Air, which is about to enter its second major phase of expansion. The first of 20 new aircraft are scheduled to arrive later this year as the carrier looks to expand its network and up frequency on existing routes.

Howard Diamond has begun his new role as senior vice president, general counsel and secretary for low cost carrier, Frontier Airlines.

Diamond has held similar positions at Thales USA and BAE Systems, and brings with him a wealth of legal and industry experience.

Air Malta will rebuild its management team with the appointment of Joseph Galea as deputy chief commercial officer. Galea is expected to serve a three-year term as deputy before assuming the full responsibilities of CCO, a position currently held by Phillip Saunders.

routesonline.com

The Airport Authority of Hong Kong has appointed Fred Lam as its new CEO. Lam is due to leave his current role as executive director of the Hong Kong Trade Development Council (HKTDC) and take up the mantle on October 1.

Singapore Airlines has announced the appointment of Mark Davey as sales manager for the UK and Ireland. Based in the carrier’s London office, Davey brings with him more than two decades worth of aviation sales experience. With the 30th anniversary of the airlines’ first non-stop London-Singapore flight and the sponsorship of the Singapore Grand Prix, Davey says it’s “an exciting time to join the team”.

Raj Sivakumar has been named as Jet Airways’ new chief commercial officer (CCO), with immediate effect.

Having joined the airline in August 2007, Sivakumar previously spent 15 years with United Airlines. Jet Airways also welcomed Rajeev Nambiar to the role of vice president for sales (India), and its new cargo vice president, Martin Drew.

Gytis Gumuliauskas has replaced Erikas Zubrus as CEO of Air Lituanica.

Zubrus hasn’t severed his ties completely though, as he has decided to stay on as the airline’s consultant for strategic affairs.

Low cost Irish airline, Ryanair, has welcomed back Michael Cawley following his departure in March. The former deputy chief executive and chief operating officer (COO) has been appointed to the carrier’s board.

Paul Gregorowitsch

Mark Davey

After seven years, SAS’ executive vice president, HR and Communication, Henriette Fenger Ellekrog will be leaving in October. The Scandinavian airline is currently in the process of selecting and appointing her replacement.

Gytis Gumuliauskas

Augustin de Romanet has been reappointed as the chairman and CEO of French airport operator, Aéroports de Paris (ADP).

Over the next five years, Romanet is aiming to elevate ADP to one of the “global leaders in the design, construction and operations of airports”.

Michael Cawley

ROUTES NEWS 6, 2014

15

World in motion Commissioner of the Chicago Department of Aviation, Rosemarie Andolino, talks to Joe Bates about her delight at hosting World Routes and the economic benefits of new services to the Windy City.

W

hen you talk to Rosemarie Andolino about the highlights of her five years in charge of Chicago’s airport system, the subject of route development is right up there.

Indeed, the commissioner of the Chicago Department of Aviation (CDA) has no hesitation in admitting that attending World Routes in Vancouver in 2010 was one of the best things she did as it proved the catalyst for a new route development strategy.

That strategy has since led to the most productive period in Chicago’s history in terms of the launch of new routes and frequency increases.

Yet it could have been so different, because Andolino says that she might never have heard of the event if a colleague hadn’t persuaded her to go to World Routes five years ago.

“It sounded interesting, so I decided that we would attend, and it turned out to be one of the most valuable business-to-business meetings we’d ever had. In fact, I was so impressed that, on the flight back to the US, I decided that I wanted to bring World Routes to Chicago.”

What was so impressive? Andolino says the ‘speed dating’ aspect of the event was particularly rewarding as it proved to her that the CDA had to do much more than just show “pretty postcards of Chicago” to airlines to get them to launch services to O’Hare or Midway.

She explains: “During the speed dating meetings, I basically asked people two questions – had they ever been to the US and had they ever visited Chicago?

16

ROUTES NEWS 6, 2014

Rosemarie Andolino

“I found out that the majority of people had visited the US, but very few had been to Chicago and, worse still, it wasn’t even on the radar of most. And these were the airline people directly responsible for launching new routes! It was time to be more proactive.”

Economic value of new routes

Andolino actually cites the launch of Etihad services (Abu Dhabi) in 2009 – a year earlier than World Routes in Vancouver 2010 – as the start of the current ‘golden years’ of international route development for O’Hare.

She notes that Qatar (Doha) followed in 2013 and the addition of Emirates (Dubai) in August 2014 gave O’Hare the full set of big Middle Eastern carriers.

Other additions under Andolino’s leadership include Cathay Pacific (Hong

Kong); Copa (Panama); Air India (Delhi); WestJet (Calgary and Vancouver); airberlin (Berlin); Austrian Airlines (Vienna); Hainan Airlines (Beijing) and Volaris (Guadalajara; Morelia, Zacatecas, León); while Spirit has trebled its operations into Chicago.

And crucially, each new air service has brought huge economic benefits to the Windy City, says Andolino.

“When we talk about airports as economic engines, depending on the size of the aircraft and the destination, a new route could add anything from $20 million to $200 million of investment per annum into your city,” she enthuses.

“In total, we have added over $3 billion worth of new services per annum to Chicago in the past five years and this is something I am particularly proud of.”

New business strategy

Andolino says that her “game changing” visit to World Routes in Vancouver triggered a total rethink in the CDA’s strategy when it came to the business of air service development.

Gone were the days of waiting for airlines to make the first approach and a new proactive era of route development was born based on aggressively going out and looking for new business.

Airline mergers and acquisitions and the rise of carriers in emerging markets, has created a very different, more transparent and competitive environment today in terms of route development, notes Andolino.

And she insists that the winners in this market are the airports that do the maths and have solid business cases to take to the airlines.

routes-news.com

Chicago

Under its new air service development strategy, she reveals that the CDA now openly “courts” airlines it wants to attract to either O’Hare or Midway, and hosting World Routes in Chicago this September is very much part of that process.

“Five years ago the philosophy was very much ‘we are O’Hare, they will come.’ Not any more. Times have changed and we have to go out and get them,” she explains.

“In my opinion, there are a limited number of aircraft entering the market at any given time, and I want them to choose Chicago first. It’s important that we develop a relationship and trust with the airline, and present it with a solid business plan.

“We do our homework and are now in a position to show airlines information and numbers about the potential of new routes that maybe they don’t know or are unaware of as nobody knows Chicago or this market better than myself and my team.”

The CDA’s ambitious route development philosophy is in line with

routesonline.com

Chicago Mayor Rahm Emanuel’s target of growing international tourism to 55 million visitors by 2020 – the bulk of them arriving via O’Hare or Midway.

Chicago’s route development team

So the CDA obviously boasts a huge route development team, right? Andolino laughs out loud, before chuckling: “The truth? It is only a handful of people.

We have a very lean and effective team.”

Route success can take years to accomplish, often involves dozens of meetings and might mean multiple overseas visits for Andolino and Matt Danaher, the CDA’s director of marketing and route development, but the financial rewards to Chicago, as she outlined earlier, are colossal.

“Every new flight brings money to Chicago, provides more choices for passengers, creates new jobs and improves the city’s connectivity to destinations around the world.

Everybody wins,” she smiles.

Airport roles

Between them Chicago’s airports handled a total of 87.3 million passengers in 2013 and the upturn has continued into 2014, with volumes up 4% at O’Hare and 2% at Midway in the first five months of the year.

O’Hare, the city’s main international gateway, accounted for 66.9 million passengers (+0.4%) and Midway – which essentially handles domestic services and international flights to Canada, Mexico and the Caribbean – accommodated 20.4 million passengers (+5%).

The difference in traffic is down to the fact that Midway is built on a site of just one square mile and the 6,500ft (1,980m) length of its longest runway is not enough to accommodate non-stop flights to long-haul destinations.

It does, however, handle regional traffic, with airlines such as Volaris and Porter Airlines serving Mexico and Canada respectively, and Southwest serving Mexico, the Dominican Republic and Jamaica.

ROUTES NEWS 6, 2014

17

Chicago

As a result, Automated Passport Control (APC) kiosks were installed at Midway this spring to make it easier for US citizens on international services to pass through its facilities.

Airlines and route network

Andolino believes that having two hub carriers (United and American) at O’Hare and Southwest growing and adding new routes out of Midway already gives Chicago outstanding connectivity across the globe.

She says that it is amazing how many places in the world can be reached with a single flight from O’Hare or Midway, and states that all the major US airlines – with the exception of Hawaiian – and most of the world’s major airlines serve Chicago.

In addition to United and American, which between them account for 81% of the market share at O’Hare, the next biggest airlines at the gateway are Delta, Spirit, JetBlue and Virgin America.

The top five routes out of O’Hare are New York (LaGuardia), Los Angeles, San Francisco, Dallas/Fort Worth and Boston, while London (Heathrow), Toronto,

18

ROUTES NEWS 6, 2014

Frankfurt, Narita and Hong Kong have the honour of being the most popular international destinations – London Heathrow on its own accounting for a total of 1.7 million passengers per annum.

At Midway, Southwest accounts for 92% of the traffic and the next biggest airlines in terms of market share are Delta, Frontier and Volaris.

Atlanta, Denver, Minneapolis-St Paul, Las Vegas and Orlando are the busiest routes out of Midway, where international services to Toronto, Cancún, Guadalajara and the Caribbean are growing in popularity.

However, Andolino is anxious for more and tells Routes News that there is definite room for growth in air services to Africa, China and Latin America.

Although O’Hare already has direct services to the Chinese cities of Beijing, Shanghai and Hong Kong, she believes that the business links between the US and China would support new services to cities such as Tianjin, Shenyang, Qingdao, Hangzhou, Wuhan and Chengdu.

Indeed, her self-confessed desire for more services is one of the reasons

behind her wish for Chicago to host World Routes this September.

“There is no denying that the competitive nature in me wants more routes, and I of course relish the opportunity to showcase our amazing city to the world,” says Andolino.

Top achievements

Andolino worked in various positions for the City of Chicago from 1990 onwards and served as first deputy commissioner in the city’s Department of Planning and Development (DPD) before Chicago Mayor, Richard Daley, appointed her executive director of the O’Hare Modernization Program (OMP) in 2003.

The role put her well and truly in the spotlight, with some questioning her suitability to oversee the $8 billion OMP, despite the fact that as first deputy commissioner with the DPD she managed a $35 million budget, oversaw $100 million of land acquisition and capital investments in the Neighborhoods Alive Program, and helped secure state and federal funding for numerous city projects.

routes-news.com

Chicago

TOP 5 AIRPORTS BASED ON MARKET SHARE O’Hare

Midway

1

United

Southwest/AirTran

2

American/US Airways

Delta

3

Delta

Frontier

4

Spirit

Porter

5

Lufthansa

Volaris

(based on departing seats and including regional/commuter affiliates)

She proved her critics wrong by successfully working with federal, state and local officials to secure OMP funding.

Indeed, in November 2005 the then-US Department of Transportation Secretary, Norman Mineta, travelled to Chicago to approve the city’s request for more than $300 million in federal funding.

And since then the OMP has raised more than $5 billion through the sale of bonds and received approval for four Passenger Facility Charge applications by the FAA to fund design, construction and land acquisition.

Under Andolino’s leadership, the OMP also created the Sustainable Design Manual (SDM), a nationally recognised document that has allowed O’Hare to become the benchmark for environmental stewardship in design and construction for a civil project. The SDM has since evolved into the Sustainable Airport Manual (SAM), which provides guidance for sustainability across all airport functions, including concessions and tenant activities.

The successes led to her being appointed commissioner of the Chicago Department of Aviation (CDA) in February 2009 and arguably acted as the catalyst for one of the most successful periods in the history of O’Hare and Midway.

20

ROUTES NEWS 6, 2014

“If you think of the runways we’ve built ahead of schedule and under budget; the complete transformation of Terminal 5 at O’Hare; traffic growth; record revenues; the installation of the first Automated Passport Control kiosks in the United States; and the fact that times have never been so robust in terms of new air services, I think my record holds up pretty well,” she says.

Andolino could also have mentioned the significant strides Chicago’s airports have taken to embrace environmental best practice and improve their customer service levels, or the image-enhancing upgrades to the domestic terminals that have included, and that still continue to incorporate, the introduction of a number of new concession concepts.

She quips: “I may not have grown up in the aviation business, but I’ve grown up in the business of getting things done.”

Love of Chicago

There is certainly no doubting that when Andolino walks out of the Chicago Department of Aviation’s office for the last time later this year, O’Hare and Midway will be losing one of their biggest supporters.

A local girl – she grew up in Elk Grove Village just west of O’Hare – Andolino admits that she has always been a fan of

the Windy City’s airports, so the chance to help develop them, firstly through her leadership of the OMP and then as commissioner, were opportunities she says she simply couldn’t turn down.

And she certainly couldn’t be accused of sitting back and taking it easy as under her leadership the city’s gateways have undergone somewhat of a transformation in terms of new infrastructure, profitability and pioneering environmental initiatives.

We speak in mid-July and her passion for the job, Chicago and the city’s airport system comes through loud and clear time and again during our conversation.

So what has it felt like to be the boss of one of the world’s biggest airport systems for the past five years?

“It’s been exciting, a learning experience and an amazing ride,” enthuses Andolino, who is stepping down to pursue a new challenge in the private sector after 24 years in local government and 11 years in aviation.

Has being a local girl made it even more of an honour? “Absolutely!

My focus was to take two great airports and make them better, and I genuinely believe we have done that over the past five years,” she says.

“I love this city and want to make sure that others get the same great experience that I’ve had growing up here.”

routes-news.com

All aboard Key executives from United Airlines discuss the carrier’s post-merger route network, the domestic and international fleet and how airports can get a piece of the action.

W

hen United Airlines and Continental Airlines completed their merger in October 2010, the new carrier promised customers an enhanced travel experience, combining the best products and services from each.

Some of the proposed benefits under the merger were said to include the world’s most comprehensive global route network; the most modern and fuel-efficient fleet (when adjusted for cabin size); and the best new aircraft order book among US network carriers.

According to the airline, the combined route network provided “world-class international gateways” to Asia, Europe, Latin America, Africa and the Middle East, with non-stop or one-stop service from virtually anywhere in the United States.

If that wasn’t enough, it also promised an industry-leading frequent flyer programme that would provide more opportunities to earn and redeem miles worldwide; and optimal hub locations in 10 cities, including hubs in the four largest cities in the United States.

22

ROUTES NEWS 6, 2014

Facts and figures

At the time the merger was completed, United had hubs at Chicago O’Hare, Cleveland Hopkins, Denver, Houston George Bush, Los Angeles, Newark Liberty, San Francisco, Washington Dulles and Guam’s Antonio B Won Pat airports.

The merger created an airline with 371 airports (223 domestic and 148 international), serving 59 countries and 5,811 daily departures carrying 144 million passengers a year.

And United has continued to make moves to expand and strengthen its global network since the merger, most recently through the July 2014 addition of Air India to the Star Alliance.

“India is one of those markets that is growing at a very fast pace, so it’s an important market for United,” says vice chairman and chief revenue officer, Jim Compton. “We already have non-stop service to Delhi and Mumbai out of New York.”

Looking more broadly, alliances are important for extending airlines’ networks, says Compton. “They’re

Jim Compton

important because you want to extend your network beyond just Delhi and Mumbai, and alliances that let you do that are terrific,” he enthuses.

“As Air India comes into the Star Alliance, it will provide United with the chance to grow our trans-Atlantic service to India in order to connect beyond where we fly. Alliances are very valuable, no matter who is in Star.”

routes-news.com

United Airlines “We have great coverage in South America and have a great partnership with Copa, so we can grow an already great portfolio. A strong market to begin with is now improved.”

But like other carriers, United is cutting back service to Venezuela over the currency crisis. “We currently have one flight a day to Caracas from Houston.

The aircraft will be downgraded from a B737-900 to a -700, and service will go down to four days a week in September,” says Znotins.

“The oil business is still happening in Venezuela and Houston is the US oil capital, so travellers still need those flights.”

Asia and the B787

Latin America

On the other side of the world in Latin America, United recently announced plans to expand in Central America with service to Santiago, Chile, Punta Cana, Dominican Republic, and Belize City, Belize.

And Brian Znotins, United’s vice president of network planning, believes that the move is a key one as Central and South America is a growing market for the US ‘super carrier’.

“Latin America is pretty important to us,” admits Znotins. “One thing going back to the merger and building our route network was having well-balanced destinations for business travellers in the United States.

“Each entity is important because we wanted to offer broad destinations to travellers and add stability to our earnings.”

In the old airline business, carriers were tied to Pacific or Atlantic routes, says Znotins. “But now it’s more balanced. Latin America is a hot and high-growth market where United is now the number two carrier in [the region],” he notes.

routesonline.com

According to Znotins, United’s Asia route network has been enhanced by having the B787 Dreamliner in its fleet.

The carrier recently started Dreamliner services between San Francisco and Chengdu, China, and earlier this year announced plans to introduce a B787-900 on a new non-stop route between Los Angeles and Melbourne.

“The Chengdu route simply wouldn’t work without a B787,” states Compton, who notes that the service marked the start of the second phase of United’s Pacific strategy.

He says: “We’ve seen significant capacity growth between the US and China, and most of that capacity is in Beijing and Shanghai. We have great footprints to these cities. Now we can look at other areas in China that are new and growing, and Chengdu is one of those.”

Success in the airline business is matching capacity and demand, says Compton. “The B787 between San Francisco and Chengdu is unique because of its size. It’s the size of B767400, but the B787 can fly routes done by the B777, but with less seats,” he stresses. “We’re excited to be the launch US customer for the B787. We’ve already taken 11 deliveries and have 65 orders.”

United has also started service between San Francisco and Taipei, Taiwan, reveals Compton. “We want

to look for secondary cities in Asia,” he says. “We’re looking for more opportunities to do more flying in cities with larger populations, and we can do that with the B787.”

Znotins refuses to be drawn on any potential new routes in Asia or China other than to admit that the successful launch of services to Chengdu “opens more opportunities to other cities in China”.

“China is definitely a growth market in the world, so we’re keeping a close eye on that region. We’re also excited about the success in Chengdu and Taipei,” concedes Znotins.

London and Europe

In the past few years, the US and some foreign flag carriers have made the New York–London route a major battleground, and United is certainly staying in the game.

“New York–London is an important market in our network. We do very well with our five non-stop trips out of Newark,” says Compton. “What we have been doing is focusing on things that are core for this important business market.”

The best way to optimise that market is to meet the demand for it, Compton tells Routes News. “Another way is to invest in facilities, and we’ve done that whether it’s the United Club or bringing all our Star Alliance partners into one facility at London Heathrow’s Terminal 2,” he says.

“It’s important to have good connectivity and facilities that are attractive to business travellers.”

Domestic US market

What’s next for United in its own backyard – the US domestic market? According to Compton, the merger brought about balance for United’s route network.

“Before the merger with Continental, we didn’t have a strong West Coast presence, and because of that, we lacked an Asia footprint,” he says.

“United didn’t have a strong New York and Latin American presence. But now

ROUTES NEWS 6, 2014

23

United Airlines

we have brought two complementary networks together.”

The airline will remove 130 50-seat regional jets from the fleet between now and the end of 2015, says Compton, noting that United will be bringing in 70-seat Embraer 175s over that same period.

“The 50-seat jets are less economical to fly and the fact that our regional partners are dealing with the 1,500-hour rule for pilots means they’re having a harder time hiring, so they can’t fly the schedules,” he reveals. “We’ll be less dependent on regional airlines in the future.”

The big decision to drop Cleveland as a hub was taken because of pilot issues, Znotins tells Routes News.

“Some cities will see further consolidation. They may go from five flights a day with 50 seaters to three flights a day using an E-175 or possibly even a mainline jet,” says Znotins.

“We are going to reshape our network. Smaller cities will see changes, but you’re already seeing that industry-wide. You will continue to see more service on larger aircraft at the expense of smaller ones.”

24

ROUTES NEWS 6, 2014

Brian Znotins

One of the things United is doing is looking to drive toward more efficiency, insists Compton. “For us to continue to be profitable, not only do we have to deliver industry-leading revenue, we need to be more efficient in managing our costs and do things differently to deliver the product we want to deliver, but also be more efficient and low cost,” he states.

Compton uses the case of Denver International Airport (DIA) as an example.

“More than a year ago, Denver worked closely with us to get a flight to Tokyo.

The service was a good fit and works well because the B787 is perfect for the route,” explains Compton.

“However, in addition to helping us expand our route network at DIA, the city of Denver worked closely with us to focus on efficiency and to reduce our costs at the airport.

“The concept we like is to find efficiencies and lower costs. That is critical as we at United do that, but it’s also a great message that other airports should continue to do that.”

So how does the airline stand nearly four years on from the merger?

“We are truly a global airline,” says Compton. “Demand and economies are changing and a balanced network allows you to handle change in the industry.

“Consolidation is about more balance, more stability, the chance to reinvest in our people and our product and build strength for our shareholders.”

routes-news.com

US report card After a period of mergers and acquisitions, consolidation appears to have led US airlines back to profitability, writes ASM’s Mike St-Laurent.

T

he wave of mergers across the US airline industry that began over three decades ago appears to have finally reached its conclusion with the completion of the American Airlines/US Airways merger in December 2013.

Since the Airline Deregulation Act of 1978 (that phased out government control over pricing and routes), approximately 200 carriers in the US have merged into others, been acquired, or gone out of business.

Many famous names from the heyday of the jet age are gone, such as Pan-Am, Western Airlines, Braniff, Eastern and TWA. The latest round of consolidation resulted in just three legacy carriers remaining (American, United and Delta), who together with

26

ROUTES NEWS 6, 2014

US carrier consolidation 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 American Airlines TWA (Trans World Airlines) US Airways America West Delta Northwest United Continental Airlines Southwest Airtran

routes-news.com

US consolidation Southwest now control a large majority of the US market.

These four airlines now account for more than 80% of the total US domestic available seat miles; in 2008 this figure was 55%.

US domestic available seat miles share (based on August 2014 schedules)

Profitability

%

Consolidation is having a positive impact on profitability. The US airline industry registered its fourth successive year of profits in 2013, after losing $45 billion collectively from 2000 to 2009.

This year is looking even better; for the second quarter, American Airlines posted the highest quarterly profit in its history and has announced its first cash dividend since 1980.

United, Delta and Southwest have also announced significantly increased Q2 profits. Gains from consolidation have undoubtedly played a major role in these improved results, both through revenue improvements and increased cost and network efficiencies.

Source: Sabre AirDI.

US carrier load factors

Capacity

routesonline.com

%

Mergers have not only strengthened individual airlines, but have reduced overall competition to a more sustainable level. This has led to airlines becoming more disciplined in how they manage their capacity.

Previously, their approach was to add seats aggressively and compete fiercely for market share. This resulted in more empty seats (especially during shoulder seasons where the demand didn’t warrant it) and also put downward pressure on yields as carriers struggled to fill their planes.

Today there’s a much stronger focus on matching capacity to demand and maximising load factors, even if it means leaving aircraft on the ground during slower travel periods.

Load factors are now at all-time highs, particularly on domestic routes, where they have now surpassed passenger load factors on international routes.

Source: Bureau of Transportation Statistics.

Domestic fares

Despite fears that consolidation would lead to less competition and higher fares, domestic fares have actually grown very modestly.

