Routes News Magazine, Issue 8, 2014 by routesnewsmagazine

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The world air service development magazine

Competitor: Virgin Australiaâ&#x20AC;&#x2122;s Judith Crompton

Destination report: Romania Interviews: Mega Maldives & Facebook Special: 2013 in review Issue 8 Volume 9 2013 www.routesonline.com

Airports: Stuttgart & Canberra Plus: News, On the move and TIACA

Foreword

he end of year is a time to take stock and reflect. We picked some of the biggest airline stories making headlines in 2013 (page 28) and were spoilt for choice – it’s been a frenetic year of change in the industry. Even as we were putting the final touches to this edition, records were being smashed at the Dubai Airshow. Emirates placed what it says is the biggest aircraft order in history for 150 B777Xs, and an additional 50 A380s. This was just one order to grab the headlines, but there was also other news from the Gulf carriers, including Qatar planning a new carrier in Saudi Arabia, Al Maha Airways. And Etihad chose to announce its new Etihad Regional venture at the show, brought about through an equity stake in Switzerland’s Darwin Airline.

Foreign ownership debate It’s the sheer economic muscle of these airlines that has Qantas up in arms over its arch rival Virgin Australia’s plans to raise an additional $350 million from its foreign shareholders, which include Etihad, Singapore Airlines and Air New Zealand. Qantas’s hands meanwhile are tied under the Qantas Sale Act, which limits foreign ownership in the national carrier to 49%. While the issue continues to prompt fierce debate, Virgin Australia’s chief commercial officer, Judith Crompton, told me she is adamant Virgin Australia (previously the low-cost Virgin Blue) has brought more competition, lower fares and more consumer choice to the Australian airline market (page 14).

Editorial

Acting Editor Lucy Siebert +61 432 770 828 lucy.siebert@routes-news.com Deputy Editor Caroline Cook +44 (0)208 831 7560 caroline.cook@routes-news.com Group Editor Joe Bates +44 (0)208 831 7507 joe@aviationmedia.aero

Sales

Industry rallies for Philippines While order records were being broken in Dubai, the Philippines was reeling from the record-smashing Typhoon Haiyan. The aviation industry responded within days of the storm, with airlines and cargo operators ferrying desperatelyneeded aid to the worst affected areas. The PATA Foundation was also quick to act – making an initial donation to local NGO MSY Foundation. One of its board members, Andrew Jones, was among the first volunteers to start distributing aid, and was joined by chairman, Mario Hardy, who shared their experiences with Routes News. You can find out more online: www.routes-news.com Finally, as the year winds down, I wish you a happy festive season and look forward to connecting with even more of you at Routes events in 2014.

Acting Editor Lucy Siebert

R™ is a registered Trade Mark of UBM Aviation Routes and is used under licence. © Copyright 2013. The content of this publication is the copyright of UBM Aviation Routes Ltd and shall not be copied or stored in digital format without the written permission of the Copyright holder. Content is correct at time of printing. UBM Aviation Routes shall not be liable for any errors or omissions contained herein.

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

Production

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

Publisher

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

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

ROUTES NEWS 8, 2013

Contents 14

6 World news 9 On the move 11 Airline one2one Beibei Wang, director of planning, financial & routes at Mega Maldives.

13 Tourism one2one Jose Napoleon Duarte Duran, minister of tourism at El Salvador's Ministry of Tourism.

14 The heat is on Virgin Australia’s change programme has seen it turning to its shareholders for more cash – raising the fury of Qantas. Its chief commercial officer, Judith Crompton, discusses transformations and competition with Lucy Siebert.

19 Tigerair: Sharpened claws Operational consistency and listening to its customers tops Tigerair Australia’s priorities for 2014, its commercial director, Carly Brear, tells Lucy Siebert.

21 Airport one2one

33 26 Mixed bag EasyJet is 18 and is all grown up; Ryanair is going all soft and cuddling up to the business market; and British Airways is charging for bags on some short-haul routes – Adam Coulter investigates shifts in the UK market.

28 2013 Snapshot It’s been a frenetic year of change in the airline industry – Routes News rounds up some of the biggest news stories from 2013.

30 Love thy neighbour? Despite its location next to one of the biggest hubs in the world, Stuttgart Airport is chasing transcontinental links to complement its short-haul network, reports Piers Evans.

33 Middle man Canberra is Australia’s newest international airport and it is now on the hunt for fresh overseas links, writes Lucy Siebert.

34 Being social

Elizabeth Axtelius, director new & strategic accounts at Swedavia.