Since 2004 average domestic airfares have increased just 2.6% annually and when adjusted for inflation the figure is just 0.2%.

Expansion by LCCs and ultra-LCCs into large domestic routes has helped to control fare increases, and carriers have turned instead to ancillary fees to grow their revenues. Fees from baggage, ticket changes, and on-board sales of food, beverages, in-flight entertainment and wi-fi have soared since 2008.

ROUTES NEWS 6, 2014

27

US consolidation

Operational performance

Average domestic airfares

Average itinerary fare

Greater financial stability and a more disciplined approach to capacity have also helped airlines to improve their operational performance. Consolidation has enabled carriers to streamline their networks and remove excess capacity from the system, which has improved efficiency.

Key operating metrics such as on-time performance, flight cancellations, and lost or mishandled baggage have all improved significantly since 2008.

Network expansion

Merging with carriers whose networks complemented their own has allowed US airlines to expand their international networks. Delta’s strength in Europe and Latin America complemented Northwest’s strong Asia network. United, with their large presence in the western US and the Asia-Pacific was a good fit with Continental’s strength in the southern and eastern US and their strong presence in Latin America.

The most recent merger between American and US Airways brings together two carriers whose schedules complement each other’s extremely well. They compete on only a small number of domestic city-pairs between their respective hubs, and on none of the 50 busiest domestic routes.

American is the dominant US carrier in Latin America, where US Airways has no presence. On the other hand, US Airways has service to key European cities such as Amsterdam, Brussels and Lisbon that are not served by American.

Of course, consolidation has led to rationalisation of some hubs as carriers worked to reduce overlap and improve efficiency.

Cincinnati, for example, was impacted severely by the Delta/ Northwest merger. With Detroit just

28

ROUTES NEWS 6, 2014

Source: Bureau of Transportation Statistics.

200 miles to the north, its position became less important and it saw a 22% cut in capacity after the merger in 2008, and an additional 17% cut in 2009.

200 US carriers

have merged, been acquired or gone out of business since 1978 It no longer has non-stop flights to London, Frankfurt, Amsterdam or Rome, with Paris its only remaining destination outside of North America.

United, earlier this year, cut its hub service in Cleveland, ending non-stop service to 39 cities; a reduction of 64% in departures and 34% in available seat miles.

For American, the settlement reached with the Department of Justice to get approval for the merger commits them to maintaining service at its current hubs for three years and it has stated an intention to maintain all of its current hubs. Time will tell whether or not this is sustainable in the long run.

Conclusion

Consolidation has had a significant and positive impact on the US airline industry. Capacity discipline has enabled carriers to reduce or eliminate unprofitable flying and better align schedules to consumer demand. It has also enabled them to expand their networks and improve operating and cost efficiencies.

With US airlines now on a stronger financial footing, their ability to invest in new aircraft, growing their networks and improving their products, will be significantly enhanced, and that is ultimately very good news for the industry.

ABOUT THE AUTHOR Mike St-Laurent is a senior consultant with ASM World Route Development Consultants based in Manchester, UK. He joined ASM this year after a long career with Air Canada.

routes-news.com

Airline one2one

Southwest’s vice president for network planning and performance, Andrew Watterson, reveals what travellers can look forward to in the coming months.

What is Southwest’s strategy towards route development?

As we look at what markets we would like to add into our growing portfolio, we take a close look at everything from local to macro-economies, job trends, airport costs, performance trends, and of course customer demand.

We then compare that information to our own strategic goals, plans, and availability of aircraft to determine if the route would fit within our unique brand.

What sets Southwest apart in an increasingly crowded industry?

Our customer-friendly policies, our people and our vastly different network strategy. We carry the most passengers in the US in terms of domestic passengers boarded, and we’re doing that with point-to-point routes that avoid some of the challenges of traditional hub-and-spoke operations.

How important a role does Chicago Midway play as one of your focus cities?

Midway is vital to our network. It is the largest station in our system, operating more than 250 daily departures to destinations across the country, as well as international. We will convert the remaining AirTran flights in November, bringing Southwest aircraft onto those

routesonline.com

routes. With the new flights, we will be adding more seats, and more low fares to Cancún, Punta Cana, and Montego Bay.

What future plans do you have for Midway?

Right now, we are focused on becoming Chicago’s hometown carrier by offering the right mix of destinations and frequencies. We are always looking at where we can go from there. On August 10, we launched service into Ronald Reagan Washington National Airport with six daily roundtrip flights and we will increase that to nine times daily by the end of September. It’s an exciting time for us as we grow and we are keeping a close eye on market trends and customer demand.

How is Southwest expanding its presence across the rest of the US? With the repeal of the Wright Amendment coming on October 13, we are very focused on bringing new non-stop service to our home airport, Dallas Love Field, starting with 15 new non-stop departures to exciting markets across the nation. The first seven flights start operating on October 13 and the remaining eight will launch on November 2. The flights will bring the service that so many of our customers

have been demanding from us for years, and now it’s finally here! Beyond Dallas, we’re making sure that we are providing the mix of routes and frequencies that make the most sense and are most profitable. We watch the trends and add and subtract routes based on those factors.

With new services recently launched to Jamaica, the Bahamas and Aruba, what are your intentions to expand further outside the US? We are actively analysing more than 50 potential destinations outside of the US, including cities across Mexico, the Caribbean, Central America, Northern Rim South America, and Canada.

What is the biggest challenge facing aviation in the US? As fuel expense becomes a much larger input cost into airline performance, managing the volatility in the energy markets will continue to be the biggest challenge. Overall, the industry is healthy and any spike would quickly erode the industry performance we are currently observing.

Additionally, we continue to closely monitor changes in the regulatory environment. Ongoing legislation and cost increases continue to put pressure on the overall business.

ROUTES NEWS 6, 2014

31

Airport one2one

Routes News talks to Amit Rikhy, senior vice president, corporate development and asset management for Airports Worldwide.

Why has the group changed its name and rebranded to Airports Worldwide?

The rebranding reflects the company’s focus on becoming a world-class airport platform for investing in, developing and operating airports globally. We felt that this new name more appropriately represents our company given that airports are our only business and we currently operate airports in the United States, Europe and Central America with a plan to grow our global presence.

How does the group as a whole approach air service development at your portfolio of airports?

Air service development and marketing (ASD) is one of the core functions of Airports Worldwide’s active asset management approach. This approach focuses on developing the airport’s key value drivers with the objective of protecting and enhancing shareholder value.

We have an ASD dedicated member of Airports Worldwide staff that actively and closely works with each of the airport’s route development managers to deliver the business plan objectives, manage relationships with existing and prospective airlines and key stakeholders (including other shareholders, regulatory, tourism agencies, etc), co-ordinate external consultants and meetings at the various airline conferences such as Routes, and proactively identify issues

routesonline.com

and risks and replicate best practices.

While we try to standardise things such as reporting processes and tracking tools and consolidate airline relationships, we focus on having a customised approach to each of our assets. In other words, our asset management process is not a cookie-cutter approach as we recognise that each airport has its own distinct profile with unique market, opportunities, challenges and stakeholders.

Do air service teams across your gateways work together on city pair routes and other opportunities?

Absolutely, the benefit of an airport platform such as Airports Worldwide is that we can develop multiple opportunities through the same relationship with existing and prospective airline partners. As appropriate, we are actively and proactively identifying city pair routes between our portfolio assets. However, we also remain flexible in establishing routes to competing airports.

Does the group believe there are further expansion opportunities within the US? As the only US-based global airport investor-operator platform with investment in one airport public private partnership (PPP) concession and five management contracts at US airports, we continue to be committed to this market.

However, we recognise that the US airport privatisation market has been relatively slower in its development compared with elsewhere globally.

However, we believe that patience and creativity with different structures will be required to develop the US market further. For instance, PPP structures similar to the one that Airports Worldwide is involved in with the Sanford Airport Authority is something that has significant potential to be replicated elsewhere in the US. Under this structure, we work collaboratively with our public sector partner, grow traffic, build a commercial business and maintain and develop the airport facilities.

Other structures such as those used by the PANYNJ for the development of T4 at JFK Airport and more recently for the Central Terminal Building at LaGuardia Airport could also be models for privatisation in the US. In summary, there are a number of potential opportunities in the US that could open up for PPPs in the airport sector.

How did you start your career in aviation?

My career in aviation started in consultancy and advisory to both governments and the private sector in airport development, finance, policy and privatisation. This then led to increasingly more senior roles in leading and executing on airport PPPs, acquisition, development and asset management.

ROUTES NEWS 6, 2014

33

Airport one2one

Head of airline marketing at Aruba’s Queen Beatrix International Airport, Jo-Anne Arends, shares her views on the Caribbean island’s ambitious development plans.

Has the airport any plans to upgrade its infrastructure?

We’ve added new hold-rooms and remodelled the arrivals and check-in areas since the opening of our new terminal facility back in 2000 and continue to make improvements through the addition of new retail and F&B outlets and upgrading and expanding our facilities. This will continue in the future to ensure that we are able to keep pace with rising passenger demand while providing top quality service.

A recently completed Master Plan provides for further infrastructural investments through to the year 2032.

What is planned for 2014/15?

Plenty! Among the major projects in 2014 we will complete the remodelling of our departure facilities, especially on the landside areas. Our new and improved non-US plaza area will also be completed by the end of 2014 and, in order to improve passenger flow within the US–bound pre-clearance facility areas, we will be implementing the use of Global Entry kiosks and Automated Passport Control (APC) kiosks within the US CBP check-area. This will greatly improve the efficient processing of US–bound passengers departing to the

routesonline.com

USA. In 2015, we will continue with these efforts by expanding and relocating our central security area in order to further improve the process upon departure for all passengers. Additional facilities such as restrooms, expansion of available F&B outlets and offerings and the provision of services for commercially important persons will also be ventured into during 2014 and 2015. Another improvement to the passenger flow will be the implementation of new check-booths in 2015 for the local immigration services upon departure and arrival. This will create more queuing space for these processes, enhancing the overall quality of service that the airport wishes to provide.

How does Aruba differentiate its tourism and conference/ convention offering from other Caribbean islands?

Aruba is a very unique island with a great location, with multiple direct flights and easy connections within North America, Latin America and Europe.

We have world-class hotels on the island, excellent conference facilities and almost perfect weather year-round that makes it a great place for doing business and for the participants

to enjoy pre- and post-tours. One of Aruba’s greatest assets is our inhabitants; you will find that our people are some of the friendliest people in the world. Communication is easy as Arubans can speak four languages – English; Spanish; our official language, Dutch; and our native language, Papiamento. Above all else, you want to feel secure in knowing that your group is travelling to a safe destination.

What success have you had with attracting low cost carrier service?

We have been very successful throughout the years in attracting both legacy and low cost airlines to our airport. A good example is when American Airlines eliminated its non-stop flights between Boston Logan (Aruba’s main source market in the US) and Aruba in late-2008. JetBlue saw an opportunity and took over these non-stop flights, and the award-winning LCC has been so successful that it has since become the near number one carrier on the island.

Another LCC success story is AirTran/Southwest Airlines, which created additional market opportunities

ROUTES NEWS 6, 2014

35

Airport one2one

Hopefully having our own booth at World Routes will help generate new leads and boost our brand positioning

for Aruba when they started their operations in 2009 out of Atlanta.

Soon after that AirTran introduced two new destinations (Orlando and Baltimore) to its network. From July 1 this year, Southwest launched daily, non-stop services between Aruba and Atlanta, and Montego Bay; Baltimore/ Washington and Aruba; Nassau and Montego Bay; and Orlando and Aruba, and Montego Bay.

You recently attracted new service with LAN Colombia from Bogota – how important was this to you?

After a few years of maintaining contacts and developing a relationship with LAN, which has its headquarters in Chile, we have been able to attract the airline to launch twice-weekly flights to and from Bogota for Aruba.

The new service is flown by an A320.

It is LAN’s only current flight into the Caribbean market and highlights how the regional divisions are playing an important role in developing wider Americas connections within the LATAM group.

Aruba has been working on this relationship since 2007, but it was in 2012 that a delegation, after five years of discussions, travelled to Chile again to present the benefits of doing business with Aruba in a market which is showing continuous growth.

In a great example of stakeholders supporting network development, AAA has received strong backing from

36

ROUTES NEWS 6, 2014

the Aruba Tourism Authority (ATA) and the Government of Aruba in this process.

There has been growing demand between Bogota and Aruba over the past two years, with MIDT data showing a 34.1% increase in bi-directional O&D passengers between 2010 and 2012, when numbers reached around 35,000.

Although the twice-weekly schedule of LAN Colombia will have a limited impact on Avianca’s dominance, it could help reduce air fares, which currently stand at an average of $256 each way.

What are your key source markets and what changes are you seeing in these markets?

Our key markets are North and Latin America. In the year to May 2014, passenger traffic to North America – New York JFK and LaGuardia are served by daily flights from Delta and additional services from JetBlue – was up 10% on the corresponding period a year ago. Traffic to Latin America for the same period is up 33%. Destinations in Colombia, Brazil, Chile and Argentina are served from Aruba by a combination of Avianca, LAN Colombia and Copa – the latter of which has upped its frequencies from 7 to 11 weekly flights since July 3, 2014.

Which routes would you most like to attract to the airport?

That’s easy! We’d like to capture more traffic from the western United States

in the shape of Dallas/Fort Worth (DFW), Los Angeles (LAX), Las Vegas (LAS) and San Francisco (SFO), and we’d also like non-stop flights to Pittsburgh (PIT) and Detroit, which are our primary and secondary feeder markets in the US. Elsewhere it would be great to get non-stop flights to Saõ Paulo and the UK.

What are you most looking forward to at World Routes in Chicago?

Without doubt the Face-to-Face meetings and the fact that, for the first time ever, Aruba Airport will have an exhibition booth. Hopefully, having our own booth will help generate new leads and boost our brand positioning.

What would you be doing if you didn’t work in air service development?

I would start my own marketing company/consultancy specialising in making your business successful.

Tell us about the airport’s new website?

I believe that www.airportaruba.com has a new look and feel and matches the recent renovations at the airport.

It is easy for travellers to use and information can be found fast without having to go through the entire website.

One of its great features is Flight Search, which provides the opportunity to search for the many airline and route options to and from Aruba before presenting them in an interactive map.

routes-news.com

Latin style Jonny Williamson talks the football World Cup, operational restructuring and post-merger synergies with LATAM Airlines Group’s chairman of the board, Mauricio Amaro.

T

rue, its team disappointed by not lifting the cup, but in almost every other way the recent FIFA World Cup finals in Brazil were a huge success for South America’s biggest nation and its airlines.

For the event showcased the best of Brazil to the world, proved that it had the infrastructure to host such a major event and was a catalyst for huge traffic growth.

38

ROUTES NEWS 6, 2014

According to Brazil’s Ministry of Civil Aviation, almost 10 million passengers were handled at around 20 Brazilian airports during the 31 days of the tournament.

And almost three million of them travelled with the nation’s largest carrier, TAM Airlines.

Yet a lot of pre-tournament talk had been about whether TAM would be able to accommodate this huge

influx of additional traffic across an already passenger-heavy network serving the third world’s third-largest aviation market.

The big build-up

To understand TAM’s winning approach to the World Cup, you first have to look back to 2013.

Last year was a milestone for the Latin American holding company, LATAM

routes-news.com

LATAM Airlines Group Airlines Group, as it marked the first full year of managed integrated operations following the 2012 merger of the Chilean LAN Airlines and Brazilian TAM Airlines.

Taking advantage of a restructured fleet, the newly formed group could offer passengers a wider network, higher frequencies and shorter connection times.

As a result, in 2013 the two airlines combined handled upwards of 60 million passengers and served 150 destinations across more than 20 countries.

And the progress continued into 2014 as the company reaped the rewards from a number of forward-thinking initiatives. Freezing capacity in Brazil proved to be one of the most successful.

LATAM Airlines Group’s chairman of the board, Mauricio Amaro, explains: “It drove load factors up to the mid to low-80s, which was an all-time high and resulted in us going from being Brazil’s lowest to the highest load factor airline.�

LATAM Airlines Group’s international network (figures for 2013): &RORPELD

PLOOLRQ SDVVHQJHUV PDUNHW VKDUH GRPHVWLF GHVWLQDWLRQV

(FXDGRU

PLOOLRQ SDVVHQJHUV PDUNHW VKDUH GRPHVWLF GHVWLQDWLRQV

PLOOLRQ SDVVHQJHUV PDUNHW VKDUH GRPHVWLF GHVWLQDWLRQV

3HUX

PLOOLRQ SDVVHQJHUV PDUNHW VKDUH GRPHVWLF GHVWLQDWLRQV

&KLOH

PLOOLRQ SDVVHQJHUV PDUNHW VKDUH GRPHVWLF GHVWLQDWLRQV

World Cup 2014

TAM is the dominant player in Brazil, accounting for a 40% share of the domestic market, so arguably had the most to win or lose during the monthlong World Cup competition.

So in order to maintain its lofty position in Brazil and beat off competition from GOL, Azul and Avianca – which enjoy a market share of 35%, 13% and 7% respectively – TAM invested over $21 million in operating 750 additional domestic flights and over 350 extra international flights between June 12 and July 13.

The huge increase in destinations and frequencies ensured that TAM transported almost 3 million football fans within Brazil, notes Amaro, and operated over 20,000 domestic flights in and out of the 12 host cities.

Its busiest day was June 20, which saw the carrier transport more than 143,000 passengers across its network.

Brazil’s largest city, São Paulo, saw the highest influx of visitors in a single

routesonline.com

%UD]LO

day, with over 50,000 alone passing through its biggest gateway, Guarulhos International Airport, on July 11.

That’s not surprising when you consider that the 45-minute flight between São Paulo and Rio de Janeiro is one of the world’s busiest air routes, with 280 daily flights annually carrying upwards of 12 million passengers.

The planning and preparation clearly paid off, insists Amaro, claiming that TAM fulfilled its mission of making a decisive contribution to the tournament’s success.

$UJHQWLQD

PLOOLRQ SDVVHQJHUV PDUNHW VKDUH GRPHVWLF GHVWLQDWLRQV

“We were very satisfied with our operational flexibility throughout the tournament,� he enthuses. “Our ability to drastically adapt our complex route network to serve a new profile of passenger was pivotal. As a result, despite the challenges, we were able to maintain high levels of excellence in our service and operational safety.�

Customer service

Amaro is quick to back up his claim of high levels of excellence by pointing out that LAN and TAM scooped first and second prizes respectively at this year’s

ROUTES NEWS 6, 2014

39

LATAM Airlines Group Skytrax World Airline Awards, as well as LAN being named South America’s Leading Airline at the World Travel Awards for the third year running.

And the successes marked the sixth consecutive year an airline belonging to the LATAM Airlines Group had been crowned Best Airline in South America.

Amaro candidly admits that, following the 2012 merger, service levels suffered as attention was understandably focused elsewhere. However, he claims that the management team quickly recognised the problem and set about raising the bar on service levels across the group in 2013.

The chairman chalks up the most recent Skytrax win to a combination of investing in a modern fleet, coupled with the commitment of a team “who are all focused on the delivery of an excellent service”, noting that in an increasingly competitive marketplace, “quality of service is the key to achieving growth”.

International growth

When questioned about the group’s plans for the future, Amaro explains that maintaining TAM’s position as the dominant carrier in Brazil is crucial as it offers a firm foundation on which to build its wider regional and international network.

“We are also performing very well in Colombia and look likely to reach profitability next year,” he says.

Colombia recently overtook Argentina to become Latin America’s third-largest economy after Brazil and Mexico.

Amaro views being the dominant carrier at São Paulo’s Guarulhos International Airport as a cornerstone of its goal to increase connectivity throughout South America.

And he believes that the airport’s recent privatisation will help it in its ambitions as the new concessionaire sets about upgrading its infrastructure, with additions such as the newly opened 12mppa capacity Terminal 3.

Indeed, Amaro insists that creating a hub at São Paulo-Guarulhos is now “more achievable” and could fuel the

40

ROUTES NEWS 6, 2014

Fleet development LATAM’s fleet comprises 85 widebody, 233 narrowbody and 15 cargo aircraft. LAN’s mainline fleet is predominantly a mixture of A319-100s; A320-200s – the real workhorse of the group; and B767-300ERs. Meanwhile, TAM’s fleet has a large number of A319-100s, A320-200s and B767-300ERs as well as “several” A321-200s, A330-200s and B777300ERs, according to Amaro.

He says: “Though a significant aircraft in its time, the A340 has become inefficient when compared with modern twin-jet alternatives. There isn’t a need for us to hold a four-engine aircraft anymore, so we are returning the A340s, although we will retain a handful of the aircraft in reserve for both LAN and TAM. “We also plan to return the A330s whose interiors have become dated and are no longer required; the same goes for the B777s.”

Amaro adds: “The merger resulted in a necessary restructuring of the fleet and provided additional investment that wouldn’t have been possible beforehand.

“Though we are aiming for fleet simplification in a broad sense, our restructure is primarily focused on acquiring aircraft that are 20% to 30% more efficient.”

Amaro reveals that LATAM will receive 19 new aircraft in 2014 and looks likely to finish the year with a 327-strong fleet.

“The investment for 2014 alone stands at almost $1.2 billion, of which 60% will be raised through guaranteed credit, with the rest financed via sale and leaseback contracts,” he says.

“Between 2014 and 2020, our purchase obligations total $12.2 billion and include 116 A320-family and 48 widebody passenger aircraft (comprising A350-900XWBs, B787-9s and B787-8s).

creation of secondary bases, such as at Peru’s Jorge Chávez International Airport, which is tipped to become the group’s hub to the US West Coast.

Amaro remains tight-lipped about such rumours for now though, insisting that the group is not looking to dramatically grow its long-haul network to the US and beyond.

The focus for now, he tells Routes News, is very much on increasing

regional and domestic routes across South America.

Without doubt the merger has resulted in LAN and TAM strengthening their global presence and their leadership in bringing the best of South America to the world.

Brazil’s football team may have failed to live up to expectations this summer, but thanks to a pro-active strategy, its biggest airline is still flying high.

routes-news.com

Advantage Gatwick?

CEO, Stewart Wingate, tells Justin Burns why the government must choose Gatwick when it comes to approving a new capacity-enhancing runway for the UK.

T

he world’s busiest single-runway airport is proposing to build a second runway as part of a €10 billion project, which it says will be privately funded, and can be delivered by 2025.

As part of the development, a new terminal linked to the South Terminal and North Terminal would be built, along with a transportation Gatwick Gateway interchange.

According to CEO, Stewart Wingate, the developments will boost Gatwick’s capacity to 95mppa by 2050 – an astonishing 40 million more than it is capable of accommodating today.

Speaking exclusively to Routes News, Wingate bullishly claims that Gatwick’s proposed new additions make it the “outstanding proposal” of all those

42

ROUTES NEWS 6, 2014

submitted to the Airports Commission, which is looking at ways of boosting the UK’s aviation capacity through the addition of new runways.

Indeed, he goes so far as to state that Gatwick’s solution is the only truly deliverable option.

“The Airports Commission has a very real choice to make: expand Gatwick and create genuine competition in the market with lower fares for everyone, or move back to a London airport market dominated by a single player that will saddle the next generation with higher air fares,” says Wingate.

“The next runway needs to bring the greatest economic return for the UK at the lowest environmental cost. Why look beyond Gatwick?

“It could be delivered in less time, at less cost and with less noise than the other proposed solutions. It would mean more connections and choice, as well as better value for money for passengers because we are the only London gateway to cater to all airline business models.”

Route development

Wingate, who saw 35.9 million passengers (+3.6%) pass through his gateway in 2013, is acutely aware that the winner of the UK’s runway race is likely to be the airport that shows that it is best placed to develop routes and improve the UK’s global connectivity.

Arguably, the UK’s need for more long-haul routes to cities in emerging nations across the globe increases every day for both business and leisure traffic.

routes-news.com

Gatwick And Wingate knows that in this respect, many question whether Gatwick can develop and sustain a greater number of routes than nearby Heathrow.

He pours scorn on this suggestion, however, claiming that Gatwick will add 63 new long-haul routes by 2050 if the new runway is given the go-ahead.

This, he insists, compares to just 40 at Heathrow and effectively means dozens of new destinations in Asia, the Americas, Europe, Africa, and other regions for UK passengers.

Indeed, in his opinion, Gatwick would have no problem attracting the new airlines needed to launch new services.

“We have demonstrated over the last four and a half years that we can develop the long-haul market very effectively in the London catchment area,” says Wingate, who notes that 15 million people with a high propensity to travel live within an hour of his gateway.

Citing some examples of Gatwick’s route successes, he tells Routes News that the launch of easyJet’s twice-daily flights to Moscow Domodedovo has “transformed” the route in terms of prices.

He also notes that Turkish Airlines now operates four flights a day to Istanbul and that Emirates has now upped frequencies to the Gulf.

“We have built cost-effective facilities to accommodate the A380, and have a very strong track record of marketing ourselves to the emerging economies, like Vietnam, Indonesia and China,” enthuses Wingate.

He also insists that unlike Heathrow, Gatwick is ready, willing and capable of accommodating all markets, from low cost carriers (LLCs) and charter traffic to the legacy carriers.

The mix, says Wingate, ensures that it serves the needs of both business and leisure passengers.

Europe is the biggest market served from Gatwick today, followed by North America courtesy of long-established routes to Canada and the US, and then Southeast Asia.

And Wingate, who is confident that Gatwick will add to its list of 70 airlines

routesonline.com

by both British Airways and Norwegian certainly supports this philosophy.

Airports Commission

Stewart Wingate

before the end of the year, doesn’t see that situation changing much in the future.

“There is no doubt that Southeast Asian markets will grow going forward, but mark my words, the European network will remain the overwhelming share of demand, and we can offer the most affordable fares to Europe on LCCs.”

Game changer

Based on what he has witnessed at Gatwick, Wingate believes that narrowbody aircraft, such as the Boeing Dreamliner and the A350, are driving long-haul route development, and he feels that this trend will grow across the UK in the future.

In fact, Wingate is convinced that both aircraft are “game-changers for the industry” and will help shape the route development strategies of many airlines in the years ahead.

“The Dreamliner and A350 will transform how the long-haul flight market works in the future because they are more fuel-efficient and make many routes more economically viable on a direct basis,” states Wingate.

“This will mean less reliance on transfer passengers, even for hubs like Heathrow, although we believe that airports such as ours will be the main beneficiaries.”

The recent launch of Dreamlineroperated flights to the US from Gatwick

Many experts believe that the Airports Commission’s final recommendation will be influenced by whether they see a need for another UK hub to rival or complement Heathrow.

The two airports have contrasting views over what is the best strategy for the UK, with Heathrow arguing that there needs to be only one hub, whereas Gatwick says there is a need for two hubs, as part of a competing airports system.

This belief is based on independent analysis, which Wingate claims found that two hubs, each with two runways, would generate better connectivity for London by 2050 than a single hub.

According to Wingate, the two-hub scenario would be capable of generating 442 destinations, compared to Heathrow with three runways and Gatwick with one, which would serve only 415 destinations.

He also claims that spreading capacity across a two-plus-two system would create more competition, and ultimately better fares for passengers, as 82% of the routes served from London would be operated from both airports.

The figure of competing routes would fall to 66% in a system where Heathrow has three runways and Gatwick only one, the analysis argues.

As such, in Wingate’s view, it would be a “retrograde step” if Heathrow alone was given the green light to add a third runway.

“It is all about competition, which was the whole purpose of breaking up the BAA monopoly, and we should not reinforce fortress Heathrow by recreating the monopoly, by putting all of our eggs in one basket,” he says.

“What we are proposing is to have competition between airports, which will stimulate better competition between the airlines, which will offer better value and services to leisure and business passengers.

“If the UK government grants Gatwick a second runway, we would eclipse

ROUTES NEWS 6, 2014

43

Gatwick

Battle for Britain

Heathrow in terms of size and passenger volume, but everybody would win as you would end up with a successful Heathrow and Gatwick.”

Wingate admits that Gatwick’s dream is to develop in a fashion that enables it to compete with key European hubs such as Amsterdam Schiphol, Frankfurt, and Paris-CDG.

The advantages of Gatwick

Never one to miss out on the chance to have a little dig at Heathrow, Wingate claims that Gatwick is potentially 5 to 10 years ahead of Heathrow when it comes to delivering a new runway for the UK. He says: “The choice is an obvious one. Expand the best and only deliverable option – Gatwick – and create a market that serves everyone.

“Why would you choose to fly a quarter of a million more aircraft every year, over one of the world’s most densely populated cities, when instead you can fly them mostly over fields?

“Why tunnel part of the busiest motorway in Europe, the M25, causing serious traffic disruption, when you can build on land already set aside for expansion?

“We are the fastest deliverable solution, the cheapest, have the lowest environmental impact, have put in place the world’s leading mitigation strategies and will bring better connectivity to London.”

44

ROUTES NEWS 6, 2014

T

he battle to gain the backing of the Airports Commission and build the first runway at a UK gateway in 60 years is hotting up.

London Gatwick is one of three options shortlisted, along with a third runway at Heathrow, and a proposal by the independent Heathrow Hub group to extend runways.

All have PR machines in full flow, and have handed in their submissions to the Sir Howard Davies led commission, as they seek to secure support in 2015.

The clock is ticking to next summer, after the next UK General Election, when commissioners will recommend to the government where it thinks an additional runway should be built.

Heathrow, which will lose its status as the world’s busiest international gateway to Dubai this year, is seeking to add a third runway to the northwest of its site. It claims that the move will create a new east and west layout and create a single transport transit centre, at a cost of €20 billion.

Heathrow says this would raise the number of aircraft movements from 480,000 to 740,000 and passenger numbers would rise by 29 million, and claims that the project can be delivered by 2025.

The gateway says that 40 new direct and daily routes would be implemented to fast growing economies such as San José, Wuhan, and Kolkata, and it would improve UK regional links.

The independent group’s proposal – led by former Concorde pilot, Jock Lowe, but not backed by Heathrow Airport – is to extend both runways to the west at a cost of €15 billion, which it says it can deliver by 2023.

The development also includes building an intermodal transport interchange called the Heathrow Hub, and changes to surface access links.

routes-news.com

Discover America Brand USA takes a comprehensive approach to enticing global travellers to the United States.

D

“

iscover this land, like never before.” That’s the central message of Brand USA’s marketing to consumer travellers around the globe. Brand USA – a nonprofit, public-private partnership dedicated to increasing international travel to the US and enhancing perceptions of the US abroad – is now operating in its third year.

“Our collaborative marketing efforts with industry partners like the aviation industry have been vital to our success in boosting inbound international tourism,” says president and CEO of Brand USA, Christopher Thompson. “We recognise the importance of airlines in connecting international travellers to the incredible travel destinations in the USA. Visitors from only two countries, Canada and Mexico, can travel to the US by car, making airline partners integral to increasing international visitation.

Increasing demand for travel and increasing airline capacity are vital to the travel industry.”

Brand USA continues to develop consumer, trade and co-operative programmes with valuable airline partners such as airberlin, Air Canada, Air New Zealand, Asiana Airlines, British Airways, Porter Airlines, United

46

ROUTES NEWS 6, 2014

Airlines, WestJet, Lufthansa, Qantas, Hawaiian Airlines, Japan Airlines, Qatar Airways, Iceland Air, KLM Royal Dutch Airlines, Sunwing, Delta, All Nippon Airways, Singapore Airlines, Hainan Airlines, Emirates and Air China.

Brand USA currently maintains 12 international offices representing 20 different markets, where it conducts consumer, co-op and trade activities – Australia, Brazil, Canada, China, Germany, Japan, South Korea, Mexico, New Zealand, and the UK including Ireland. These 10 source markets account for 90% of inbound travellers to the US.

Consumer marketing and advertising

Brand USA uses integrated campaigns that include broadcast, out-of-home messaging, print and social media to communicate its consumer messaging (out-of-home advertising targets consumers on the go, outside of their homes, through billboards and other public mediums). All online elements and calls to action use the native language of each market. Consumer advertising represents a third of Brand USA’s marketing budget.

Co-op programmes

With nearly 100 co-op marketing opportunities, Brand USA amplifies its partner reach into global markets.

Brand USA Originals include Discover America Global Inspiration Guides (language-specific); advertising on Brand USA’s consumer website, DiscoverAmerica. com; and co-ordinated efforts for media planning and purchases. Co-op programmes account for just over half of the marketing budget.

Travel-trade outreach

Brand USA manages a variety of marketing strategies that present its nearly 400 industry partners with opportunities to increase international visitation to the US. Trade outreach has seven elements: • Trade shows – Brand USA hosts a series of US-branded pavilions at significant travel and trade exhibitions, including shows such as (attendance figures indicated): JATA Tourism Expo Japan in Tokyo (130,000); China International Travel Mart in Shanghai (100,000); FIT International Tourism Trade Fair of Latin America in Buenos Aires, Argentina (90,000); Vakantiebeurs in Utrecht, Netherlands (100,000);

routes-news.com

Sponsored statement

Adnova RUSSIA UNITED KINGDOM IRELAND

CANADA

SWITZERLAND

Aviareps GERMANY AUSTRIA

Brandmasters CHINA INDIA

MEXICO

JAPAN

Black Diamond

SOUTH KOREA TAIWAN HONG KONG

Connect Worldwide

CENTRAL AMERICA

Gate 7

BRAZIL

Ogilvy PR

AUSTRALIA

Sartha Marketing

NEW ZEALAND

Adnova Aviareps

•

•

•

•

Pulse Communications

Brand USA currently has a trade representative for the GCC and is looking to expand Brandmasters Connect Worldwide PR Pulse Communications in the following markets: Benelux region, France, Russia,Oglivy Scandinavia, Middle East Black Diamond Gate 7 Sartha Marketing (GCC), Southeast Asia and Latin America (Southern Cone and Andean Region).

FITUR in Madrid, Spain (155,000); and ITB Berlin (170,000).

Sales missions – These missions are a series of planned events at which Brand USA and sponsor partners meet with tour operators, airlines, travel agents, incentive and meeting planners, and media outlets. With the success of its first sales mission to India in 2012, Brand USA has missions set for China, Hong Kong, and India.

Road shows – The shows allow Brand USA and partner organisations to promote travel to the US with tour operators, travel agents and other travel buyers through seminars, receptions and events that facilitate in-person connections.

Themed events – Brand USA organises customised events that celebrate specific holidays and experiences to promote US destinations, travel brands and travel-related organisations.

Training initiatives – Brand USA offers two programmes that provide international travel buyers with the tools and knowledge to sell US travel destinations and experiences.

The USA Discovery Online Training Platform is a hands-on training

routesonline.com

system that includes destination modules designed to motivate travel agents and tour operators to sell American packages. Modules deliver information about US states and regions. Brand USA launched USA Discovery in the UK. It has expanded the programme to Australia, India, China and Brazil.

The other training initiative is a more targeted approach. Brand USA’s international representation firms and partner organisations present in-market seminars that address specific US experiences and regions.

• MegaFams – These large-scale, multi-itinerary familiarisation trips introduce qualified international travel buyers and partners to US destinations and experiences. (See the MegaFam section for details about recent trips.)

• Advisory boards – Brand USA establishes these boards in markets where it maintains international offices. The boards – made up of tour operators, travel agents and other in-market travel professionals – provide Brand USA with feedback regarding new marketing programmes.

Origin of Brand USA

Provisions of the Travel Promotion Act, which President Obama signed into law in March 2010, led to the creation of Brand USA. Congress had passed the legislation with overwhelming bipartisan support. When Brand USA began operations in May 2011, it was the first time that the US had a single organisation to co-ordinate and lead marketing efforts to promote the United States as a premier travel destination. Brand USA also works with the federal government to convey guidelines for US entry and exit procedures, making the system easier for visitors to navigate.

ROUTES NEWS 6, 2014

47

Sponsored statement

Brand USA: A Powerful Force in US Economic Growth Inspiring and influencing international travel to the United States.

Brand USA, the nation’s destination marketing organisation, delivered powerful results in fiscal year 2013. According to a study by Oxford Economics, Brand USA's initiatives in eight markets where it had fully deployed consumer, trade, and co-op marketing campaigns, contributed to a stronger, more dynamic US economy.

1.1

8

47:1

3.4

$

million visitors

in visitor spending

markets*

53,181

For every $1 spent, Brand USA generated $47 for US companies

US taxpayers pay

$

0

new jobs supported

to fund Brand USA's marketing efforts www.thebrandusa.com

Sources: Oxford Economics, National Travel and Tourism Office, Bureau of Economic Analysis, Advance Passenger Information System. Download the full report: An independent study conducted by Oxford Economics quantified the measurable benefits Brand USA delivered to the U.S. economy in its 2013 fiscal year ended September 30, 2013.

MegaFams offer simultaneous itineraries

we offer an extensive choice to passengers.”

Participating agents from May’s UK MegaFam booked 12,000 flights to and within the US when they returned home – more than double the number of flights that agents booked after the 2013 MegaFam.

* Australia, Brazil, Canada, Germany, Japan, Mexico, South Korea, United Kingdom

UK and Ireland – Following up on the success of a mid-May MegaFam, Brand USA plans to host a third annual edition of the event in 2015, again in partnership with American Airlines and British Airways.

The 2014 MegaFam allowed 100 travel agents from the UK (including Ireland) to participate in one of seven simultaneous itineraries that took them to a total of 21 states. Upon completing their trips, the agents assembled in Austin, Texas, where they shared perspectives about their particular journeys.

“Working with Brand USA in the UK has been a successful partnership from the beginning and we are pleased to commit to a 2015 MegaFam,” says Craig Dewey, managing director, EMEA sales for American Airlines. “It is our combined goal to increase UK tourism to all parts of the United States and, with over 6,500 domestic flights a day,

48

billion

ROUTES NEWS 6, 2014

Brand USA MegaFams:

Germany – In early May, Lufthansa brought 80 travel agents from Germany, Austria and Switzerland to the US for Brand USA’s first German MegaFam. Agents followed one of eight itineraries, which covered these cities and their surrounding regions: New York; Washington, DC; Miami; Chicago; Dallas; Denver; Los Angeles; and Seattle.

Australia and New Zealand – Qantas Airways brought 50 travel agents from Australia to the US in 2013. Agents participated in one

#BrandUSA

of five itineraries: New York/Boston; Florida; Arizona; Texas; and New Orleans.

Hawaiian Airlines will bring 60 travel agents – 40 from Australia and 20 from New Zealand – to the US in early-2015.

National Geographic, Brand USA partner for road-trip project

In April National Geographic and Brand USA embarked on a series of five road trips across America to showcase unique American travel experiences. The project represents a partnership between the National Geographic Travel group and Brand USA designed to inspire international travellers to explore iconic American routes.

“One of the best ways to discover and experience America is by car, and that’s why we enlisted the support of National Geographic’s Offbeat Observer, Robert Reid, who took us along for the ride,” Thompson notes.

routes-news.com

Sponsored statement

American cuisine reveals nation’s diversity German carrier soars with Brand USA message Airberlin has an A320 flying along European routes that sports Brand USA’s “Discover America” logo across its fuselage. A ceremony at Düsseldorf Airport in July revealed a new venture in collaborative marketing between Brand USA and the German airline company.

“Our unusual marketing campaign with airberlin underscores the importance of Germany as a source market for travel to the US,” said Alfredo Gonzalez, Brand USA’s senior vice-president for global partnership development. “Through our strategic co-operation with airberlin, we will draw greater attention to the US as a travel destination as we move toward our goal of welcoming two million guests from Germany to the US in 2014.”

“Brand USA is an important partner for airberlin,” said Tade Peters, vicepresident for marketing communications at airberlin. “This year we are flying to New York 10 times a week and we offer daily flights to Miami.” The airline also flies non-stop from Germany to Fort Myers, Florida, Los Angeles and Chicago.

Stephen Hubler, US consul general in Düsseldorf, officially inaugurated the aircraft. Other guests at the summer unveiling included cheerleaders and members of the Düsseldorf Panthers, an American-style football team in the German Football League.

Reid uses social media – tweets, blog postings, videos and photos – to document his experiences on the road. His most recent trip was the Northeast Corridor and he will be embarking on the Mountains and Prairies, as well as Western Trails road trips in the next few months. The five road trips included Route 66; Rhythms of the South; Northeast Corridor; Mountains and Prairies; and Western Trails.

Giant-screen film salutes Park Service

Brand USA plans to release a film for giant-screen theatres that depicts the appeal of National Park Service attractions across the nation. Set for release in 2015, the film commemorates the Park Service’s centennial anniversary.

“Today, there are over 400 of these gems located in wilderness areas and in the core of many of America’s most vibrant cities,” explains Thompson.

“This production will entice viewers to discover the beauty and diversity of the US.”

routesonline.com

MacGillivray Freeman Films, a prominent creator of films for IMAX theatres, is working with Brand USA to develop the film.

The independent filmmaker has made 5 of the top 10 highest-grossing, giant-screen films of all time.

“This partnership allows us to showcase our national parks, while at the same time reaching a large number of key international markets,” explains Tom Garzilli, Brand USA’s senior vice-president of global partner marketing.

“MacGillivray Freeman is the perfect partner to give this film impact, credibility and exposure around the world.”

More than 800 giant-screen theatres exist in nearly 60 countries – many in Brand USA markets.

China, for instance, has in excess of 75 giant-screen venues. It is among the top ten countries for international visitation and spending in the US.

International travellers can now get a taste of the US with Brand USA’s new culinary guide to American cuisine, ‘Discover America: Great American Food Stories.’ The 64-page booklet – published in six languages – features 31 distinguished chefs with recipes that span the varied regions of the United States.

“American cuisine captures inspiration from all over the world – a true reflection of our diversity and history,” enthuses Christopher Thompson, president and CEO of Brand USA. “We’re excited to invite visitors to experience the culinary highlights of each region of the country.”

Brand USA collaborated with the US Department of State’s Diplomatic Culinary Partnership to produce the guide. Established in 2012 in co-operation with the James Beard Foundation, the Diplomatic Culinary Partnership designates American chefs to use their particular style of American cuisine to engage foreign officials who visit the US, in addition to international audiences abroad.

Five of the chefs featured in the culinary guide travelled to five different Asian markets to participate in July Fourth celebrations at US missions in China, Australia, Japan, Taiwan and South Korea.

ROUTES NEWS 6, 2014

49

To serve, to lead Lucy Siebert discovers that creating a sustainable future for Fiji Airways is one of the key priorities for new CEO and managing director, Stefan Pichler.

What was your top priority when coming in as CEO in September 2013?

As the old CEO had apparently relocated to the United States around a year before, there was an obvious lack of leadership as well as co-ordination.

So the initial focus was to provide direction and to develop a shared vision with common objectives.

The organisation at that time seemed quite dysfunctional, to put it politely, with the ground operations manager residing in Los Angeles and the IT manager residing in London. Therefore, the initial phasing-in also included the assessment of management performance as well as the re-design of corporate structures and processes.

You started this year by unveiling your five-year strategic plan.

What makes this plan different from previous strategies that the airline has had?

Between 2010 and 2013, the business was carved out of Qantas management

routesonline.com

and put on a stand-alone base, with its own maintenance and engineering, hosting of inventory, revenue management and so on. At this time, the airline was more or less breaking even financially.

The job was to develop a strategic plan, which would deliver a sustainable level of profitability and stable cash flows. The outcome of this plan was our growth in terms of fleet, network, partners and staff.

Why was expanding your fleet a key part of the plan?

Otherwise, we could not meet our profit and cash flow targets. And given the limited size of our fleet, you capture some good economies of scale by just adding one or two units on each aircraft platform.

The second question in this context would be the structure of the fleet, so we decided to grow the South Pacific network as well as the long-haul network to capture O&D growth and to stabilise our loads through connecting traffic.

Why is connectivity vital for a country like Fiji?

It is not vital. We still base our business model on O&D traffic, so 89% of all our passengers are travelling to and from Fiji. This will never change, as we cannot afford the vulnerability and the lower yields that come from connecting traffic.

This market segment is the first to be affected in every economic crisis, and can’t be replaced by more point-to-point traffic.

But, the way we are growing our South Pacific network provides more connecting options and we are more than happy to take those passengers.

Why did you invest in a rebrand?

Because we had the option to align ourselves with a global consumer brand, Fiji. The ‘Air Pacific’ brand was misleading our customers rather than supporting our efforts. Now it has become much easier to build an inspiring and aspirational brand, not only for our customers but also for our staff and for everyone in Fiji.

ROUTES NEWS 6, 2014

51

Fiji Airways But it is learning by doing, so we will start refining the existing partnership and then see what can be done next. Etihad has a very open culture and they move fast, and that’s what we like about it.

Is an equity partnership, such as Etihad has with Air Seychelles, a possibility?

We are profitable and have very sound cash flows and don’t need any funding or equity. We already create value for our shareholders. We are also paying off our debt faster than anticipated, so, from a business perspective, we don’t have any need for an equity partnership.

But it is not our call; it is the decision of the current owners on what to do with their stakes. We are just managing the company to make all of our stakeholders financially happy.

Stefan Pichler

By the way, that’s the reason why we just rebranded Pacific Sun into Fiji Link. So our airlines share the same family name. And we capture some marketing synergies.

Why are you taking on more staff? Doesn’t it add to your cost base?

While we will increase our capacity nearly 60% in the next five years, our staff numbers will go up just 30%.

In other words, we have factored in significant staff productivity increases.

As Fiji is a low cost labour environment, staff costs are not the most important performance driver, although they must be managed tightly.

How has the airline performed in 2014 and what factors have had an impact?

It has been a great year so far, beating our profit and cash flow budgets in every single month. This is true for leisure and business travel and it is also true for all sales markets. I think the brand, the new management team rolling out exciting initiatives, the motivation of our

52

ROUTES NEWS 6, 2014

entire staff and the pride of the Fijian, supporting Fiji Airways, all works for us.

We have created some momentum – and we will keep it going.

What is the rationale behind the interline agreement with Etihad?

Interline agreements always make sense if they add up to a competitive product that could be sold in existing and/or new sales markets. Interlining and codesharing are about growing the revenue pie without growing the risk.

For us, Etihad was a great option as they added 71 destinations to our network and put Fiji on the global map.

Now, more of our tickets can be sold in Europe, the Middle East, Africa and Asia.

Are there opportunities to further the relationship with Etihad?

We might move into codeshare arrangements and share lounge access or the Etihad frequent flyer programme down the track. This is just the beginning of a joint road ahead where we both might see a lot of upside.