Jessica Roberts, client partner, travel & tourism at Facebook, on how the travel industry can use the social network to drive more arrivals.

22 City break

36 Routes update

Romania is tipped to notch up record growth in inbound tourism over the next decade, and has welcomed easyJet back from the UK to its shores. Gary Noakes travelled there to find out more.

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38 View from the top Doug Brittin, secretary general, The International Air Cargo Association (TIACA).

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World news RYANAIR FLYING HIGH Ryanair has been in route announcement mode, revealing more growth plans at Dublin and Stansted. This follows its move to boost its presence at Shannon after the Irish government decided to remove the air travel tax from next year. The LCC now has plans to launch nine new routes from Dublin. In addition to four weekly services each to Almeria, Bari, Chania, Comiso and Marrakesh, the carrier will launch a further six flights a week to Basel. Bucharest will get eight weekly flights, while Prague and Lisbon will gain 10 weekly and 14 weekly flights, respectively. In addition to the new destinations, the LCC will also increase frequencies on its UK flights to Birmingham, Bristol,

RECORD SETTERS Emirates and Etihad led the pack at Dubai Airshow, sealing record aircraft deals with Airbus and Boeing. Emirates placed its largest order yet, signing for 150 Boeing 777Xs, comprising 35 777-8X and 115 777-9X aircraft, plus 50 purchase rights, and an additional 50 Airbus A380s. The airline claimed it was the largest aircraft order “ever witnessed” in civil aviation, at an estimated $99 billion. Emirates’ total firm order book has now reached 385 aircraft,

Edinburgh Airport has had new routes announced by US Airways and SAS, plus Scotland’s first scheduled 787 Dreamliner service from Qatar Airways. Etihad Airways has bought a third of Switzerland’s Darwin Airline to launch its Etihad Regional venture. Under the plan, Darwin Airline will add 21 new routes

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Edinburgh, Glasgow Prestwick, London Stansted and Manchester. Meanwhile, in London, Ryanair is growing its Stansted network with 12 new routes and increased frequencies on 17 existing services from April. This is

part of its 10-year growth deal signed with the airport’s new owners, Manchester Airports Group. This is aimed at growing Ryanair’s passenger numbers at the gateway from 13.2mppa to 20mppa. Under the Stansted expansion, four weekly flights will be launched between Brive, Comiso, Osijek, Podgorica and Skellefteå. Bordeaux and Rabat will gain six weekly flights each, while Basel, Bucharest, Dortmund and Prague will get 14 flights a week. Lisbon has the highest frequency at 28 weekly flights. CEO, Michael O’Leary, noted that many of the increased frequencies were being restored from previous cuts, made under previous airport owner, BAA. O’Leary said the new routes would “begin to provide the business market with a reliable service”.

excluding options or purchase rights: 214 Boeing 777s; 101 A380s; and 70 A350s, reaching a value of around $166 billion. While Emirates broke records, Etihad was not far behind, investing $67 billion in its largest ever fleet order. It signed for 25 B777X, along with 30 787-10 Dreamliners; one 777 freighter; 50 Airbus A350 XWBs; 36 A320neos; and one A330-200F. The airline also has a further 56 options and purchase rights and deliveries are expected to start in 2018.

Etihad’s order secures its place as the single largest customer for the 787 Dreamliner, while Emirates still leads the way for A380 ownership. Etihad suggested the aircraft would be used across its network of equity partners, including airberlin, Aer Lingus and Virgin Australia. Qatar Airways also joined the queue for Boeing’s Next Generation 777s, ordering 50 of the 777-9X variant at $19 billion. It also committed to five Airbus A300-200 freighters, with options for eight more, in a deal worth $2.8 billion at book prices.

and 18 new destinations to its network to feed into Etihad services in Europe.

Thai Lion Air is due to start flights from Bangkok Don Mueang to Chiang Mai and Jakarta, as well as a daily service to Kuala Lumpur, in December.

Aer Lingus will have new services from Dublin to Hanover and Pula from April, as well as a new Shannon–Malaga link from March. It has also increased frequencies on some flights from Dublin, Shannon and Cork.

AirAsia X is adding Nagoya as its third destination in Japan, after Tokyo and Osaka. It will operate four flights a week from Kuala Lumpur from March.

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WESTJET Announces Dublin as first transatlantic link.

EASYJET New routes from Gatwick with ex-Flybe slots.

BUCKLE UP Virgin America has taken its in-flight safety video to new heights with the help of film director, Jon Chu, and ‘American Idol’ finalist, Todrick Hall. The airline is the first ever to set the announcement entirely to music and performed in dance.