What is it like leading a company that has such national importance?

Leading a company is actually more ‘serving’ than ‘leading’. My masters are our managers, our staff, our customers and the Fijian people who own the company. I try to serve all of them in the best way possible.

This means creating reasonable and solid plans for a great future that go beyond my time as the CEO. It is taking responsibility for a sustainable future for the airline and the tourism sector. Tourism accounts for 38% of the national GDP.

If you weren’t an airline CEO, what would you be doing?

I am a passionate outdoor and sports person and a former professional marathon runner. I have also worked as a dive master and a ski instructor.

My initial plan was always to become a sport professional. Soccer was first, then long-distance running, where I had a great time.

But, with age, options tend to become a little more limited. My son just said to me: “Dad, don’t be so ready for adventure all the time”.

He might be right!

routes-news.com

Arabian plights How are Tunisia, Morocco, Egypt and Libya faring in terms of route development four years on from the Arab Spring?

Gary Noakes investigates.

A

s route launches go, the inaugural Heathrow–Tripoli service by former carrier Bmi in February 2011 might be a record breaker, but not for the right reasons.

For the service lasted just one day as the uprisings that gripped North Africa spread to Libya, with knock-on effects in the aviation and tourism industries that are still being felt today.

Indeed, Libya’s emerging airline and tourism industry was halted in its tracks, while Tunisia’s hopes of emulating Morocco in attracting budget airlines – and more tourism – were stymied as talks over an Open Skies deal faltered during the conflict.

Elsewhere, Egypt is still feeling the reluctance of tourists to visit; and airlines flying there, particularly charter and budget, have reined in capacity.

Tunisia

Many in the airline world would argue that Tunisia is the region’s biggest opportunity lost following the uprisings.

Talks with the European Union about an Open Skies agreement began in January 2011, just as the Arab Spring took hold, with initial hopes that a deal would be in place by November 2011.

However, the revolution and the need to protect Tunisair in its wake means that nothing has transpired, with a refusal to follow Morocco in allowing the low cost carriers into the country meaning that tourism – and in some cases, business traffic – has not grown in the way it could have.

Open Skies also faces opposition from tour operators with in-house airlines,

54

ROUTES NEWS 6, 2014

such as TUI. According to a World Bank report, these account for around 40% of traffic to the country, and they are reluctant to lose this business to an influx of European budget carriers.

However, the report concludes: “Given the recent events in Tunisia and the considerable drop in tourist arrivals as a result, the liberalisation of air services should indeed be re-addressed.”

40% of traffic to Tunisia is accounted for by in-house airlines

Tunisair has its own subsidiary, Tunisair Express, which operates a small fleet of regional aircraft, mainly propeller driven. It serves eight domestic airports plus Malta, Naples and two destinations in Libya, but it is not suited to compete against established budget carriers should the need arise.

Home-grown competition has existed since 2011, when Syphax Airlines was established using a hybrid model with a pair of A319s. Among Syphax’s first routes was a daily TunisCharles de Gaulle flight and there are other plans for short-haul expansion, probably centred on France, in 2015, once more aircraft are brought into the fleet.

Syphax scored a march on Tunisair in mid-2013 after securing an A330 to launch services to Montréal. A second is being leased, with plans for routes to Beijing and New York in 2015.

Tunisair, which has been loss making since 2011, had been refused government bail outs, but in June, gained a $90 million guarantee from the Tunisian government for the purchase of three A330s in order to operate routes such as these itself.

Meanwhile, perhaps the only other notable development in Tunisia’s aviation sector in the past few years has been the opening of Enfidha-Hammamet Airport in 2007.

Located between Tunis and Sousse, Enfidha has taken the bulk of charter traffic away from Tunis and Tunisair serves several destinations in Russia from here.

Morocco

While Tunisia postpones what might be inevitable, Morocco has made hay. It signed an Open Skies agreement in 2005, the first of its kind between the EU and a non-EU country, and has seen foreign visitor numbers rise from 5.4 million in 2004 to more than 10 million now, driven by a decrease in fares that the EU puts at an average 40%.

The total dwarfed the 6.3 million visitors welcomed by near neighbour Tunisia in 2013.

“Morocco has been a really successful growth market for us,” says an easyJet spokeswoman. Marrakech is proof of this alone, as the airline now serves the city from 14 points across Europe.

The carrier adds that it is awaiting any developments on Open Skies to Tunisia, so it can be construed that swift developments would result if an agreement were reached.

routes-news.com

Africa

Airline guide OAG calculates that 2013 saw an extra 2.8 million international seats appear in schedules to Morocco, and The World Travel & Tourism Council puts Morocco’s direct contribution to Gross Domestic Product from the industry last year at $9 billion, nearly three times that of Tunisia’s.

Egypt

Egypt, meanwhile, is an example of a country that has successfully played catch-up in terms of tourism in the last 15 years, only to lose the momentum due to political instability.

The development of vast swathes of the Red Sea and the Sinai Peninsula gave the country a mass market beach product that it lacked and one which has since outstripped cultural tourism in terms of numbers many times over.

This development has steadily been undone by the political instability that is still badly affecting tourism, despite charter and budget carriers continuing to serve the Red Sea. Tourism to these beach resort areas is continuing amid governments’ recommendations that they are subject to enhanced security, and arrival numbers have fallen sharply.

Egypt saw a record 14.7 million foreign arrivals in 2010, but this plummeted to 9.5 million in 2013 – only a fraction ahead of 2008 figures.

routesonline.com

ROUTES NEWS 6, 2014

55

Africa

Photos © Tim E White.

Year-on-year figures for the month of February 2014 underline nervousness about Egypt, showing a 27% decrease in arrivals. The country nevertheless has big ambitions for its tourism industry, which employs one in every seven people.

Its target is for 25 million tourists by 2020, and it has already achieved some success in Russia, which is now its top market with 19% of arrivals, ahead of the UK and Germany with around 9% each.

Since 2009, Egypt has effectively offered Open Skies to Sharm el Sheikh, Hurghada and Luxor, but the EU is aiming for complete liberalisation of the airways with Egypt by 2015, which will open Cairo to low cost carriers, although Egyptair will doubtless oppose this.

A hint of the protectionism the airline enjoys came in 2010, when easyJet was technically granted rights to fly to Cairo three times a week, but told it could only do so if it operated as a full-service carrier.

This stipulation is not the main sticking point at the moment, however, as the country’s political troubles affect the capital more than anywhere else, as an easyJet spokeswoman explains.

She says: “We are designated by the UK government to fly to Cairo; however, we do not have plans to start flying at present since the situation there is quite fluid currently.”

The airline suspended its flights to Luxor in August 2013 and has yet to signal a return date.

In normal times Egyptair perhaps has less to lose from liberalisation than its

56

ROUTES NEWS 6, 2014

neighbouring flag carriers, as Open Skies already applies to the bulk of routes served by foreign carriers that mainly operate low-yield services for the tourist industry.

It is heavily concentrated on its main hub and is one of Africa’s big four network carriers. Indeed, the crises in Libya and Syria saw transfer traffic at Cairo treble to more than one million passengers in 2013 as some direct routes to these countries were closed, but it still remains greatly affected by Egypt’s own troubles.

€1.2 billion lost by Eygptair since the domestic crisis began

The flag carrier plunged into the red in 2011 and is set to make another loss in 2013/14 of up to €260 million, with cuts to European services set to be announced in September. In all, it will have lost more than €1.2 billion since the crisis began.

Egyptair mainly steers clear of the mainstream tourism market, leaving this to charter and budget airlines, as its cost base makes it uncompetitive. Its own attempt at a Heathrow–Sharm el Sheikh service in 2011 lasted only 18 months, seen off by the might of TUI, Thomas Cook and easyJet which continue to operate there from many points.

Libya

The last off the blocks in terms of tourism development was always going to be Libya, whose pre-revolution regime did not lend itself to anything beyond cultural tours of the country’s extensive Roman remains despite miles of undeveloped Mediterranean coastline.

There is little to suggest that this will change in the coming few years while the country remains on the verge of civil war and Islamist factions deter Western influences.

Libya’s Afriqiyah Airways revived its Gatwick service in 2012 and operated four times a week to Tripoli, while British Airways and Libyan Airlines operated from Heathrow, serving the oil and gas industry.

This continued until the bombing of the airport in July 2014 that destroyed some of Afriqiyah’s fleet. Libya’s second airport at Benghazi was closed two months earlier, leaving only Misrata, to the east of Tripoli, which has been open sporadically.

The situation is reminiscent of Sri Lanka in 2001, whose main airport at Colombo was attacked by rebels when half the flag carrier’s fleet were put out of action. The difference, however, is that the Sri Lankan government was keen to revive tourism as a key plank of its economy, while it will not be high on the list of any Libyan factions, especially since the country is among the world’s top 10 oil producers.

It is likely to be some years before any new European carrier marks its inaugural celebration in Tripoli again.

routes-news.com

Running head Sponsored statement

Kraków Airport’s

everlasting potential

North America is a market with the greatest potential for indirect traffic from Kraków Airport.

The latest systemic data indicate over 70,000 tickets sold for flights to New York and Chicago.

Importantly, this market is characterized by a significant rate of growth: in 2013 passenger traffic on all routes to the United States increased 30%, reaching 120,000 passengers.

Co-operation with the United States covers the full range of international relations, from economic issues through security and promotion of democracy, to contacts between people and cultural relations. Trade volume between Poland and the United States reached nearly US$10 billion in 2013, a record figure in the history of Polish-American trade, with 25% growth in Polish exports to the American market (according to data from the American Chamber of Commerce in Poland).

very popular, serving nearly 80 thousand passengers per year with a passenger load close to 100% on a Boeing 767 just a few years ago.” - says Jan Pamula, the President of the Board at Kraków Airport.

Strong market potential is the basis for carrying out intensive efforts to acquire a carrier which could effectively offer a direct connection from Chicago to Kraków.

The estimated value of the market is nearly US$7 million and the number of tickets sold suggests that two flights a week could be offered on this route.

Americans recognise the tourist, economic and academic potential of the Małopolska region, of which Kraków is the capital. In 2013 more than 9 million tourists, including 115,000 Americans visited Kraków. They are attracted by the richness of cultural resources, historical heritage, including Jewish, as well as the growing offer of non-standard tourist attractions. Religious tourism associated with the cult of St. John Paul II and St. Faustina is an important aspect too.

Kraków is the second largest city in Poland and the gateway to Małopolska - a region with the strongest associations with the United States and the traditional route of migration to the United States. It is worth noting that the city of Chicago has 1.8 million people with Polish roots, which makes it the second largest Polish city in the world, after Warsaw.

Meanwhile Kraków Airport – serving some 20 million people in one of the most dynamic parts of Europe – would be the perfect match for a direct service to the United States.

“Kraków Airport’s route network development strategy becomes part of the strategy of Polish-American cooperation.

The tradition of direct flights to the United States dates back to 1998. LOT Polish Airlines used to offer a direct connection to Chicago-O’Hare for 12 years. The route was

routesonline.com

managed to grow traffic 9%. Over that time, we opened seven new routes and increased frequency on five others.” - explains Grzegorz Michorek, Director of the Commercial Department at Kraków Airport. “Our professional team and the instruments we have allow me to believe in further dynamic development of our route network. Direct long distance connections, a base of a regional carrier, direct eastbound routes and adding more European hubs are on our priority list in the coming years” - he adds.

“Kraków Airport is currently the largest regional airport in Poland with 62 direct connections operated by 15 airlines. The last 12 months have been extremely challenging. During the ongoing construction process covering both landside and airside area we

Małopolska is also perceived as a modern region with well-developed technological infrastructure. Many American and multinational companies and corporations have established their head offices in the region, including Philip Morris, Can-Pack, Coca-Cola, British American Tobacco, General Motors, Motorola, RR Donnelley and Google.

ROUTES NEWS 6, 2014

57

Aviation hub 4.0 Air Arabia is proving a trailblazer when it comes to low cost aviation, as it opens its fourth hub and starts expanding into new markets. Sarah McCay caught up with group chief executive officer, Adel Ali, to find out more.

E

arlier this year Air Arabia commenced operations from its fourth hub airport – Ras Al Khaimah (RAK) in the United Arab Emirates (UAE) – after entering into a partnership with the Ras Al Khaimah Department of Civil Aviation that saw the airline become the official carrier of the emirate.

Air Arabia, now entering its second decade of operations, has proved something of a pioneer in the Middle East low cost carrier market with its innovative hub network. The airline also operates from Sharjah in the UAE, Alexandria in Egypt, and Casablanca in Morocco.

Great things are expected out of Ras Al Khaimah. “Our approach of using strategic hubs around the region has played a key role in our sustained success by enabling us to maximise the range of our A320 fleet and expand our route network,” says group chief executive officer, Air Arabia, Adel Ali. “The Ras Al Khaimah partnership fits into Air Arabia’s long-term growth and expansion plans,” he adds.

“Specifically, it increases our ability to serve passengers in the Northern Emirates while helping to support tourism in Ras Al Khaimah. The emirate’s tourism sector is witnessing healthy growth and we are optimistic that this will continue in the years to come.”

Air Arabia’s Ras Al Khaimah operations commenced on May 6, 2014 with a network of seven destinations from RAK International Airport: Jeddah in Saudi Arabia; Cairo in Egypt; Muscat in Oman; Islamabad, Lahore and Peshawar in Pakistan and Dhaka in Bangladesh.

58

ROUTES NEWS 6, 2014

Adel Ali

“These routes are designed to serve both RAK residents and key inbound tourism destinations,” explains Ali. “For instance, there are big Indian and Pakistani communities in RAK, which is why we will initially offer services to four different destinations in those countries.

Saudi Arabia, Oman and Egypt are more orientated towards tourist passengers, which is why we selected those markets.”

Tourism growth

The arrival of Air Arabia is big news for RAK. The emirate has seen two incarnations of its RAK Airways flag carrier get off the ground only to end up back on the tarmac all too soon after take-off.

RAK Airways was initially launched in 2006 and commenced operations in 2007, only to be grounded in 2009. The

airline relaunched in 2010 with a new management and livery but suspended all flights at the start of 2014. Those working in the RAK tourism industry are keen to see Air Arabia soar to success.

“We are very excited about Air Arabia,” says Steven Rice, CEO, Ras Al Khaimah Tourism Development Board. “Three of the seven launch destinations connect to the GCC market – Oman, Cairo and Jeddah. We want to grow the GCC market so these routes are very important to us for their connectivity.”

The RAK Tourism Development Board is providing marketing assistance to Air Arabia to push the airline and the destination, partnering with Air Arabia on road shows and exhibitions.

“Having Air Arabia will attract other airlines and charters coming into RAK,” Rice adds. “It’s a big deal for us. It can impact tourism greatly.”

So what about RAK Airways? Is the curse now lifted? “RAK Airways had three planes; Air Arabia has a fleet,” says Rice.

“The low cost carrier model is dependent on scale, being able to sell ancillary services and reducing fixed operational costs. It is easier to do this with a big fleet, so I don’t think the risks RAK Airways was exposed to will be an issue for Air Arabia.”

Fleet expansion

In March 2014, Air Arabia took delivery of its 35th A320 aircraft, which was particularly notable since it was the 6,000th A320 made to date. The airline’s entire fleet is made up of A320 aircraft. The latest models are equipped with sharklets, wingtip devices that

routes-news.com

Air Arabia

Decade of success October 2003

Air Arabia commences operations with its first flight to Bahrain

February 2004

First brand new A320 arrives

June 2005

First female pilot, Martha Pabon, flies to Doha

December 2006 Network reaches 30 destinations

reduce fuel burn and emissions by significantly improving the aerodynamics of the aircraft.

“Air Arabia is the first carrier in the Middle East to fly these planes,” says Ali. “We have now received 25 of 44 A320s ordered from Airbus in 2007, and once complete in 2016, the order will more than double the size of our existing fleet.”

The addition of the RAK hub means that more aircraft could be on order in the near future.

“If you look back at the history of Air Arabia, every time we open a new hub – whether in Sharjah, Alexandria or Casablanca – we have started with a few planes and a couple of destinations and steadily grown from there,” Ali points out.

“It is absolutely our intention to repeat this process in RAK and to steadily grow the breadth of our operations in line with the needs and objectives of the emirate’s economy.”

July 2007

Air Arabia shares list on the Dubai Financial Market

March 2008

Opens first sales shop in Almaty, Kazakhstan

April 2009

Launches Moroccan hub

June 2010

Air Arabia (Egypt) takes off

April 2011

Air Arabia Express launches between Dubai and Sharjah

July 2012

Named world’s second best performing airline

March 2013

Inaugural flight to Bagdad, Iraq

May 2014

Launches Ras Al Khaimah hub

Ribbon Cutting of RAK Hub launch, from left to right: His Excellency Engr. Sheikh Salem Bin Sultan Al Qasimi, Chairman, Department of Civil Aviation (DCA), Ras Al Khaimah; His Excellency Sheikh Abdullah Bin Mohammad Al Thani, Chairman of Air Arabia; His Highness Sheikh Mohamed Bin Saud Al Qasimi, Crown Prince of Ras Al Khaimah; His Excellency Sheikh Khalid Bin Issam Al Qassimi, Chairman of Sharjah Civil Aviation.

Global ambitions

Air Arabia currently serves nearly 100 destinations. Its new RAK hub will certainly help facilitate further network growth.

“We have an ambitious route expansion strategy in place. As we enter our second decade of operations,

routesonline.com

it is our aim to operate services to all airports in the Arab world, stretching from the Atlantic Ocean to the Indian Ocean,” says Ali. While there are no current plans for further hubs, Air Arabia is an

ambitious airline with a lot more potential to come. “We continue to set our sights on the future by expanding into new geographies and launching new ventures,” Ali remarks.

ROUTES NEWS 6, 2014

59

Back on track

A strong partnership with its airlines and an effective route development strategy ensure that traffic figures at Athens International Airport are on the rise again.

T

he past three years have seen Greece, and in particular Athens, hit by the most severe financial crisis it has ever encountered; a challenging environment for the country’s largest international airport, Athens (AIA).

However, it appears a corner was turned at the end of last year, with December showing the highest monthly traffic growth, up 4.5%, driven by an 11% increase in international passengers.

Over the past year more than 1.2 million seats have been introduced into foreign markets to and from AIA, many from national carrier Aegean Airlines, who has embarked on a major expansion.

Athens has also become a base for Irish budget carrier Ryanair with the introduction of 900,000 additional seats, 75% of which has enhanced connectivity in the domestic market.

During the winter 2013/2014 season, 31 new weekly flights operated from Athens, with a further 150 weekly flights introduced this summer. An increasing share of low cost operations supported this summer’s growth, with 16 budget carriers (up from 12 last summer) boosting the LCC network from Athens 36% to 34 cities (38 airports). This sector now accounts for more than a quarter of the total carriers operating scheduled flights from Athens.

routesonline.com

Highlights of AIA’s winter 2013/2014 schedule included Aegean Airlines retaining flights to Berlin, Budapest, Geneva, Kiev and Warsaw; Pegasus Airlines introducing daily flights to Istanbul; Ukraine International Airlines and SAS flying respective summer Kiev and Stockholm links on a year-round basis; and LOT Polish Airlines reinstating winter operations to Warsaw.

The current summer schedule sees Aegean Airlines introducing six new destinations and adding flights to eight currently served markets; with Ryanair basing two aircraft in Athens and offering a variety of daily flights in both the domestic and international markets.

Other new services include Vueling launching double daily services to Rome; Transavia starting operations to Eindhoven and sister company Transavia France to Lyon, Nantes and Paris Orly; easyJet adding flights to Hamburg; Meridiana starting services to Naples; Alitalia introducing seasonal flights to Milan Linate; Air Armenia inaugurating a link to Yerevan; Arkia Israel Airlines flying to Tel Aviv; and Croatia Airlines to Split and SAS to Gothenburg.

Meanwhile, Brussels Airlines resumed its service from Brussels, Gulf Air re-established a link with Bahrain, and after a one-year absence Singapore Airlines restored its twice-weekly flights from Singapore.

This network growth is a clear endorsement of AIA’s strong partnership with its airline operators, supported by aeronautical incentives and marketing support. For many years AIA has offered a ‘risk-sharing’ incentive scheme, providing significant discounts to its charges for those airlines developing new and/or additional services out of Athens.

To further enhance its relationships with current and potential future airlines partners, AIA has introduced additional targeted risk-sharing incentive schemes including sustainability, transfer and load factor incentives for airlines to maintain or increase traffic.

The airport has also upgraded its recently established developmental scheme, niche routes incentive, to a permanent status; augmented with an increased validity of three years to attract new direct services from niche markets that are currently not operated to or from Athens.

During 2014, 13 different incentives addressing both development and sustainability aspects have been in effect at AIA, with upwards of 80% of its operating carriers reportedly taking advantage of one or more of them.

The traffic results from the past 18 months would suggest that AIA’s incentive strategy has proved effective.

ROUTES NEWS 6, 2014

61

Upward trajectory Nicole Nelson discovers more about the driving forces behind Edmonton International Airport’s fast-expanding route network.

S

elling an airport that lacks designated hub status and ranks fifth in passenger traffic among its countrywide peers may seem a daunting task to some air service development business professionals, but not so with Carol Hewitt.

Over the course of the past seven years, the former Air Canada sales and marketing maven has embraced her role as director of route development with Edmonton International Airport and, in doing so, has propelled YEG to become one of the fastest-growing major airports in Canada.

The self-proclaimed ‘analytical geek’ says she thrives on the utilisation of her skill set: a love for sales and people coupled with her understanding of numbers and statistics.

“I always say we are a unique bunch that work in aviation,” Hewitt enthuses.

“It is very dynamic, but I find for me, it is very rewarding, especially in air service development.

“Things don’t happen fast, so you have to be a bit tenacious and you have to be committed. But when you get the wins, they are extremely satisfying.”

Hewitt has good reason to be extremely satisfied of late, with some hallmark ‘wins’ over the course of the past 18 months.

United’s start-up service to Newark Liberty International Airport in May 2013, and the announcement of American Airlines’ service to Dallas/Fort Worth in December 2013, were followed by the coup of five-timesweekly service to Reykjavik on Icelandair in March 2014.

62

ROUTES NEWS 6, 2014

“We had some pretty good indication from Icelandair that they were very interested in the market,” Hewitt says, noting that the 2013 lifting of a bilateral restriction triggered the initiation of the non-stop Reykjavik service.

She adds: “The commencement of that air service is basically a result of a five-year investment of working with that carrier.”

Michael Raucheisen, Icelandair’s marketing and communications director for the Americas, says that Edmonton’s niche market – with its vibrant and affluent community – was underserved by international airlines.

Until the Icelandair commitment, Edmonton’s only other options for European service were on Air Canada’s London Heathrow route and Air Transat’s summer seasonal service to London Gatwick.

“We knew it was the right time to offer Edmontonians a refreshing alternative to Europe,” remarks Raucheisen. “We are calling 2014 the year of Canada and we anticipate a bright future for Edmonton.”

Raucheisen says Icelandair has been very pleased with the positive response since the carrier announced Reykjavik service from Edmonton in September 2013.

Since that time, the YEG demand has been such that the launch date was advanced from March 26 to March 5, additional flights have been added, and the seasonal schedule evolved to year-round service.

“We always evaluate the success and needs of each gateway and work best to serve each community,” claims Raucheisen. “If we continue to see demand from Edmonton, we will,

routes-news.com

Edmonton of course, be open to reviewing expansion opportunities.”

Meanwhile, Hewitt states that Canada’s home national carrier was “taken a little aback” when YEG announced the arrival of Icelandair, “but you have to respect and understand that their business plan and their strategy is to grow their international service from their hubs.”

As the principal gateway to the main staging area for Alberta’s thriving energy industry, including northern Alberta’s vast Athabasca Oil Sands, Hewitt said Edmonton provides carriers with a unique market.

“Not all our frequent fliers are white collars in suits; they are also oil workers who are in work boots,” reveals Hewitt.

“We still fill the front of the cabin because these guys go in and out of the oil sands. They are travelling very frequently, but maybe not as the super elite or the 1K customer as you would normally see them.”

Coupled with that, the traffic is also driven by these same workers seeking to get out of the oil sands to visit their families, hence they are looking for options toward the back of the plane.

51% capacity growth since 2004

“The Icelandair product comes in a little lower priced,” Hewitt admits of the new competitive pricing to the European destination and connecting point, adding “and they are definitely filling the demand of the market.”

As for new North American routes, Hewitt believes the American Airlines entry to the Dallas/Fort Worth market was a nod to the positive gains in United’s Houston Intercontinental route and the subsequent addition of a second IAH frequency in 2013.

“I am a firm believer that when airlines see other carriers growing and building capacity at an airport, that trigger is quite an indicator and certainly helps your

routesonline.com

ROUTES NEWS 6, 2014

63

Edmonton

market growth and your recognition with the carriers,” she says.

Increased global marketing exposure is another tactic to which Hewitt attributes recent success.

“One of the things that we have done on the marketing side over the last three years is taken on the sponsorship for the airline meeting halls,” admits Hewitt, noting the first sponsorship of Routes events dating back to Abu Dhabi.

“We really felt that gave us some pretty major global exposure. It certainly drove some interest and questions and it brought some awareness to the market on a global perspective that I think truly benefited us.”

Edmonton has posted significant gains over the course of the past decade and is proud to connect Alberta’s capital with more than 60 non-stop destinations across North America and beyond.

64

ROUTES NEWS 6, 2014

Since 2004, capacity at YEG has increased 51% and passenger traffic 71%. “What is really key when you look at those numbers is that our demand is obviously far exceeding our capacity,” says Hewitt.

71% traffic growth since 2004

“The oil companies have an influx of people immigrating and working in the northern part of the province that has been a continual driver of our passenger growth,” states Hewitt.

And she notes that the market is not expected to diminish, with a bounty of oil, gas, and natural resources in addition to education, tourism, manufacturing, and agribusiness.

“There is a diversification which is going to drive the continued population

growth and it is not something that is going to end any time soon,” she confidently states. “It is a secure market.”

Also on an upward trajectory is YEG cargo volume, with 23% growth over the course of the past four years, and 15 consecutive quarters of cargo growth. In 2013 alone, YEG cargo grew 8.3% – nearly six times the global average of 1.4%.

“We have brand new cargo facilities and we actually have over 2,200 acres of space where we are planning to build even more cargo facilities,” says Hewitt of the C$100 million investment in Edmonton’s cargo village to include warehousing and office space for freight forwarders.

Hewitt says one of the key components driving cargo growth and development is the boots on the ground effect, with Edmonton serving as a staging area for people and goods travelling to and from the oil sands in the north.

routes-news.com

A winning strategy Bremen’s director of sales, marketing and communication, Florian Kruse, speaks to Jonny Williamson about the airport’s record-breaking year.

C

ity Airport Bremen has certainly had an impressive 2014 so far.

Its revitalised marketing strategy played a leading role in it scooping the top prize at this years’ 9th Routes Europe, and it currently offers its highest ever number of direct connections.

Over 2.6 million passengers passed through Bremen’s facilities in 2013, equalling its best ever year back in 2010.

And this year looks set to surpass them both, with passenger numbers for January to June already showing an increase of 3.4% on the previous year’s first half.

Passenger appeal

The airport successfully capitalises on a catchment area that stretches well beyond Germany, touching the east of the Netherlands, southern Denmark and the German states of North Rhine-Westphalia and Hesse.

Combined, its catchment population comprises almost 15 million inhabitants with the second-highest available net income in Germany.

Thanks to the city’s close proximity to industry giants such as Airbus and Mercedes-Benz (who operates its second-biggest plant in Bremen), business has increased to become a key driver of current passenger growth.

routesonline.com

Accordingly, in the past 12 months Bremen has successfully developed a number of new business routes that link Germany’s northwest with Europe’s economic centres, as well as becoming one of the few German airports with Ryanair growth this year.

Standing out

As one of Germany’s smaller airports, Bremen faces stiff competition from the likes of Frankfurt, Munich, Düsseldorf and Berlin Tegel, among others; but director of sales, marketing and communication, Florian Kruse, cites its balanced carrier roster as helping to level the playing field.

“Our real strength is the brand mix; only in this way can we remain attractive for all airlines and be convincing in regards to the economic strength of our catchment area,” he says.

Seventeen airlines currently serve Bremen, including a mix of both domestic and foreign carriers – airberlin; Air France; AIS Airlines; bmi regional; Corendon; Germania; Germanwings; Hamburg Airways; KLM; Lufthansa; Onur Air; Ryanair; SAS; Sun Express; Tailwind; TUIfly and Turkish Airlines.

Kruse says it’s this blend of business, tourism and low cost offerings that has enabled Bremen’s success, both now and in the future.

Florian Kruse

“We have a strong network that captures all three of these crucial market segments; we are in close contact with the VFW networks of the destinations and locally, we have a close exchange with the travel agencies through our own distribution channel, flybremen.de,” he explains.

Creating connections

A significant operating base for both Germania and Ryanair, Bremen predominantly serves European metropolitan and leisure destinations.

ROUTES NEWS 6, 2014

67

City Airport Bremen Reflecting this focus, Ryanair has recently adopted three new routes – Madrid, Lisbon and Gothenburg – which Kruse expects to annually carry more than one million passengers to/from Bremen.

Germania became the first airline to bring an A321 to Bremen in May, utilising the aircraft’s extra seat capacity to address growing demand on popular tourist routes to resorts such as Antalya, Majorca and Fuerteventura.

The German regional also added a second North African route, to Egypt’s rising coastal town of Marsa Alam, joining its existing service to Agadir, Morocco.

Regional Dutch carrier, AIS Airlines, launched several new flights this year, including to Zurich, Nuremburg, Luxemburg and Sylt. The largest of the North Frisian islands, Sylt has proven particularly popular with Germany’s jet set and is now established as being a celebrity hotspot.

Long-term vision

Kruse reflects that Ryanair’s topical transformation into a carrier offering a more sophisticated product line could have industry-wide implications, stimulating similar conversions in its low cost peers.

Bremen’s strategy for the future involves attracting more point-to-point connections, especially in Europe, and Kruse is positive that if such routes were to operate, they would see an immediate uptake from the local economy.

The director would also like to see stronger development of the Eastern European markets and greater connection to both Africa and the Middle East.

He sees Germany’s air travel tax as an unnecessary encumbrance to attracting new carriers to Bremen, as well as fostering further expansion from its current airlines.

Were the country to abolish the tax, such as was recently seen in Ireland, he is confident that Bremen, and Germany’s aviation industry as a whole, would witness dramatic traffic growth as a result, especially on domestic routes.

68

ROUTES NEWS 6, 2014

Catch of the day

In April, in front of a record number of aviation professionals at the Marseille Provence Cruise Terminal, Bremen was crowned the overall winner of the European heat of this year’s Routes Marketing Awards.

Seeing off larger airports such as Brussels, Prague, Barcelona El Prat and Amsterdam Schiphol, Bremen was also named the winner from the ‘Under 4 Million Passengers’ category.

Having already been crowned the overall winner in 2012, Kruse was delighted to be there in person to pick up the award for the second time.

“To be distinguished by our airline customers for the best marketing is like the entire team being knighted. The team has done an amazing job over the past 18 months and has collectively invented our current marketing campaign,” he says.

As overall winner of the regional heat, Bremen will be automatically shortlisted for the World Routes Marketing Awards that will be announced at Chicago’s Field Museum of Natural History on the evening of September 22.

Kruse notes that the new routes the airport has gained and its recent increase in passengers clearly demonstrate that the new strategy is working and looks forward to “setting sail” for Chicago!

routes-news.com

Serious intent Is it all just a dream?

Big data could transform route development strategies, writes Matthew Parsons.

T

he big data revolution is upon us. And a number of technology companies involved in big data are firmly entrenched in the global tourism industry and, in particular, aviation.

A common theme is using data to find new revenue streams, with airlines looking for more personalised marketing and airports keen to get waiting passengers shopping with targeted deals.

But planning new routes will also be affected. Traditionally, this area of activity has relied on historical information and local intelligence, using data from civil aviation authorities and global distribution systems (GDSs).

But big data means there is a new layer of insight to be gained.

Credible data

As the landscape continues to shift towards direct web bookings, via online giants such as Skyscanner, Kayak, Expedia, priceline and Booking.com, traditional GDS data influence may be on the wane. Mining these new players’ vast

routesonline.com

swathes of data could help improve the case for new routes.

“It is easy to bang the drum for new destinations, but competition is intense, so you have to be able to back this up with strong data,” says Shaun Browne, aviation director at Bristol Airport.

He says he works with airlines to develop the business case for new routes, but every airline is different. “The data required will vary,” he notes. “The most powerful form for us is local market intelligence. For example, we have a database detailing the travel patterns of organisations in our region.

When we share this with airlines it usually has a powerful impact.

“But any new sources that help us build a convincing picture can be useful as long as they are credible,” he adds.

Bristol Airport is working to secure a direct trans-Atlantic service, and Browne says New York comes up frequently in surveys and research.

Coupled with the southwest’s cultural attractions, he says this is hard to ignore.

Is big data the final ingredient?

Some in the industry warn that there must not be an overreliance on intent data. Carl Denton, managing director at Sven Carlson Aviation Consulting, likens this kind of analysis to speculating on the stock market.

“British travellers reportedly look for holidays online more than any other nation – yet book the least,” he says. “They’re dreaming, and I’d be mindful of this.”

He urges planners to focus on contextualising the data.

“There are differences between dream-state data and real data,” suggests Denton. ”Try and overlay that. For example, there may be more demand emerging because a certain airline has failed.”

He also cites tourist boards as increasingly relevant sources of data. “They are plugging the gap, helping airports present a case for a route; they can have information such as the number of beds, prices, infrastructure – they can affirm or reaffirm the viability of a route to an airport.”

ROUTES NEWS 6, 2014

71

Big data “The more data, the better,” says Browne. “When the same name keeps cropping up across a range of different data sources, it helps reinforce the strength of the case for introducing a service.”

Patterns of change

Technology company, Sojern, specialises in ‘intent data’. Through its partnerships with airlines, online travel agents, metasearch websites, data exchanges and more, it looks at the destinations people enter into search boxes. It claims to have 200 million traveller profiles and billions of ‘intent data points’.

Stephen Taylor, vice-president and managing director, international, says given these volumes, Sojern can see any patterns of change. “With our metasearch data, we’re seeing origin and destination data, looking at pairs, seeing how they shift, or any seasonal trends,” he says.

For airlines, this is “deep granular data”. It is used to look for a correlation, or validation, based on existing ideas.

“But they will also be the first to see emerging trends or pairs that did not exist before,” Taylor adds.

NSight ups the numbers even further, claiming access to 30 billion searches in its warehouse, alongside 80-90 million searches made daily from 500 travel websites.

Jami Timmons, president and chief product officer, says nSight can show route planners emerging trends.

“We look at search and conversions and give a firm set of data,” Timmons notes. “Everyone knows somewhere is going to be hot. Airlines would need to ask themselves: I already fly to two out of these five hot destinations. But should I focus on promoting my existing routes or add connections to the other three.

Is the demand likely to be high enough?”

At the same time, warning signals may come in the form of a dramatic uplift in search for a destination, but with no hotel bookings. “For example, we may see a lot of metasearch data showing intent, but no conversion,” says Timmons.

72

ROUTES NEWS 6, 2014

Putting it into practice While many big data companies have yet to become fully involved in route planning, one firm has just begun working with airports – Adara. It specialises in travel, and takes data directly from 70 travel companies.

Scott Garner, Adara’s chief commercial officer, describes intent data as unconstrained demand. “Many planners look at booking data, but that is constrained,” he says. “Intent data is what the customer really wants to do, whether it’s available or not.

It will open up a new frontier in how companies plan routes.”

Garner previously spent 10 years at United Airlines, and believes the airline would already be doing something similar. “It represents the current way of embracing travel search,” he concludes.

“We can access hotel data too, so it could be that there is a low conversion rate due to a lack of hotel stock.

“You need to get down to the source market, and persona type – are they dream trippers or backpackers looking

at this destination,” she adds. “Perhaps the proposed route has to be a direct one, as affluent travellers are looking at it; or should it be a no-frills option for backpackers? We can pre-empt that.”

NSight works with tourist boards, hotel groups, city authorities and airports, but no airlines as yet. Timmons, though, says nSight is “getting around to everybody”. “Normally airlines look at what’s booked, but as we draw more traffic, the information will help us to talk to them,” she says.

Retaining the customer

Boxever is another fast growing big data company – and one that provides the connective tissue for airlines, according to Allyson Pelletier, vicepresident of marketing.

“There’s a lot of potential in big data,” she says. “It’s the ‘then what?’ question. Our focus is to convert and retain the customer.

But with data, you can do anything.”

By managing the last searches made on an airline’s website – itself a form of destination intent – Boxever can see what consumers are ultimately looking for, and pick up if they are looking for something that’s not popular. “We’d see if people were leaving Mauritius in their cart, for example, so we can see who is researching,” she adds.

This kind of data can also be overlaid with social profiles. “It’s also about the power of the crowd, and referrals, when people ask where should I go?” says Pelletier. “The crowd responds.”

routes-news.com

Istanbul At atürk Paris CDG

Double delight!

Holding a joint stand at World Routes 2014 is just one example of the growing bond between Aéroports de Paris and Turkish airport operator, TAV Holdings – Routes News investigates.

A

little over two years ago, Aéroports de Paris management (ADP) parted with $874 million to purchase a 38% stake in TAV Airports Holdings.

Combined, the two airport authorities carry more than 180 million passengers a year through 37 airports in eight countries – France, Turkey, Georgia, Tunisia, Macedonia, Latvia, Saudi Arabia and Croatia.

Their joint portfolio includes the likes of Paris Charles de Gaulle (CDG) and Orly (ORY); Turkey’s Istanbul Atatürk (IST) and Esenboğa (ESB); Saudi Arabia’s Prince Mohammad Bin Abdul-Aziz (MED); Macedonia’s Skopje (SKP); and Georgia’s Tbilisi International (TBS) and Batumi International (BUS).

By leveraging the expertise and knowledge of both parties, ADP and TAV have successfully used the partnership as a means of achieving growth in a competitive and crowded industry marketplace.

routesonline.com

The Turkish operator expects to serve upwards of 95 million passengers in 2014, up from a record 84 million in 2013. Its French associate has already seen traffic through Paris CDG and Paris-Orly rise 4.2% (to 44.8 million) in the first six months of the year.

Sustained growth

Of course, Paris has a lot going for it. It is one of the world’s most visited cities and annually welcomes upwards of 59 million visitors.

ADP’s head of network development, Hugues Potart, says the city’s business market is equally strong. “More than ever, airports and air services are an integral part of a destination’s strategy for development and attractiveness, even for world cities such as Rome, London or Paris,” he says.

Subsequently, ADP has reaped a bountiful harvest of new routes in 2014, including Air France’s long-haul, three-times weekly service from

Primary airports: Paris Charles de Gaulle International – ADP • Europe’s 2nd busiest airport • 8th busiest airport in the world • 62 million passengers in 2013, +0.7% on the previous year

Istanbul Atatürk – TAV • Europe’s 5th busiest airport • 17th busiest airport in the world • 51.3 million passengers in 2013, +14% on the previous year

ROUTES NEWS 6, 2014

75

ADP/TAV Paris CDG to the Brazilian capital, Brasilia; Jet Airways’ daily flight from CDG to Mumbai; easyJet’s twice-daily service from CDG to London Gatwick; and Transavia’s additional routes from Paris-Orly to key European destinations, such as Madrid and Prague.

Fourteen hundred miles away and the jewel in TAV’s crown, Istanbul Atatürk, has also witnessed strong growth this year, especially from its flagship carrier, Turkish Airlines.

The airline has upped its services to the African continent in particular, with new flights to Mali, the Republic of Guinea and Algeria among others.

It has also launched Istanbul’s first direct service to Boston. San Francisco is slated to commence in April next year.

International reach

Outside of managing and redeveloping existing sites, ADP and TAV are also involved in the conception and construction of new airports. ADP’s acquisition included the purchase of a 49% stake in TAV’s construction division for US$49 million.

This particular strand of the alliance has already proved useful. At the end of 2013, ADP and TAV took 20.77% and 15% respectively of the international consortium, MZLZ, which has taken over the operation of Croatia’s Zagreb International Airport (ZAG).

Zagreb has since become the first jointly operated and maintained ADP-TAV airport, with the 30-year management agreement also including a new US$326 million, 65,000sqm terminal to replace the current facility, which is at saturation point.

Construction of the 5 million-capacity terminal broke ground in May 2014 and is expected to take three years. At the ceremonial event, CEO of TAV Airports, Sani Şener, said that the new terminal marked “an important milestone in Zagreb’s bid to fully exploit its potential as a centre of attraction in Europe”.

76

ROUTES NEWS 6, 2014

World Routes 2014: “Passenger growth can only be achieved if we expand and develop our route network and ensure that airlines receive only the best quality of service. World Routes is therefore an essential event for us since it enables us to share our air services analysis and discuss new route opportunities.

“It’s a perfect opportunity to meet the global industry’s key decision makers, build a relationship and attend to their route concerns face-to-face.

“To better co-ordinate our strategies, ADP and TAV decided to attend World Routes 2014 together. Our joint stand includes a spacious meeting chalet to facilitate more comfortable discussions with airlines.

“We aim to leverage our collective skills and experience to target specific airlines, as well as showcase both our airports and destinations.”

TAV Airports, marketing and business development co-ordinator, Aslihan Çörtük

A new KLM-operated Amsterdam-Zagreb service has already been secured.

ADP and TAV have similar concessions in the pipeline. The operators are awaiting a response on their tenders to develop and manage New York’s LaGuardia (LGA) and Chile’s Santiago Arturo Merino Benítez (SCL).

Decisions about the airports’ futures are due to be announced before the end of the year.

The future

The two operators may address different markets – with Paris mainly competing with major European hubs and Istanbul with principal locations in

the Middle East – but holding a joint stand at this year’s World Routes is clear evidence that the two are becoming more aligned in terms of their approaches to air services development.

For the future, Potart says that ADP hopes to further benefit from, and support, the dynamic growth TAV has seen in recent years. He would also like to see ADP become less dependent on its primary customer base in France.

To date, the two operators haven’t initiated any city-pair programmes, but Potart is confident that an imminent staff exchange scheme will help bring the two operators even closer together.

routes-news.com

20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014

Twenty up Aviation has witnessed some game-changing trends and technology in the 20 years since World Routes began.

W

orld Routes opened for business for the first time on 14 September 1995 in Cannes.

The 60 or so people that attended most likely used a major flag carrier to facilitate their journey to the event. Booking a seat on a low cost carrier (LCC) via the Internet wasn’t yet a viable option.

But all that was about to change. Making use of a new architecture that allowed commercial Internet service providers to connect at network access points, the likes of Amazon and eBay were pioneering Internet sales. And LCCs were quick to catch on.

Soon enough, they had established online booking as the backbone of a new business model. The aviation landscape would never be the same again.

Low cost carriers

The LCC concept actually had a notable history by 1995. Laker Airways was one of a number of airlines founded on a business model that was determined to undercut the flag carriers.

Southwest Airlines is most often cited as the LCC ‘granddaddy’, however. Southwest started services in 1971 and has performed admirably in the United States, initially under the colourful leadership of Herb Kelleher.

Kelleher noted in 1994 that “if the Wright brothers were alive today, Wilbur would have to fire Orville to reduce costs”. LCCs live true to this sentiment in many areas. They serve secondary airports to keep charges down, use online sales almost exclusively and employ a standardised fleet.

Alongside cutting costs to the bone, LCCs innovated in ancillary services, charging for bags or food and beverages on board. These new revenue streams have been every bit as important as saving the pennies.

But it was the advent of the Internet that really allowed the LCC ethos to hit home. Just a couple of months after the first Routes event, easyJet started flights, serving Edinburgh and Glasgow from London Luton (Ryanair had been re-launched as an LCC in 1990).

78

ROUTES NEWS 6, 2014

Today, easyJet flies some 630 routes from 22 bases, carrying more than 60 million passengers using 217 aircraft. Its incredible achievement typifies the LCC movement.

Being an LCC is no guarantee of success, though.

Hundreds of start-up LCCs have come and gone in the past 20 years. The major carriers tried – and usually failed – to establish their own subsidiaries in an effort to beat back the competition. The likes of Go by British Airways, Song by Delta, and United’s Ted are no longer part of the scene.

Gradually, however, lessons were learned or defeat accepted. LCCs now control around 30% of globally available seats.

But the wheel of fortune may be coming full circle as LCCs begin to gain a whiff of corporate respectability. Upstarts no longer, LCCs have become part of the establishment even though the core of the business model remains.

As Routes marks its 20th anniversary, Ryanair’s uncompromising business model looks to have run its course while easyJet now offers allocated seating and many of the other sprinklings of a mature airline.

“But it’s the strength of LCCs that will continue to drive aviation traffic growth,” says Nigel Mayes, senior vice president, consulting and product development at ASM. “In some countries, like the Philippines, LCCs actually form the majority of the market. These brands will still be a force 20 years from now.

Lion Air, AirAsia and IndiGo have close to 1,000 aircraft on order between them, for example. And I’ve no doubt LCCs will move into the medium and long-haul markets in years to come.”

The Gulf carriers

If the LCCs can be beaten in their claim as the greatest transformational force in aviation in the past 20 years, it is perhaps the “Big Three” from the Gulf that would pip them to the post.

routes-news.com

Special report 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014

Routes had moved on to Oslo in 1997 when Akbar Al Baker relaunched Qatar Airways with just four aircraft. The airline now has around 130 planes serving 140 destinations. Some 300 aircraft are on order, worth around $50 billion. A new airport, Hamad International, will facilitate this extraordinary development.

Meanwhile, Etihad was set up in 2003, first flying a couple of months after the Edinburgh World Routes event. It has become one of the fastest-growing airlines in the world, its near 90-strong fleet operating 1,500 flights per week across the globe. Like Qatar, it is developing its home base to accommodate the growth strategy.

Arguably, Emirates has created the biggest storm, riding on the back of the success of Dubai as a destination and Dubai Airports as a trailblazer in infrastructure development. When World Routes rolled up in Dubai in September 2006, the airport was enjoying a successful year that would see it handle more than 28 million passengers. Less than 10 years later, the city luxuriates in two major airports and handled almost 66 million passengers in 2013.