GREEN LIGHT FOR MEGA MERGER American Airlines and US Airways are aiming to become the biggest airline in the world during December, after they settled their legal battle outside of the court room. The airlines managed to settle a deal with the Department for Justice, which believed their planned merger would be bad for competition and consumer choice in the US. Under a wide-ranging agreement, the airlines have agreed to a number of remedies. This will see the carriers divesting 52 slot pairs at Washington Reagan National Airport and 17 slot pairs at New York’s LaGuardia Airport, as well as certain gates and facilities at the airports. Both airlines will surrender two gates and related facilities at Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles and Miami airports.

The ‘new American’ is expected to generate more than $1 billion in annual net synergies from 2015. The divestitures will result in 44 fewer daily departures from Reagan and 12 fewer from LaGuardia, down from the 290 and 175 currently operated by the two airlines. It’s been agreed with the Department of Transportation that Reagan’s commuter slot pairs will be reallocated to serve small- and medium-sized markets. The new American will maintain its hubs in Charlotte, New York/JFK, Los Angeles, Miami, Chicago O’Hare, Philadelphia and Phoenix for three years. In addition, for five years, the airline giant will continue to provide daily scheduled service from at least one of its hubs to each plaintiff state airport that currently has daily flights from either US Airways or American.

’APPY DAYS Routes News launches free app.

TUI TRAVEL Orders two additional Dreamliners.

TAKE OFF NOT AEROLINEAS ARGENTINAS Network shake-up sees Sydney dropped.

FLYBE Routes and jobs being slashed.

SOUTH AFRICAN AIRWAYS Buenos Aires chopped under latest network review.

QANTAS Fury at Virgin Australia’s capital raising.

The World Routes Strategy Summit White Paper is now available to download from www.routesonline.com. The paper, produced by Aaron Heslehurst, BBC World Television news anchor and presenter, and Shruti Vijayakumar, The World Bank’s air transport specialist, reports the event's key findings on the state of the air transport industry.

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Qatar Airways hopes to launch new domestic services in Saudi Arabia in the first half of next year, under the Al Maha Airways name. CEO, Akbar Al Baker, reportedly says first operations will be between the kingdom’s main cities, including Riyadh and Jeddah.

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ON THE MOVE

Brad Tilden (pictured) has been appointed as chairman of Alaska Air Group and its subsidiaries, Alaska Airlines and Horizon Air. Currently the group’s president and CEO, Tilden succeeds Bill Ayer, who will retire on December 31 after 31 years at Alaska Air. Serving as president, CEO and chairman during the last decade, Ayer retained his title as chairman following Tilden’s appointment as CEO in February 2012. Paul Gregorowitsch, chief commercial officer at airberlin, has left the airline. He had been in the role since September 2011 and will now pursue a new challenge in the Netherlands from March next year. Airberlin’s CEO, Wolfgang Prock-Schauer, will take up Gregorowitsch’s responsibilities until a new CCO is appointed. Dante Stein, the Romanian Prime Minister’s adviser, has been appointed to the new board of directors for national carrier Tarom, alongside several others. Simon Laffin has replaced Jim French as non-executive chairman of Flybe Group. French was succeeded as CEO by Saad Hammad in August. John Dabkowski has joined Amadeus’s airline IT business unit in the newlycreated role of VP airline commercial. He was previously managing director of Accenture subsidiary, Navitaire.

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Tom Ruth (pictured), president and CEO of Halifax International Airport Authority (HIAA) since 2008, will become the president and CEO of Edmonton Airports on January 20. He replaces Reg Milley, who is retiring, having led Edmonton since February 2005. HIAA has begun the search for Ruth’s successor and said it hopes to have a new leader “within the next few months”. Scott Callaway will manage the ‘South’ marketing initiative, based at Christchurch Airport. Callaway will promote New Zealand’s South Island as a tourism destination from next year. Scott Wintner has left his job as public affairs department manager at Wayne County Airport Authority in Detroit to become the Port of Oakland's aviation senior marketing and communications representative. Justin Bowman has been promoted to the newly-created role of vice chairman at Air Charter Service. He has been deputy managing director since January 2013, following promotion from his previous position as commercial director. Meanwhile, Elie Hanna has been promoted to director of private jets at the Dubai office. Hanna – previously assistant director of executive jets – replaces Maya Tarabay, who has left the company to start a family.