Emirates is the driving force behind the incredible growth, with 370 aircraft on order worth US$162 billion.

The “Big Three” have not affected aviation through size alone. Mayes says their approach to product development has “raised the bar in several areas, from in-flight entertainment to on-ground services”.

He cites the recent launch of Etihad’s revamped first-class product. “We might well be looking back on that in years to come and recognising it as a game changer,” notes Mayes.

routesonline.com

Alliances

Not even the Gulf carriers can cover all corners of the globe. Aviation’s solution is the global alliances, Star Alliance, oneworld, and SkyTeam. KLM and Northwest set the ball rolling in 1993 but it was Star Alliance, started in 1997, that really cemented the trend. Two years later, oneworld followed, while SkyTeam was set up in 2000.

Combined, the three alliances account for some 1.8 billion passengers (more than 60% of all passengers on an annual basis) and around 3,000 destinations.

Alliances have made a tremendous difference to the way a member airline develops its own network.

No longer is there a need to cover all bases if a partner can do it for you far more cost-effectively.

It gives an airline and its customer instant reach and adds an extra dimension to route development.

The markets

The aviation markets have changed hugely too.

North America and Europe aren’t the dominant voices any more. Aviation’s centre of gravity has shifted east in the past two decades and Asia-Pacific is now the largest air travel market in the world.

Sheer size gives it weight, with much notably contributed by the thriving middle class in China. In 1995, the potential of air travel in the country was recognised but not realised. But then the airlines were merged under the umbrella of Air China, China Southern and China Eastern. This brought greater efficiency to the sector, while airports improved in both size and standards.

ROUTES NEWS 6, 2014

79

Special report 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014

China is now in its 11th five-year plan (20112015), in which the government indicated it would spend $237 billion to improve the aviation sector further. New aircraft are coming in their thousands and some 150 airports are under development.

With per capita income set to reach $15,000 in the next decade, an extra 1 billion Chinese are expected to travel and so the upgrades will be sorely needed.

Asia-Pacific is not just about China. It is a diverse region. LCCs have less than 10% of the northeast Asian market but some 50% of the southeast Asian market. “Countries like Vietnam and India still have huge growth ahead of them, while others are closer to maturity,” says Mayes.

And not all countries have enjoyed unbroken success. The Tiger Economies blossomed in the mid-90s but by 1997 had fallen prey to the Asian financial crisis. Some 50% of stock market value was wiped out in Hong Kong and Singapore while currencies in the region declined to a similar extent.

Air travel inevitably suffered as a result.

But the region is nothing if not resilient and a willingness to trade and a culture of saving soon had these economies back on their feet. Further shocks, such as Severe Acute Respiratory Syndrome (SARS), kept a check on the region, but its emergence as a global driving force has never been questioned.

Meanwhile, though Africa has stalled, says Mayes, strong moves towards greater safety and enhanced infrastructure could help the continent to realise its potential, while Latin America seems to have

80

ROUTES NEWS 6, 2014

overcome its financial difficulties to enjoy strong airlines and strong demand.

Airports and the passenger

If the world has changed for the airlines, the same must be said of airports and the passenger experience. In general, the passenger process in 1995 was much the same as it had been 20 years before. Bookings were usually made via a travel agent, a paper ticket was issued and check-in was completed at an airport desk with the paper ticket swapped for a paper boarding pass with a 1D magnetic stripe.

But 1995 was a pivotal year, with the first tickets sold via the Internet. Two decades later, a complete transformation has put the journey experience into the hands of the traveller. Bookings are made via the Internet (although travel agents remain popular in some regions), there is no ticket, check-in is online or at an airport self-service kiosk, and the boarding pass could be a bar code on a smartphone.

The enabler for much of this transformation was the e-ticket. It had first made an appearance the year before the inauguration of World Routes, but at that point it was applicable only to a single segment on a single carrier.

The industry needed a complete system overhaul if interline and more complicated itineraries were to be accommodated. This was finally achieved in mid-2008.

routes-news.com

Special report 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014

Airports have changed in many other ways, not least route development. “Airports are putting far more resources into developing air service,” says Mayes. “But the whole business model has undergone a seismic shift.

“Non-aeronautical revenue is now driving development, for example. I think the transformation will continue and airports will continue to innovate in the methods used to drive revenue and to interact with the consumer.”

The events

A number of external events have also shaped aviation since World Routes began. SARS hit in early 2003 and caused a 3% drop in seats worldwide, according to OAG. Flights to China dropped 45% in June 2003 compared with the year before, while flights within Asia-Pacific dropped 10%.

Arguably, the most significant event was the 9/11 tragedy. Its most obvious effect was on the security checkpoint, which became far more robust. Without losing any of the efficacy gained, the challenge ahead is to ensure efficiency and a throughput capability that matches passenger numbers.

But 9/11 did more than up the security stakes.

It forced a complete re-think about the value of aviation, a conversation that is still ongoing today.

There have also been various bird flu scares, a volcanic eruption that shut down European

routesonline.com

airspace for the best part of a week, and a global economic meltdown that actually had a far greater financial impact than even 9/11. All have influenced aviation’s direction, the strategies employed and the processes required.

Conclusion

Much else has happened in the past 20 years, of course. Environmental issues loomed large, for example, but these seem to have been headed off at the pass by a coherent and comprehensive industry strategy. And safety, the top priority and the backbone of a successful industry, has seen exceptional improvements despite the recent tragedies. In 2013, there was just one accident for every 2.4 million flights in western-built jets.

Many airlines have come and gone and airports and destinations have risen to meet the new paradigm of connectivity.

At its heart, though, aviation remains customercentric. Serving the customer in the most efficient way possible while ensuring an excellent bespoke travel experience is the ideal that aligns all stakeholders.

For all of aviation’s trials and tribulations, getting partners around the table to discuss ways to improve customer service is as important now as it ever was. World Routes has remained fundamental to this goal since the very first show.

ROUTES NEWS 6, 2014

83

Special report 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014

The power of competition Angela Gittens, director general of Airports Council International (ACI), reflects on 20 years of World Routes.

T

wenty years ago, when World Routes first burst upon the air transport scene, aviation was a very different industry.

Security had yet to be transformed by the tragic events of 9/11, legacy carriers were largely unaware of the looming impact of the low cost business model and the environment was the concern of the few and not the majority.

Many other events have affected aviation’s outlook since 1995, of course, not least the more recent global economic meltdown. But we shouldn’t be surprised by the scale of change. Commercial air transport is 100 years old. And from a single passenger flying across the bay in Tampa, the industry has grown to accommodating over 6 billion passengers around the world.

Airports have transformed over the past two decades to offer an even greater passenger experience. Think how much easier check-in has become or how retail has improved. At some key hubs around the world, airports have even become destinations in their own right.

And make no mistake; airports compete. In fact, the success of World Routes is down to the fact that airports are constantly vying for new air services.

Airports understand that airlines have a choice and that they must compete to win an airline’s business to serve their community.

This vibrant market is particularly tough for smaller airports. Airport industry profitability is primarily generated from the 20% of airports that carry the bulk of passenger traffic. Of the world’s airports 67% operate at a net loss. Size matters.

Of airports with fewer than a million passengers 80% posted an average net loss of 6%.

Looking at the picture from the perspective of return on invested capital, in 2013 airports worldwide had an average return on invested capital of 5.9%,

routesonline.com

with the highest return generated by airports with passenger volume between 15 and 25 million.

Airports with fewer than one million passengers had a negative return on invested capital of -1.1%.

ACI is working with airports and all stakeholders to improve the aviation supply chain and ensure aviation’s economic, cultural and social benefits are extended globally.

You will start to see more collaborations with ICAO, IATA and others. You will see us reach outside of the industry to kindred spirits like the World Travel and Tourism Council, with whom we have joined on projects of common interest, notably convincing governments to better facilitate the visa process.

We are stronger together. But we would not be seen as valuable allies if we were not seen as capable of providing solutions – if we were not seen as having high standards and were not committed to achieving them.

A big advantage that we have as airport operators is the willingness to help each other, even in this era of increased competition. We know that weakness anywhere hurts our system and ultimately hurts each of us.

Air services development needs strong airports.

ACI is committed to providing that foundation.

ROUTES NEWS 6, 2014

85

Special report 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014 • 20 YEARS OF WORLD ROUTES • 1995-2014

Positive impact International Air Transport Association’s (IATA) director general and CEO, Tony Tyler, provides his thoughts on the impact of aviation and the Routes phenomenon.

I

n 2014, airlines will safely transport approximately 3.3 billion passengers and 50 million tonnes of cargo across a network of 50,000 routes.

This connectivity supports 58 million jobs and $2.4 trillion in business. With over a third of the goods traded across borders being delivered by air, it is no understatement to say that aviation propels the global economy.

There is also a very human impact to aviation’s achievements. Flying has helped to turn our big planet into a global community. Families and friends are reunited across great distances.

Cultures are experienced and exchanged through journeys of exploration. Ideas are developed and shared through meetings and conferences. People’s lives are made more prosperous by working together in global supply chains. In 24 hours, people have the freedom to be anywhere.

Commercial aviation’s success has many parents.

The first flight was a partnership between a plane builder, an entrepreneur and a pilot. And the 100,000 flights that take off each day result from choreographed collaboration across a complex value chain.

Underpinning this is one of our most important stakeholder groups – governments and regulators.

This relationship is also marking a significant milestone this year as the Chicago Convention, which laid down the foundations of modern air transport, celebrates its 70th anniversary.

Aviation has always been forward looking.

Constant improvement in safety is a hallmark of the industry. Technical innovation has driven improvements in the passenger experience.

And the quest for efficiency has made flying ever more accessible.

The Gulf region is a showcase of what aviation can deliver when countries place a strategic priority on creating a business-friendly environment for air

routesonline.com

transport. Jobs and prosperity are being created by businesses that rely on global connectivity.

It should serve as inspiration for other regions of the world. When governments provide adequate infrastructure, don’t over-regulate, and tax fairly, aviation provides real benefits.

This message should be spread far and wide.

Because not all governments take the same approach. Recent tax proposals in Africa would make the continent more expensive to get to and to stay in. That is not the way to promote tourism, development and trade. Making connectivity more expensive is bad news for any business and certainly a disincentive to relocate.

I congratulate World Routes on its 20th anniversary. Its desire to promote connectivity is shared by the industry and by all those who wish for a peaceful, prosperous global community.

ROUTES NEWS 6, 2014

87

Growth spurt The low cost carrier business model still has enormous potential in the Asia-Pacific and Latin America markets, says OAG’s executive vice president, John Grant.

T

he North American and European air travel markets are the most mature in the world and with maturity has come sluggish growth.

But growth is what grabs attention, and both Asia-Pacific and Latin America deserve some attention, thanks to their emergent economies, a fast-developing cohort of middle-class consumers and a number of entrepreneurial low cost carriers.

A closer inspection of current trends in airline behaviour shows that these regions appear to be developing in parallel. But are these top-line similarities simply superficial? Perhaps the dynamics of each market are, in fact, quite different, leading to different patterns of growth?

Getting to grips with the similarities and differences in these markets will help us to understand how we can expect them to develop over the next five to ten years.

Are they comparable?

It is not surprising that the commercial aviation market is four times larger in AsiaPacific than in Latin America. China alone has a population of 1.4 billion and India’s is 1.2 billion, with the total population in the region topping 4.2 billion. Contrast that with the 600 million living in the whole of Latin America and you’d expect there to be a far greater volume of airline seats available in Asia-Pacific.

In 2014, OAG anticipates that airline capacity in Asia-Pacific will nudge close to 1.4 billion seats, meaning there will be airline seats for one-third of the region’s population. In contrast, carriers in Latin America will offer 321 million seats, equivalent to an airline seat for half of the region’s population.

So there are obvious differences in the size of the market in each region.

But what about the market composition in terms of legacy or full-service carriers and low cost carriers (LCCs)?

LCCs account for 25% of seat capacity within Asia-Pacific, operating 343 million seats in 2014. Ten years ago, LCCs had just 4% of the market in the region but

Market size and shape %HWZHHQ VXE UHJLRQV

$VLD 3DFLČ´F

EQ VHDWV

:LWKLQ 6: 3DFLČ´F :LWKLQ 6( $VLD :LWKLQ 6 $VLD

LQ VHDWV DUH /&& /DWLQ $PHULFD LQ VHDWV DUH /&& )6& /&&

:LWKLQ 1( $VLD :LWKLQ &HQWUDO $VLD

P VHDWV

%HWZHHQ VXE UHJLRQV :LWKLQ 8SSHU 6 $PHULFD :LWKLQ /RZHU 6 $PHULFD :LWKLQ &HQWUDO $PHULFD :LWKLQ &DULEEHDQ

0LOOLRQV

Source: OAG Schedules Analyser.

routesonline.com

ROUTES NEWS 6, 2014

89

Low cost carriers

$LU $VLD *URXS /LRQ $LU *URXS -HWVWDU *URXS

$VLD 3DFLČ´F 7RS /&&V E\ VHDW FDSDFLW\ $LU $VLD *URXS

&HEX 3DFLČ´F P

/LRQ $LU *URXS

P

-HWVWDU *URXS

P

ΖQGL*R &HEX 3DFLȴF

ΖQGL*R

P P

6HDWV P LQ

Source: OAG Schedules Analyser.

have been growing fast, with carriers increasing seats by an average of 26% each year for the last 10 years.

LCC operations are concentrated in markets within the sub-regions of South East Asia and South Asia, however, where they make up 55% and 56% of seat capacity respectively. North East Asia (dominated by China) remains relatively untapped as yet, with just 9% of capacity operated by LCCs, and Central Asia (the five ‘stans’ and Bhutan) has no LCC capacity at all.

Across Latin America, LCCs will make up a larger overall proportion of seat capacity in 2014 at 33%. LCC capacity has grown at an average annual rate of 23% each year since 2004, and market share has risen from 7% of all seats at that time.

As in Asia-Pacific, LCCs in Latin America are concentrated in two subregions. In Central America, 49% of seats this year will be operated by LCCs, with Mexico accounting for a significant proportion of that. In Lower South America, 46% of seats are operated by LCCs, much of that number in Brazil.

The remaining two sub-regions in Latin America, the Caribbean and Upper South America, have little or no LCC activity yet.

90

ROUTES NEWS 6, 2014

Low cost carriers in Asia-Pacific

The top five players in Asia-Pacific’s LCC market represent nearly two-thirds of all LCC capacity in the region. They are comprised of the AirAsia group, the Lion Air group, the Jetstar group, IndiGo and Cebu Pacific. Collectively, these carriers have 202 million scheduled seats within the Asia-Pacific region in 2014.

61 million seats offered by the AirAsia group annually

The AirAsia group has grown from just 9 million seats 10 years ago to 61 million today. It has 4.4% of all seats within Asia-Pacific and is the biggest LCC group in the region. To put this into context, Cathay Pacific and Singapore Airlines have 1.5% and 1.4% of capacity respectively within Asia-Pacific. The AirAsia group accounts for 18% of all LCC seats within Asia-Pacific and has averaged growth of 21% each year since 2005. In 2014, the group will see seats grow by 8% – the equivalent of adding 12,000 seats every day.

The AirAsia group has seven subsidiaries, many of which have been launched as a means of getting around foreign ownership rules. Just under half (46%) of the AirAsia group’s seats are operated

by AirAsia. The fastest-growing arm of the group is AirAsia X, which has grown by 46% this year and will operate 5 million seats.

The Lion Air group is second-largest, with a similar growth trajectory. In 2005, it operated just 9 million seats, while in 2014 it plans to operate 59 million. Most (88%) of the group’s capacity serves the Indonesian domestic market. The Lion Air group represents 4.2% of all seats in AsiaPacific, and has a 17% share of LCC seats.

These mostly operate on Lion Air (93%), based in Indonesia, with the remainder operating on Lion Air’s new overseas ventures, Malindo Air (based in Malaysia) and Thai Lion Air (based in Thailand).

There is quite a gap between these two powerhouses and the remaining carrier groups. The Jetstar group is thirdlargest, with 33 million seats in 2014, while the fourth-largest carrier, IndiGo, is the largest individual carrier to make it into the Top 5 with 31 million seats. Much like Lion Air, 98% of IndiGo’s capacity serves the domestic market of its home country – in this case, India.

routes-news.com

Low cost carriers

*RO $]XO $LUOLQHV ΖQWHUMHW 9RODULV 9LYDDHUREXV

/DWLQ $PHULFD 7RS /&&V E\ VHDW FDSDFLW\ *RO

P

$]XO $LUOLQHV

P

ΖQWHUMHW

P

9RODULV 9LYDDHUREXV

P

P

6HDWV P LQ

Low cost carriers in Latin America

While LCCs contribute a greater share of total seat capacity in Latin America than in Asia-Pacific, they are more concentrated, with just five airlines classified as LCCs by OAG. These are Gol, Azul Airlines, Interjet, Volaris and Vivaaerobus. Collectively, these carriers have 107 million seats within Latin America in 2014, so just over half the size of the comparable Asia-Pacific Top 5 LCCs. Gol, the oldest LCC operator in the market having started services over 10 years ago, is also the largest and operates 50% of all LCC seats in Latin America. It is a Brazilian airline and all of its routes are operated within Brazil, or to and from Brazil, with the exception of a few stopping services via Aruba and the Dominican Republic to the United States.

A further 26% of Latin American LCC capacity is with Azul Airlines, another Brazilian carrier. Azul Airlines was established by JetBlue’s founder, David Neeleman, in 2008 and operates domestic sectors using Embraer 190-195 aircraft.

The three remaining Latin American LCCs are Interjet, Volaris and

routesonline.com

Source: OAG Schedules Analyser.

Vivaaerobus, with 11%, 10% and 3% LCC capacity respectively. All are based in Mexico.

With Brazil and Mexico by far the largest markets in Latin America in terms of population, with 195 million and 118 million inhabitants respectively, it is not surprising that these are hotspots for carriers seeking growth opportunities.

Liberalisation, geography and strategy

Latin America and Asia-Pacific governments have been grappling with the extent to which greater market liberalisation in aviation is required to facilitate growth and balancing that with the need to protect domestic markets and home-grown carriers from external competition.

While both have regional bodies, which have an agenda to make the skies more open, neither has succeeded yet – although the ASEAN single aviation market is due to come into effect next year. In the absence of regional agreements, it is left to individual countries to pursue their own Open Skies

policy, to liberalise markets or to restrict market access.

In Asia-Pacific, the Malaysian government’s commitment to a progressive liberal aviation policy has helped create the conditions in which a carrier like AirAsia can thrive. India is also moving steadily towards freeing up its aviation market but Indonesia appears keen to continue to protect its national carriers.

In Latin America, several countries have signed Open Skies agreements while the United States and Brazil have signed an Open Skies agreement that is due to come into effect in October 2015.

In contrast, Venezuela, like Indonesia, continues to protect domestic players and has actively blocked attempts by Gol to operate between Brazil and Caracas and on to the United States.

While the regulatory environment in each region is similar, with some countries moving faster towards market liberalisation, the geography is quite different. The dominant LCCs in AsiaPacific typically lie in the centre of the

4 billion

people live within an eight-hour flight of Kuala Lumpur region; there are an estimated 4 billion people living within an eight-hour flight of Kuala Lumpur. The goal of establishing a network of hub airports across the region makes sense in this environment and it is not surprising that the AirAsia group is enabling the creation of a series of virtual hubs and spokes to serve travel needs across the region.

The geography in Latin America, where the large conurbations lie around the perimeter of the region, makes this approach less likely, and to date there has been no sign that carriers such as Gol are pursuing a subsidiary strategy to maintain growth.

Aside from AirAsia, there are plenty of similarities in airline strategies. Pacific Lion Air predominantly serves the large

ROUTES NEWS 6, 2014

93

Low cost carriers

*2/

$]XO

/LRQ $LU

ΖQGL*R

%UD]LO

%UD]LO

ΖQGRQHVLD

ΖQGLD

5HJLRQDO /&& 5DQN

P

P P

P

P

P P

P

6HDWV 3RSXODWLRQ RI FDSDFLW\ GRPHVWLF

6HDWV SHU FDSLWD

6HDW FDSDFLW\ JURZWK

*2/

$]XO

/LRQ $LU

ΖQGL*R

6HDWV P

$$*5 \HDUV

ΖQGLD

ΖQGRQHVLD

0H[LFR

%UD]LO *HUPDQ\ 86$

Source: OAG Schedules Analyser.

domestic market of Indonesia, while IndiGo operates mostly in India, with Indonesia and India being two of the fastest-growing markets in the region.

Similarly, in Latin America Mexico and Brazil have the only real LCC development and these carriers are serving mostly domestic markets.

Strategies for tapping into future growth

Without doubt there is plenty of room for further growth in Asia-Pacific and Latin America, both within country markets, within regions and further afield.

A look at the airline seat capacity per capita of population in the four countries discussed earlier – Brazil, India, Indonesia

94

ROUTES NEWS 6, 2014

and Mexico – shows that there are three times more seats available per capita in Germany and six times more in the United States than in either Indonesia or Mexico.

But where will the growth come from?

To what extent will the LCCs be able to continue their strident growth beyond their domestic markets?

In Asia-Pacific, we already have an example of how LCC growth may play out with the AirAsia model. Is it time that Gol, as the dominant LCC in Latin America, starts to consider a similar approach?

The next three largest markets in terms of population in Latin America are Columbia (46 million), Peru (29 million) and Venezuela (29 million).

A Gol subsidiary in Peru or Colombia would have all the benefits of the Peru-US and Colombia-US Open Skies agreements in force today.

But this strategy is not really new. LAN started to shed its restrictive national identity back in 1999 when it created LAN Peru, followed by LAN Ecuador in 2003 and LAN Argentina in 2005.

Following LAN’s merger with TAM, today the LATAM group has operations based in Argentina, Brazil, Chile, Ecuador, Paraguay and Peru and will operate nearly 87 million seats in 2014, some 62% more than Gol. It seems that it is time for Gol to step up its competition with LATAM if it wishes to emulate the success of its Asian counterparts.

routes-news.com

Up-cycling an aircraft From a theme park ride to films, or turning a fuselage into furniture, Mary-Anne Baldwin looks at innovative ways to re-use end-of-life aircraft.

I

f you’ve any interest in home décor you’ll probably be familiar with the trend for up-cycling – that’s turning old junk into something new and desirable.

It’s seen wine bottles turned into drinking glasses and suitcases into coffee tables, but recently, UK designer and TV presenter, Kevin McCloud, took it many steps further by asking ‘what can we make out of an A320?’

The UK’s Channel 4 documentary, Kevin McCloud’s Supersized Salvage, showed the presenter and his team of three designers use aircraft parts to create new items, from rickshaws to rocking chairs and from storage to jewellery.

routesonline.com

The challenge was to use each and every part of the plane, leaving nothing for scrap.

While an A320 of its vintage is worth between $1m and $3m (€1.2m and €3.7 million), the scrap value of this plane was £15,000 (€19,000). Because of its value, it was not the prime candidate for up-cycling were it done just for profit, but this project was also about design innovation. And, thankfully, it had a generous contributor.

As the CEO of an AFRA-accredited teardown company, Sycamore Aviation, Kevin O’Hare had access to the aircraft and the means to disassemble it – both of which he gave without charge.

From fuselage to furniture

Sycamore Aviation removed around 2,000 potentially airworthy parts and cut the aircraft in to manageable pieces, which were then put on a low-loader and transported to a workshop near Wembley, London. There, the designers transformed the components into weird, wonderful and stylish pieces.

While most aircraft parts have their own inherent value – either in the aftermarket or as scrap – such innovative up-cycling could create a new market for otherwise unusable aircraft parts.

Indeed, aircraft parts lend themselves to today’s trend for industrial design,

ROUTES NEWS 6, 2014

97

Aircraft recycling O’Hare’s daughter. Both Katie and her dad were at the heart of the project. Now aged five, Katie was diagnosed with cancer and not expected to live past three.

“She is still going strong with a very good prognosis after two major operations and a course of chemo,” O’Hare, explains.

He donated the plane in a bid to raise money for the charity that has supported his daughter’s fight against cancer.

Proceeds from the up-cycled objects are going to the children’s charity, Neuroblastoma Children’s Cancer Alliance (NCCA).

“I was always hopeful that they would make interesting items and maybe get retailers involved, but the thought of raising money and the profile of this small charity clinched it for me, especially as they have helped us as a family over the last three years,” says O’Hare. and what McCloud and his team did with them was really rather special.

McCloud wanted the finished pieces to look different to the plane itself, and its parts. “It’s very important that we don’t take bits of the plane, polish them up and just sell them as a paperweight,” he says.

And, the team – including its three designers – certainly achieved that.

Paul Firbank, salvage designer, makes household objects, such as lights, from industrial equipment. Harry Dwyer, designer and electronics engineer, makes more ‘fanciful’ pieces and was the brains behind creating a rickshaw and rocking chair from the components.

Lastly, there’s Max McMurdo, who calls himself an up-cycling entrepreneur.

“Max’s approach is entirely different again,” says McCloud. “He takes sections of the plane and turns them into buildings”. One of McMurdo’s finished pieces was a beautiful polished gazebo made from strips of windowed fuselage.

Bird boxes were made from air-conditioning ducting, while a tray table was turned into a magazine rack – complete with a cup holder. Other objects, such as a desk lamp made from seat frames, were completely unrecognisable from their original parts.

98

ROUTES NEWS 6, 2014

The programme not only showed the teardown, planning and manufacture of these fresh design pieces, but also how the finished products were marketed and sold to the general public.

In fact, the televised project drummed up some real business. A new bar and club in London took about 100 bar stools made from the parts. “The interior designer who bought them would love more of this type of stuff on a commercial scale,” says O’Hare.

“We will look to keep doing this for maximum recyclability, and not just melting down for tin cans but for a worthwhile use. We think there is an actual commercial venture in providing this material,” adds the teardown CEO. “Even if we don’t continue with the full airframe, we will certainly start with a select number of items and materials.”

He has also been in talks with a high street shop that would like to order a certain part to be made into a household object.

“They are looking to purchase them by the thousand if we can do it at the right price on a commercial scale,” he says.

The first airing of the show, in late April, couldn’t have been more meaningful.

It coincided with the birthday of Katie,

Films and theme parks

But such innovative uses for aircraft parts aren’t just limited to charity projects; they can create a good return for some companies, and for Air Salvage International (ASI) it has provided sustained business.

Mark Gregory, CEO of ASI, explains that this type of thing “isn’t new”. ASI has sold parts to up-cycling companies for 18 years – the entire life of the company. It works closely with a company called Fallen Furniture, based in Bath, UK. Using parts provided by ASI, the bespoke design company creates furniture and objects such as a clock made from a B747 fuselage, a table made from an exit door, and a circular bar made from an engine cowl.

But according to Gregory, this part of the business is not very profitable.

He believes the Channel 4 programme used only 15% to 20% of the aircraft and is doubtful a whole aircraft could be upcycled in a cost effective way.

Only about 1% of ASI’s profit comes from up-cycling parts into furniture.

Gregory explains that this is because of the amount of man-hours needed to turn a part into a piece of art.

routes-news.com

Aircraft recycling “The amount of time and effort that goes into it is tremendous really. And we’re not giving it [the parts] away. Our time involved, to, say, cut a section and polish it, costs money,” he notes.

“Most people want a three-windowed section that they can put a clock behind, or stuff like that. For that we charge about £200 (€253), just for the raw material [which is] a metre long by about 60 centimetres high.”

The result of high-cost production is a steep price tag, meaning there are only a limited number of buyers. “It’s not furniture for everyday people,” admits Gregory, although he counters that it’s great for managers, directors and aviation companies.

But ASI doesn’t just rely on up-cycling as its only innovative means of business.

The company will soon sell one of its aircraft to Westfield shopping centre in Shepherds Bush, London, which will install it as a flight simulator. It’s taking the front section of an A320 so that customers can try their hand at being a pilot.

ASI has also supplied the UK theme park, Thorpe Park, with a B737, which it used as scenery for its ride The Swarm.

Passengers board the ride from a dilapidated, boarded-up chapel. The ride spins 180 degrees, drops 127ft and reaches G force 4.5 as it takes them through an apocalyptic scene past a ‘crashed’ plane, a helicopter and an up-ended ambulance.

The company has also worked with production crews requiring aircraft for films, including World War Z and a number of the James Bond films.

Gregory explains that some crews hire the aircraft and others buy them – and the decision often depends on whether they want to blow it up. Sometimes the crew requests an aircraft with all its working parts, but often it would be stripped of all valuable components first.

If the crew wants a realistic interior, then depending on budget, ASI works with the company to strip and replace valuable assets for identical ones that no longer work. He also explains that some companies just want the cabin interior

routesonline.com

to use for filming scenes that take place onboard an aircraft.

“We do far more work with those [film and TV] people than we would ever do with people who turn parts into furniture,” he says.

Turnover from training

According to Gregory, there are about six UK aircraft-dismantling companies, but none are as old as ASI. Its longevity has meant that it has been able to build up a good working relationship with its clients.

Not all teardown companies would find it easy to sell aircraft to a film company; unfortunately, it’s a very limited market.

At the time of interview, Gregory had just closed a deal with a film company, but in comparison, ASI was also working with four aviation training companies. This is a more viable market for end-of-life aircraft, not only because there is more business, but also because it is more profitable.

Gregory believes he could have tripled the money made from the aircraft McCloud used for up-cycling by not

turning it into furniture. “An A320 would sell for a minimum of £35,000 [€44,000] – and that’s empty. We turn them into simulators for colleges. That one would have been a prime candidate.

The flight deck alone would sell for about £25,000 [€32,000].”

According to Gregory, ASI would put only 5% of an A320 into landfill. A training institution might pay £80,000 (€100,000) for the front section of an A320, other parts could be sold and others still could be kept until there was a market for them.

“We also work with police, the fire services, the airport services; people involved in aviation where they need to get access onboard an aircraft to carry out training.”

Aside from training facilities such as flight attendants academies, ASI sells aircraft to other schools. For example, it sells some of the cabin interior, such as side or ceiling panels, to Oxford University, which is researching how to recycle composite plastics.

Composites plastics are made by combining numerous types of plastic; it is very hard to melt down and extract one plastic from another, meaning recycling is currently either not cost-effective or not even possible.

Gregory explains that about 90% of the plastic used in a modern aircraft is composite, so this type of research will play a crucial part in making aviation more environmentally friendly, and will open up more residual value in the parts.

“One day plastic aircraft parts will go into a machine at one end and come out the other as something else,” says Gregory.

Regardless of how it’s done, teardown companies will always look to make the highest return possible, but sometimes, even the low-return markets, if they are innovative and not too competitive, can also generate worthwhile income.

“Ultimately we are in the business to recover the spare parts from the airframe and we are always looking for avenues to maximise the return on the airframe,” Gregory concludes.

ROUTES NEWS 6, 2014

101

BIG ambitions Vladimir Kamynin, director for aviation business development at Airports of Regions, talks to Routes News about the growth strategy for its Russian regional gateways.

Can you tell us more about Airports of Regions?

We are the largest airport holding company in Russia and count the Renova Group as our strategic investor. Currently, the group includes Ekaterinburg Koltsovo, Kurumoch and Nizhny Novgorod airports, which between them handled 7.3 million passengers in 2013. We are also involved in construction projects to build new airports in Rostov-on-Don and in Saratov.

Airports of Regions (AR) makes use of the private-public partnership (PPP) mechanism to implement comprehensive development programmes for major Russian air-transport nodes by setting up new, modern, high-tech infrastructure (passenger and cargo terminals, airport hotels, facilities). Developing extensive air links among Russian regions and other countries and/or restoring intraregional air services is a vital to the success of our airports.

102

ROUTES NEWS 6, 2014

million passengers (+13.1%) passed through its facilities in 2013.

Kurumoch International Airport in Samara and Nizhny Novgorod International Airport – sometimes referred to as Strigino – are also both doing well in their own right.

Indeed, Nizhny Novgorod, reported a 22.8% rise in traffic last year when it handled 0.9 million passengers, while throughput at Kurumoch reached 2.2 million in 2013 – a rise of 14.7% on the previous year.

Vladimir Kamynin

How are your airports doing?

Ekaterinburg Koltsovo Airport is located in the third-biggest Russian market after Moscow and St Petersburg and its status ensures that it is the fifth-busiest gateway in the Russian Federation. Around 4.3

Where are your airports located?

Possibly the best way to explain it is to say that Ekaterinburg is almost in the centre of the country and as such almost at a dividing point between Asia and Europe. Nizhny Novgorod is located 400 kilometres east of Moscow and Kurumoch is found 35 kilometres north of the city of Samara in Samarskaya

routes-news.com

Russia’s regional airports Oblast, which is close to 860 kilometres southeast of the capital.

Does operating three airports allow for certain synergies?

Certainly, and this is something we continue to fine-tune today. We have, for example, introduced uniform corporate management standards across all three airports and continue to streamline operational and technological processes and procedures to ensure that we provide the right conditions for the successful development of our aviation business and air services in Russia.

How about when it comes to route development?

The Russian regional markets are characterised by very large distances and rather low traffic; however, the good news is that regional airlines are just beginning to bounce back after a 20 year decline. So, when it comes to route development, we must be very consistent and accurate when preparing our plans and coming up with strategies.

What does this mean in reality?

[It means] developing strategies focused specifically on each of our target markets and, of course, listening to each airport, which has a key role to play in the implementation of the strategy. Our first priority is to connect our regional markets with each other. We have paid and continue to pay serious attention to this issue and have devised a complex

routesonline.com

business strategy to make it happen. The goal is simply to drive the development of regional transportation and stimulate the development of transfer traffic.

What roles do the airports play?

Ekaterinburg effectively lies on a straight line between Northern Europe and Southeast Asia and its geographical position ensures that it connects global markets. Our aim is for Nizhny Novgorod to become an alternative option to Moscow’s already crowded airports, and we expect things to gather momentum in the next few years with

the expected opening of a high-speed train link that will make it possible to travel between Moscow and Nizhny Novgorod in just 90 minutes. We are currently working on plans for an integrated transfer hub between railway and airport. Kurumoch International Airport serves the 3.5 million citizens of Samarskaya Oblast, the administrative centre of the city of Samara.

We also understand that our airports will never realise their market potential if they fail to deliver on quality, reliability and reputation. This is why we are rapidly

Training courses Airports of Regions takes training so seriously that, in conjunction with ASM, in August this year it hosted two courses aimed at CIS-based professionals.

Both courses – Fundamentals of Route Development (August 19-20) and Data Analytics and Forecasting (August 21-22) – were held in Ekaterinburg.

Speaking on the eve of the events, Kamynin, said: “ASM’s training courses give a unique opportunity to gain valuable knowledge on the development of the route network, analytics and forecasting.

“We are delighted that Koltsovo International Airport has been chosen as this year’s host for ASM’s CIS-based training. This follows

the airport’s significant experience of being a host of international conferences and a magnet for the industry professionals.”

David Stroud, director, ASM, enthused: “Russia, and CIS overall, is a very fast-developing market, with aviation growth reaching double digits. However, the growth will not be a given for everyone and as the market liberalises, airports will need to compete hard to achieve success.

“We are pleased and excited to run both unique training courses in the CIS region again this year. Ekaterinburg Airport as the previous Routes CIS host and our longstanding partner, is the ideal host for this training.”

ROUTES NEWS 6, 2014

103

Russia’s regional airports developing the infrastructure at all our airports, the next new addition being the opening of a state-of-the-art new terminal at Kurumoch before the end of the year.

What is driving airline growth in Russia?

I think there are a number of reasons for the upturn in traffic and they include strong economic growth; the recovery of the regional airlines; and the fact that the long travelling distances between Russian cities largely favour aviation as the mode of travel. The good news is that these are early days for many airlines and there is big potential for future growth.

Is the future bright for LCCs in Russia?

As you know, the low cost market in Russia is not yet developed and this is a major difference between us and the rest of Europe. Wizz Air and easyJet serve Russia, of course, and Aeroflot recently launched its own low cost carrier, Dobrolet, so times are changing, but it is early days.

Sky Express and Avianova previously tried to apply the LCC model in the Russian market and both attempts ended in bankruptcy, not helped by legal restrictions in place at the time.

On a more general note, I am not sure if Russian airports are really set up for LCCs as most offer the same facilities, range of services and subsequently fees to all airlines, meaning that they are not attractive to the low cost model. Having said that, there are reasons to believe that the budget business model will grow in the future as this is something the government is interested in seeing develop. Dobrolet is greatly supported by the government, for example.

Are your airports equipped to handle LCCs? We must prepare for a time when LCCs account for a 20% to 30% share of the market, maybe even more. This means offering low cost services to fit their business model. This might, for example,

104

ROUTES NEWS 6, 2014

translate into providing a terminal with sufficient budget piers and simplified technology. Everything will, of course, depend on how quickly the LCC model develops in Russia and what share of the market they will take. What I can tell you is that accommodating LCCs and charter flights is a key part of our ambitious plan to transform Nizhny Novgorod into an alternative gateway for Moscow.

How are Asian routes and Asian airlines impacting your airports?

According to Airbus’ forecast, the main increase in passenger traffic over the next 20 years will be to the Asian market, so to a certain extent, we will build our future development strategy on this understanding. The first steps for us are to establish direct links with the most capacious markets of Southeast Asia.

I can say that China, Thailand and Vietnam are already among the most popular destinations from Koltsovo, and India is developing rapidly. We also expect strong growth to Cambodia, Malaysia and Myanmar going forward.

What infrastructure developments are taking place at each of your gateways?

We will complete a new passenger terminal in Samara early next year and by 2015 year-end we expect to have completed the construction of a new terminal in Nizhny Novgorod. Next on the agenda is the 2017 completion of the construction of two new airports in Saratov and Rostov-on-Don.

Overview of CIS market The region’s geographical size and diverse terrain make airline travel an attractive transportation option, writes Yuliya Crane.

Indeed, air travel will increase over the next 20 years as personal incomes rise and liberalisation of air transport regulations makes aviation services more available and affordable.

And with Moscow’s three main airports nearing full capacity, there is certainly a great opportunity for the regional airports to launch new international and domestic services of their own and break Russia’s long-established Moscowcentred aviation model.

A number of countries in the region have recently liberalised their aviation environment. Indeed, Moldova, Georgia, Azerbaijan and Armenia have all established Open Skies agreements with the EU and other countries.

In contrast, Belarus, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan all have a tightly regulated aviation environment (frequencies, designated airline, equal number of operated flights, etc).

Russia is also significantly regulated, although an issue of abandoning trans-Siberian routes royalties’ payment has been discussed for a number of years.

routes-news.com

History repeating itself The quest for aviation sustainability has attracted the talents of one of the industry’s most famous names, Matthew Parsons reports.

I

“

want to take the industry that I love, and make it sustainable.” It’s a simple statement, but one that may have a profound effect on the aviation industry.

It also sums up the ethos behind Powering Imagination – the new project from Erik Lindbergh that aims to promote more environmentallyfriendly flying.

The initiative was launched in December 2013 and was inspired by Lindbergh’s grandparents and their involvement in the 1927 Orteig Prize, which Lindbergh says shifted the world’s perception of aviation.

“Before, pilots were perceived as barnstormers,” he says. In fact, six pilots had already died attempting to fly from

routesonline.com

New York to Paris, or vice-versa, before Charles Lindbergh won the $25,000 Orteig Prize. “But then there was a massive shift, and it paved the way for commercial aviation,” notes Lindbergh.

It’s not the first time the Charles Lindbergh story has inspired aviation.

In 1996, the Ansari X Prize (based on the Orteig Prize) was set up, offering a $10 million reward for the manufacturer (in the private sector) of a spacecraft that could carry three people to 100km above the earth twice within two weeks.

It was won in 2004, by Burt Rutan and Paul Allen. Their spacecraft, SpaceShipOne, was made from lightweight carbon composite materials.

Five years later, space tourism took a bold step forward, with Sir Richard Branson modelling Virgin Galactic’s SpaceShipTwo on the X Prize winner’s original concept.

Erik Lindbergh, who sits on the X Prize Foundation’s board, says: “Coming from that history… it is empowering for us to look at how we can shift the focus. We said, ‘how can we do that again?’”

And so Powering Imagination was born, with a focus on sustainable aviation, including alternative fuels and the use of electric aircraft.

These initiatives can alleviate many issues, Lindbergh says, including noise and pollution.

ROUTES NEWS 6, 2014

107

Powering Imagination

Threats of closure

Lindbergh argues aviation must pay more attention to sustainable aviation.

“Airports are already facing threats,” he believes. “Some are closing due to noise pollution. In the United States, people living near these airports move away because of noise.”

There may come a point when airports base their decisions regarding which airlines operate at the gateway on eco-credentials, although Carl Denton, from Sven Carlson Aviation Consulting, does not believe airports yet have the luxury of being that selective.

“The only impact would be if airports invest in infrastructure to facilitate the operations of airlines with more environmentally friendly aircraft,” he says. “This already happens to an extent with noise surcharges, but further developments may need

108

ROUTES NEWS 6, 2014

Got the power Powering Imagination will be attending the 2014 Oshkosh Airventure Airshow, based at the Embry-Riddle Aeronautical University tent. It is also planning to attend Aero-Friedrichshafen in Germany, and the Paris Airshow in 2015.

to be driven more by legislation than economics.”

Air travel is tipped to double by 2032, with the Air Transport Action Group predicting 17.2 million passengers per day by that date.

“Electric propulsion will become more popular and there’s incredible

potential to lower noise,” says Lindbergh.

“There’s a lot of research and development going on in batteries, and it will filter its way upward. We want to frame the dialogue; there’s good work going on by the likes of Rolls-Royce and GE.”

Alternate fuels

Powering Imagination, through its upcoming projects (see box on page 110), is also promoting alternate fuels.

For Lindbergh, the problem is scale.

“The aviation industry could reduce emissions by 80% by using biofuels,” he suggests. “But the problem is cost; there’s a huge premium. Biofuels need specific input. This is not only legislative input but also increased demand to bring costs down. We need to bring alternative fuel prices down.”

routes-news.com

Powering Imagination

Powering Imagination projects Quiet Flight

North to the Orient

Quiet Flight is an electric flight initiative, due to take place later in 2014.

“I’ve been invited to demo electric aircraft over the Grand Canyon,” Lindbergh says.

The project could help solve a noise issue in US national parks.

Since 1987, the US National Park Service has been looking at ways to allow visitors to appreciate the parks from the air but is aware that the peace can be easily disturbed by machines such as helicopters flying overhead.

“I’ve spent a lot of time instructing, wearing noise-reduction earphones,” says Lindbergh. “It’s a sublime experience to fly quietly, to hear a dog barking beneath you, for example.”

In 1931, Charles Lindbergh flew 30,000 miles with wife Anne Morrow Lindbergh from the United States to China, via Canada, Siberia and Japan.

Anne Morrow Lindbergh wrote a book, North to the Orient, describing this journey, which was published in 1935.

Erik Lindbergh describes this particular project as a “celebratory route”, as in 2016 he will retrace the 1931 journey to commemorate its 85th anniversary. But this time, the journey will be covered in a floatplane powered by biofuels. The project will also take in extra stops and promote Powering Imagination’s goals directly in Canada, Siberia, Japan, and China. “We will use this as an opportunity to focus on alternative fuel solutions,” he says.

Biofuels have been proven to work.

About 1,500 commercial flights have taken place using a biofuel blend. GE Aviation was involved with Virgin Atlantic’s 2008 test flight of a B747 carrying biofuel derived from coconut and babassu oil.

More recently, the airline has worked with LanzaTech on low-carbon fuels. Meanwhile, British Airways GreenSky’s fuel plant, run by Solena Fuels, is to be built in Thurrock, Essex by 2017, with BA committing to buy 50,000 tonnes of fuel that has been converted from landfill waste. Lindbergh says this kind of project is “brilliant”, but adds that the markets are volatile.

PR is another string to Powering Imagination’s bow. Lindbergh worries aviation is losing the children of today – when perhaps in earlier times being a pilot was the ultimate aspiration.

“We want to have fun and work with partners, like museums and galleries, that capture children’s

110

ROUTES NEWS 6, 2014

imaginations,” he says. “We need children but we’re losing them early on.”

As a result, Powering Imagination has partnered with The Museum of Flight in Seattle, and Embry-Riddle Aeronautical University in Florida. Lindbergh says he wants to reach 10 million children in the next five years and is in talks with a broadcasting partner that could help him exceed this target.

There’s a focus on storytelling.

Among other projects, a recreation of Charles and Anne Morrow Lindbergh’s 1933 survey flight around the North Atlantic Ocean will take place in 2018.

The recreation will form the basis of a documentary and showcase how electric power and biofuel can power flight across continents. Anne Morrow Lindbergh’s Listen! the Wind, published in 1938, lends its name to the project.

As for writing his own story, Erik Lindbergh says this is on the cards, alongside a documentary based on

Erik Lindbergh

Reinventing Aviation This is a documentary, due soon, that will cover the story of the innovators of electric flight aviation in their race to produce the first commercially-viable electric aircraft. Erik Lindbergh will film the key innovators, with behind-thescenes access at workshops and test flights and interviews with engineers and entrepreneurs.

footage taken by himself over the past 20 years.

Partnering for success

While Powering Imagination has just taken off, Lindbergh says the ideas have formed over the past 10 years, especially when he was sculpting in his workshop. “My sculptures have led to important experiences,” he says, citing the sale of three of his works to Chris Leach, chairman of Air Charter Service (ACS).

The sale sparked a relationship that now sees Lindbergh as a brand ambassador for ACS, and the appointment of ACS as a corporate sponsor of Powering Imagination.

“The partnership is founded on a mutual desire to create a clean, quiet and exciting future for aviation through innovation, adventure and storytelling,” Lindbergh says.

“By partnering with Powering Imagination, ACS is sitting in the pilot’s

routes-news.com

Powering Imagination

seat and leading the dialogue about the future of our industry and its viability for future generations. ACS really wants to be at the leading edge of aviation.”

ACS’s Chris Leach says his prime motivation is about putting back and not taking out. “We hope being associated with a sustainable future for our industry, and a serious aviator such as Erik, will communicate

something more about our values as a company,” he says.

Leach aims to fly with Lindbergh across the Pacific Ocean in an aircraft run on biofuel and will help publicise aviation across all available channels.

As for the eco-movement’s bearing on route planning, Leach says: “Regulators will shape the future of electric flight, biofuels and the pace of

progress of hybrid regional aircraft.

This will be the future, and market costs and regulations will lead us in that direction.”

Lindbergh now wants to get more partners on board, whether corporate, energy or travel related, and make aviation “clean, quiet and exciting”.

The Lindbergh name looks set to be a part of aviation history once again.

From New York to Paris: how the journey began It was a daring flight in 1927 that paved the way for commercial aviation as we know it today. American Charles Lindbergh, at just 25 years of age, departed New York’s Long Island on 20 May and landed the following day in Paris-Le Bourget, France.

His solo flight in the single-seat, single-engine Ryan monoplane, named Spirit of St Louis, scooped the Orteig Prize – a $25,000 reward promised by New York hotelier Raymond Orteig in 1919 to the first person to fly non-stop from New York City to Paris, or vice versa.

112

ROUTES NEWS 6, 2014

After winning, Lindbergh became an overnight celebrity, touring the globe and publishing an autobiography.

Franco-American relations blossomed.

He received the French Legion d’honneur from the French president in 1931. In the United States, meanwhile, Lindbergh was awarded the Medal of Honour – usually given for heroism in combat.

In the same year, a tour around the United States in the Spirit of St Louis on behalf of the Daniel Guggenheim Fund for the Promotion of Aeronautics took three months to complete.

In 1929, Lindbergh married Anne Morrow (the daughter of a US ambassador to Mexico) and later the pair undertook a series of survey flights across the globe in a custom-made Lockheed Model 8 Sirius, which was able to land on water.

One notable expedition involved proving the viability of flying from the West to the Far East, while another involved flying across the North and South Atlantic to scout potential routes for Pan Am, paving the way for the aviation revolution.

routes-news.com

Ripe for conversion?

In time for a new B737-800 PTF conversion programme, Martin Roebuck examines the market for converted B737-800 aircraft.

U

S-based Aeronautical Engineers, inc. (AEI) is promising a new departure in passenger-to-freighter (PTF) aircraft conversion when its B737800 programme receives its supplemental type certificate – it hopes by early 2017.

The programme highlights AEI’s belief that it is now cost-effective to convert the B737-800, but is there really a market for it?

Robert Convey, VP of sales and marketing at AEI, says: “The programme is unique in that the B737-800 is still in production and its replacement – the MAX 8 – is nearing entry into service.

This means owners and operators will have access to modern narrowbody converted freighters for the first time.”

AEI carried out 224 PTF conversions on B727s and has so far converted

routesonline.com

68 B737-200s, -300s and -400s. However, no other conversion programme has been previously launched where the aircraft has been out of production for at least four years.

According to Convey, low interest rates have changed the dynamics of the industry by reducing demand for second-hand passenger narrowbodies.

“Start-up LCCs [low cost carriers] can take new aircraft ex-factory when they used to take 15-year-old planes.

It’s a new phenomenon.”

When the -800 freighter comes to market, the oldest passenger aircraft will be nearing 19 years old.

“The ones most likely to be converted will be 16 to 17 years old,” says Convey.

“Boeing will run with the -800 until 2019 because, for some operators,

investing in the MAX is not worth it for the fuel savings they get. That’s perfect for us because it will mean an abundance of feedstock.

“The industry could be converting -800s till 2040 and they could spend another 20 years in service.”

The B737 as a freighter

AEI’s -300 conversion comes in a 9- or 10-pallet configuration, and the -400 takes 11 pallets. The company has decided not to develop a -700 freighter, but its -800 will accommodate 11 full-height unit load devices (ULDs) plus one smaller unit.

“We’ve passed on the -700. It would be no different from the -300 as a cargo conversion. The engines and airframe mean it would cost more, but there

ROUTES NEWS 6, 2014

115

Freighter conversions

would be no more available space,” Convey says.

“It’s the -800 that will replace -300s and -400s because of the additional pallet position and extra range of 500 miles. It’s a no-brainer. This is where the industry is going.”

AEI expects to announce its first -800 customer in the next three months.

The maths dictates that it will be an existing owner, as -400s are selling for $3m while the -800 will have a value of $12m to $13m when the conversion programme goes live. AEI’s on-cost will be around $3.5m.

“You wouldn’t do it for one more [pallet] position unless you already own the aircraft,” Convey admits. “It’s early, it’s a niche product. The general freight guys will still be converting -400s.

“There will only be a handful of customers for the -800 initially. But as it grows in age and prices fall, it will come more into reach.”

He predicts that Asian operators, confronted by regulatory requirements on age and avionics, will be among the early takers for the -800 conversion.

Integrators in Europe will also be in play, as direct owners or via ACMI agreements (lease agreements that include aircraft, crew, maintenance and insurance), but US take-up will be slower, he predicts.

116

ROUTES NEWS 6, 2014

“The twos [B737-200s] lasted so long, they’re only just getting into -400s.

But customers realise that the -300s and -400s are 3- or 4-year plays. The -800 is a 20-year play - we could be talking about leases of 10, 12, even 15 years. It’s not a question of if, but when,” Convey insists.

The -800 will also be offered as a Combi – AEI’s first – which will combine five main-deck pallet positions with 90 seats. “I see requests for it from governments, the UN, and operators that fly in outlying areas like Alaska and Africa,” he says.

Boeing’s total final production of the -800 will be around 3,500. AEI expects that 200 to 300 will ultimately be converted to freighters. Maximo Gainza, analyst at aviation consultancy Ascend, believes 200 is a “conservative” estimate.

IAI and PEMCO

IAI, part of Israel’s Bedek Aviation Group, sees a big market for PTF conversions of both the -700 and the -800.

“Although the capacity of both is not very different from the Classic B737, the operating economics make it more attractive than the ageing Classic,” says Jack Gaber, senior VP of marketing and business development.

To date, IAI has converted 40 -300s and 14 -400s, mostly for GECAS and

other lessors, although customers have also included airlines such as Qantas and Jet2.com.

“We believe that within a couple of years, the Classic will be replaced by the NG [next generation] as the preferred model to be converted,” states Gaber.

For US converter Pemco, however, there is no commercial logic in an -800 freighter. Kevin Casey, Pemco president, says: “It’s larger by only one position.

The fuel benefit over the Classic is well publicised, but if your longest runs are under two hours, you’re doing too much climbing and descending so the benefit is not really there.”

The bigger issue for Casey is acquisition cost. “A Classic costing $2.5m becomes a $7.5m airplane fully converted. The oldest -800, from 1998, costs $13m, so would become an $18m airplane.

“There’s a step-up in freighter conversion activity as values diminish,” Casey says. ‘“But, looking back at previous programmes, that didn’t occur until seven years, on average, after production ceased.

“That would take us until 2025-26 in the case of the -800. There’s no explaining how you’re going to get payback [with an aircraft that is still in production].

routes-news.com

Freighter conversions

“In most people’s eyes, a cheap freighter is a good freighter. I like the -800 a lot, but I am not convinced we are in the zone of convertability,” Casey remarks.

He points out that earlier this year, the -800 was actually increasing in value by around 3% a month and lease rates remain “sky high”.

Those supporting a new narrowbody freighter argue that there are fewer -400s than -300s in the market for potential conversion, and that the -300 has a significantly lower payload at 19.1 tonnes compared with 21.7 tonnes.

“There is a diminishing number of heavyweight -400s left,” Casey accepts.

“But express traffic is not dense, so it’s only operators in Africa and Latin America who really need to consider payload. In any case, recent research suggests payloads are hovering around 50%.”

Now that Qantas has disposed of all of its -400s, British Airways (BA) will soon have its fleet in the spotlight. However, Gainza believes that, with D-checks looming, BA’s aircraft may instead be considered for part-out. This could make Malaysia Airlines’ -400s, due to be phased out by 2015, next up for conversion.

The road ahead

The second-hand aircraft market in countries that have some of the greatest need for freighters – such as China and Indonesia – is being affected by the 15- and 20-year age limits civil aviation

routesonline.com

authorities are introducing.

Gainza says: “There is still a fair amount of time left” for the -400, which is from 14 to 26 years-old now. “Despite the Chinese controls, aircraft built in the 1996-98 period are going there and 15 conversions have already been completed this year.”

However, it is likely that the biggest influence on -800 feedstock will not be tightening regulations, but the fact that airlines are decommissioning at an ever-younger age.

When Jet Airways removed some 12- to 15-year-old -800s from service, lessor GECAS sent them for part-out.

Around 40 -700s across the globe have already had the same fate. It’s “a high number for a relatively young fleet”, says Gainza.

Emerging markets will continue to look for older and cheaper freighter options, but he expects “at least one integrator” to go for -800 freighters and points out that DHL will soon need 30 or 40 replacements for B757s that are nearing 30 years old.

“If they’re happy with the size, the -800 would be the way to go,” he concludes.

Re-lease or release?

Norwegian Air Shuttle currently has 79 leased and owned B737-800s in its fleet.

Unveiling one of Europe’s largest orders in January 2012, which was for 100 B737 MAX 8s and 22 B737800s, as well as 100 A320neo aircraft, Norwegian’s CEO, Bjørn Kjos, said: “We

intend to replace every aircraft after seven years of operation. We will sell or rent out our older aircraft in order to keep a young fleet.”

The commercial rationale was that the MAX 8 would burn up to 20% less fuel than first-generation -800s.

Deliveries of the new orders start in 2016. By then, Norwegian’s first -800s will be eight years old, but the carrier is not confirming at this stage whether it plans to renew leases and keep its older, owned -800s in operation.

Qantas retired its last B737 Classic in February, although it retains four -300s as freighters. The carrier operates 70 -800s. Spokeswoman, Jacqui Kempler, says: “Our B737-800 fleet is very young after extensive renewal over the past few years, with an average age of 6.3 years. We will not need to make a decision on replacement aircraft for several years, and we have no plans to convert our -800s to freighters.”

With a wide mix in its fleet, Turkish Airlines may be a more likely candidate for PTF conversions. As of June, it was operating 82 B737-800s, of which 24 are owned, 33 are on financial lease, 10 on operating lease and 15 wet-leased.

The carrier’s oldest -800s are of 1998 vintage, among the earliest made. Its rapid expansion means they have all remained in service, but with 95 more B737s on order – 20 -800s, 65 MAX 8s and 10 MAX 9s – Turkish may be tempted to dispose of its older equipment soon.

ROUTES NEWS 6, 2014

119

Social media

Arms open wide Andrew Fraser, director of marketing, Tourism New Zealand, says social media’s embrace is vital to destination marketing.

What role do you see social media playing in your overall marketing strategy?

What has been your most successful or memorable social media campaign to date?

Social Media is about storytelling and advocacy. It’s a key channel for us to tell the world about New Zealand as a destination and provide a real-time window to the destination. It’s also a great place for current and past visitors to share stories about their holiday here.

#NZMustDo on Instagram would be a good highlight. We started our Instagram account, @PureNewZealand, in March 2014 and shared stories and highlights about the must-dos in New Zealand on that hashtag. Within a few weeks, we acquired thousands of followers, but, more importantly, there are now more than 6,000 Instagram posts by current and past travellers under #NZMustDo sharing their own highlights of New Zealand, turning the hashtag into a crowd-sourced catalogue of experiences from all over the country.

How many people are on your social media team and how is it structured?

The channel management is centralised in Auckland with one full-time, in-house resource, although it’s a cross-functional collaboration process in terms of content creation, whether globally or market-specific.

Why has Tourism New Zealand managed to be so successful and innovative with its social media?

We try to always look at social media from a user’s perspective. What would they want to see? What would they care about and why would they share? What would make them inspired to consider New Zealand as a holiday destination?

More importantly, if they’re already here, what would make them recommend it to their friends and family?

Regardless of our message, story or objective, the above questions are always on our minds to provide guidance for us to use social media in an effective and a meaningful way that achieves our objectives, engages our community and sustains best practice on our social channels.

routesonline.com

Have you ever partnered with an airline or an airport on social media campaigns?

Not on a social campaign specifically, but we have recently collaborated with Auckland Airport on hosting Indonesian celebrity chef Farah Quinn on an experience across New Zealand. Farah raved about her experience here using her social channels, generating hundreds of thousands of impressions that would have cost no less than NZ$65,000 to generate via advertising.

What is the next big thing in terms of social media channels or approaches?

For travel in particular, Instagram is going to be key. So far it’s a rather closed platform with not much insight or reporting and limited opportunities for advertising. But soon enough it will open its arms wide with more opportunities for destination marketing organisations.

Andrew Fraser

On the other hand, it’s a great playground for social influence, with many influencers or opinion leaders who can help drive preference to specific destinations by informing their large following about it.

Which organisation’s social media strategy or approach do you most admire?

Oreo. They have a clear and unique identity on social media that is true to their brand. They promote their product and entertain their audience. And they are always topical, which requires great agility from their side. A great example of that is their ad on Twitter and Facebook that read “You can still dunk in the dark” only minutes after the widely-spread power cut in the United States a few years ago.

What is your advice for airports looking to work more closely with their destinations on social media campaigns?

Establish common objectives with your destination marketing organisation and work towards building advocacy for the destination on social media. Look at what others in your shoes are doing and learn from them. And finally, be aware that trial and error is a common theme in social media marketing. It is a continuously evolving landscape.

ROUTES NEWS 6, 2014

121

Events essentials

even

ts

esse ntial s

World Routes Checklist Friday 19 Arrive; a chance to take in some of Chicago’s world-class offerings, including its parks, museums, restaurants and architecture.

Download the World Routes App.

Saturday 20 Collect delegate badge from McCormick Palace; or take your pick from a complimentary architectural boat tour, city segway tour, Chicago film tour, a close-up look at O’Hare International or relax with a round of golf. Head downtown to the Hyatt Regency Chicago’s Crystal Ballroom for the Saturday Reception sponsored by Brand USA.

Sunday 21

McCormick Place

Head to the Skyline Ballroom of McCormick Place, and attend World Routes Strategy Summit. Explore Networking Village and get involved in activities on the stands; Face-to-Face meetings begin today in Airline Meeting Halls 1 & 2 so make extra meeting requests at the Diary Advice Desk through the Extra Meetings System, sponsored by Copenhagen Airport.

Image courtesy of Choose Chicago

122

ROUTES NEWS 6, 2014

Experience the tastes and sounds of the city while enjoying one of its leading cultural attractions, the world-renowned Art Institute of Chicago, venue for the evening’s Welcome Reception.

Septem ber 19 – 23

Monday 22 Get to the event for the 7:30am opening.

Face-to-Face meetings continue in Airline Meeting Halls 1 & 2, as does the World Routes Strategy Summit. Attend the World Routes Tourism Summit and Routes Exchange Airline Briefings which start today. There will be over 20 Route Exchange Briefings by senior network planners; confirmed briefings include easyJet, Finnair, WestJet, Arik Air, AirAsia, Virgin Atlantic Airways, Air New Zealand and more.

Have a quick change of clothes before heading to the Field Museum of Natural History for a memorable network evening. Hosted by the Chicago Department of Aviation and Choose Chicago, the night will include the World Routes Marketing Awards and an array of fabulous entertainment.

Tuesday 23 A third day of Face-to-Face meetings and further Route Exchange Airline Briefings from the likes of Iberia Airlines, Etihad, JetBlue, Air Canada and Flynas, among others.

Attend the networking lunch, sponsored by host of World Routes Durban 2015, South Africa’s ‘garden province’ KwaZulu-Natal, and get to the Farewell Reception hosted by next year’s host in the Networking Village after the final meeting at 5.00pm.

Just time to catch your breath before preparations begin for Routes Americas 2015 in Denver!

routes-news.com

Events essentials

Routes Americas 2015

Routes Asia 2015

Denver, Colorado, USA 01-03 February 2015

Kunming, Yunnan, China 15-17 March 2015

Routes Europe 2015

Routes CIS 2015

Aberdeen, Scotland 12-14 April 2015

Venue TBC Date TBC

MEET THE

TEAM

Routes MENA 2015

The Kingdom of Bahrain Date TBC

19-22 September 2015

and delegate feedback, and try to improve where we can.

To liaise with our host teams in the planning of our events throughout the year and for the following year, as well as project managing the delivery of these events with the wider Routes team.

What goes into holding a high-profile event such as World Routes?

A positive attitude and the ability to remain calm under pressure – which some days you really need at World Routes!

routesonline.com

Durban, KwaZulu-Natal Province, South Africa

What is your main responsibility at Routes?

What do you bring to the role?

Host and project manager, Rebecca Teale, reveals Routes’ continuous improvement strategy and exposes what goes on behind the scenes at World Routes.

World Routes 2015

What is the atmosphere like ‘backstage’?

Exciting and very busy – there’s always lots going on and plenty to do but we love it!

How do you ensure that World Routes continues to improve and grow?

We’re constantly looking for ways to improve and have several new initiatives this year; we read all our survey results

A lot of time and energy from both the host and Routes team. There’s a myriad of details that have to be considered, both prior to the event and during the event.

What are you most looking forward to at World Routes in Chicago?

Being back in the midst of all the excitement with a really great team, as well as returning to Chicago, one of my favourite cities!

What’s the latest on World Routes 2015?

We’re very excited about getting our new floor plan out on sale, and heading to such a beautiful and vibrant city [Durban, South Africa].

ROUTES NEWS 6, 2014

123

Events essentials

Top Tips for...Effective Face-to-Face Meetings With more than 10,000 Face-to-Face meetings expected to take place during this year’s World Routes, we offer some guidance to ensure you get the most out of your 20 minutes.

1. Keep presentations short and impactful but try to include all the information the airline will need to know. This could include a map so the airline understands the location and territory the airport serves, along with its proximity to major cities, regions and competing airports.

2. Focus on things that are important to an airline’s route planning decisions: What’s the size and value of the market? How is the traffic flowing today, and how does it compare with other opportunities you have?

Make sure you offer information on your current air service network, including: • Current airlines and route networks • Top indirect markets relevant to the airline

•

Average fares of existing routes compared to alternative choices Address how the route would be supported to ensure traffic, and if necessary, to improve the chances of the airline doing business with you.

Outline your marketing plans; stakeholder support; plans to drive outbound, inbound and connecting traffic; yield improvement plans through high-value passenger customer engagement, corporate sales brokering and route incentive programme.

3. Don’t include information that airlines don’t factor into network decisions, such as: • Pictures of the airport and its facilities • Terminal expansion or runway construction projects • Lists of companies in the region

• •

•

Economic data (GDP, population, unemployment rates, etc.)

Information about airport retail shops, numbers of baggage belts and check-in counters Awards the airport has won, etc.

4. Allow time for discussion and feedback from the airline. Ask how the opportunity sounds to them, or what they would need to seriously consider using your airport. Establish objections as to why they wouldn’t operate the route and try to agree the next steps. How could this opportunity be moved forward?

5. Above all, remember Airlines want to know about the market, not the airport!

Don’t forget to download 2014’s World Routes Smartphone App This year’s app includes the brand new functionality to arrange your diary directly through the app, as well as: • Full delegate listings – message anyone who is attending World Routes.

• Personal profile – promote yourself and allow peers to easily identify and connect with you.

• Speaker profiles – see who is speaking during the conference programme and when, rate them and leave feedback.

• Rate and Review – rate individual sessions and/or speakers.

• Airline table listings – find out where the airlines are and who is representing them.

• ‘Visit Me’ information – discover what stand activities are taking place.

• Chicago city guide • Leaderboard – top app users are rewarded with badges and points.

The free event wi-fi, sponsored by Venice Airport System, will enable delegates to easily download and login to the app, which will be regularly updated throughout the event.

Available on Android, iOS and HTML5 for your browser – for all the event essentials right at your fingertips.

124

ROUTES NEWS 6, 2014

routes-news.com

p o t e h t m o r f w ie V NAME

IDENT AND CEO CHRIS THOMPSON, PRES WEBSITE

ORGANISATION

Brand USA

YEAR FOUNDED

Promotion Established by the Travel

MEMBERS

www.thebrandusa.com

Act in 2010

hin them all of the major cities wit 450 across all 50 states and

rts are Brand USA’s marketing effo akers for the world’s n-m isio dec e hav and the vals st arri ate having on international What are Brand USA’s gre our own backyard. in er gath nes airli tes Rou US tourism industry. achievements since World r? yea last as Veg in Las so Why has Brand USA been ry Do elected officials, indust We continue to build upon our ation avi the h wit ed olv inv ply dee ognise al rec tion ers rna stakeholders and oth successes and expand our inte s industries? vice ser air? and rism tou er of sum the economic impact presence. Since 2013 our con cal part of the global criti a are ines s, Airl fact the at ed look and Absolutely. People, who brand campaign has been exp essential to Brand USA’s and y . nom stry eco indu ctly soft a dire dly k know that tourism is har to 10 key markets, we now wor easing the number of incr of sion est mis larg s on’ in nati e trad Travel and tourism is our with the international travel make the international travellers who ng the top tinue con we and s rket ma el service export and travel is amo trav .

20 top choice travel destination first ir the USA District al the tion and rna inte 10 industries in 49 states n, to build the nation’s largest rnational visitors – other tha inte Our ent. loym emp of Columbia in terms of representation network. ing from but also including those com tinues to t of par l gra inte an are nes It creates hard dollars and con airli The ada – must arrive Can and xico Me nd Bra for support new jobs. global market development ice, we here by air. Without air serv ked wor e we’v as, Veg Las e Sinc USA. able to share the iconic llenge e, including: would not be at’s the most significant cha with airlines around the glob ional parks or premier Wh nat s, tion tina des , ry? ust ANA , ind nes facing the US tourism Air China, airberlin, Alaska Airli r the attractions the US has to offe can get irates, Em ta, Del BA, , nes Airli Global competition. Travellers na AA, Asia rs. elle trav ld’s wor the , und nes aro n Airli to destinations from all Etihad, Hainan Airlines, Japa to the get can ttle, world – as easily as they Lufthansa, Norwegian Air Shu red with Oxford Economics tne par You wcasing . sho ted of Uni ter Therefore, it’s a mat Qantas, Singapore Airlines and study that addressed US. rism tou US a on actions attr e of hav rsity iers what we offer. The dive Partnerships with these carr spending. What were and on tati visi ls for riva s US nitie and experiences in the brought about new opportu its key findings? ire travellers ed and exp and rs elle trav al anywhere. It’s up to us to insp tion interna stand out. Brand USA’s s item few A , before. er avia nev ndin to discover this land like service from Saudi Arabia, Sca marketing efforts e ativ per co-o and th Europe, Australia, Asia and Sou ental generated 1.1 million increm the highlight of your Central America.

2013 – a What has been al fisc ing dur US visitors to the ? tenure at Brand USA so far e over growth as a result eas incr 2.3% industry e rism hav tou to The enthusiasm for our What does it mean to you ting initiatives. Those rke ma our of tourism er oth the in and ce – among our partners World Routes taking pla ors spent $3.4 billion in visit al ition add and g ? ifyin row grat a professionals – is both US for the second year in travel and the United States, including in our World . nce fide con of vote invigorating. It’s a vital element a t’s Tha eipts, and supported rec fare ier carr y as a stor ts our por collective efforts to tell Routes recognises and sup of 53,000 US jobs. The n atio cre the

. ne airli tion premier travel destina the strong state of America’s impact study confirmed the positive at to gre it’s rse, cou of , And y. industr

126

ROUTES NEWS 6, 2014

routes-news.com