Lesa Seibert (pictured) has been appointed to the Board of Directors of the Louisville Regional Airport Authority for a four-year term, ending July 15, 2017. Graeme Ferguson, currently head of legal and an operations board director at London Stansted Airport, has been appointed cargo director for the airport’s owner and operator, Manchester Airports Group (MAG). He will focus on developing the cargo business of Stansted, Manchester, East Midlands and Bournemouth airports. Ferguson replaces John Froggatt, who retired as cargo and commercial bid director at the end of November. Martin Gauss’s contract as CEO and chairman of the board at airBaltic has been extended until December 31, 2015. David Binks will become regional president, FedEx Express, EMEA, from January 1. He succeeds Gerald Leary, who is retiring from the company after 39 years. Michael Holt, currently CEO of FedEx UK and VP of operational integration Europe, will assume Binks’s current position as senior VP of European operations. Paula Morris will join Cardiff Airport as its new head of marketing and communications. She most recently headed up the marketing and business development team at Capital Law for four years.

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AIRLINE Why is your network focused on Chinese Tier 1 and 2 cities? When we look at the Chinese market, we primarily target those cities that have potential to launch with low frequency and can quickly increase frequencies to at least three to four times a week. With the Maldives’ unique four-night travel pattern, getting the right schedule and frequency is key. China is the fastest growing tourism market, especially its Tier 1 and 2 cities (Chinese arrivals to the Maldives increased 15.6% year-on-year, from 198,655 in 2011 to 229,551 in 2012, and is expected to surpass 300,000 for 2013). From no direct service in Beijing, Shanghai and Hong Kong when we started three years ago, we have been able to develop these markets to five times a week. Other carriers have since followed our lead and jumped into the market.

Last year, you announced plans to serve Melbourne, Johannesburg, Tokyo and cities in Germany – how are these plans progressing? We have been talking with those markets and planning the right aircraft and the timing for each market. The European economy has not bounced back yet and with the Gulf carriers expanding their network with attractive prices, direct service airlines are pulling back. We believe next year will be good timing for us to enter these markets. This year, we have been focusing on maintaining and increasing our existing routes, improving our overall service from online sales to inflight services, and planning our fleet expansion. With the addition of more aircraft, we will move into the above-mentioned markets.

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charter services. We are also looking to expand and connect our network to Africa, including Mauritius, Saudi Arabia and other points. We will build up our European network next year targeting cities with strong historical demand but that currently don’t have any non-stop services. And we have some exciting plans for our unique fifth freedom rights to China and beyond.

What sort of information would you like from airports?

NAME:

Beibei Wang

COMPANY: Mega

Maldives

JOB TITLE: Director

of planning,

financial & routes HOMETOWN AND CURRENT RESIDENCE: Beijing

What are your fleet plans? We have two B767-300ERs and one B757-200ER. We plan to introduce another three or four aircraft in the coming year.

How is the inbound market to the Maldives performing? Inbound arrivals to the Maldives totalled 958,027 last year, up 3% from the previous year. Asia was the main driver, with Asian arrivals in 2012 totalling 384,506 – a 10.2% increase over the prior year. This made up 40% of total arrivals.

What are the plans for Mega Maldives’ network? We would like to enter other underserved areas in China and other places in Asia with scheduled service or

It is always important to have start-up support, but for our model, we really need to identify the right marketing partners. We appreciate airports with good market knowledge. We would like to know the volume from each region historically, the seasonality and the current direct or indirect airline services, not just to the Maldives but also to comparable destinations (this can be both a positive and a negative). Of course, we need to know about the airport operation requirements and costs, and the slot availability.

How did Korea perform for Mega Maldives? The Korean market traditionally has very lumpy seasonality, with a peak in May and October for only a few weeks. We worked hard with our charterer to provide a Sunday departure with a four-night stay in the Maldives. But due to the highly seasonal market, the charterer eventually defaulted on our contract and we had to close the route. Korea has market potential but it needs to be developed. Even now with Korea flying via Colombo, the market has not really taken off. The Maldives may also need more than just sun-and-sea marketing to build up markets like Korea and Japan.

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TOURISM Which airlines currently fly to San Salvador? El Salvador has been working on connectivity for a while and the main airlines serving San Salvador in 2013 were Spirit Airlines, American Airlines, Delta Air Lines, Iberia, Copa Airlines, United Airlines, Aeromexico and Air Transat.

How has your mix of airlines changed? There have been three new airlines in the past three years: in 2010, Iberia; 2011, Spirit Airlines; and in 2012, Aeromexico. Plus, the merger between Avianca/Taca has made San Salvador a regional hub, which will increase transit traffic in the future.

Which routes are new to your network? Avianca Airlines added new service to Chicago in September – this will strengthen the connection between one of our most important markets, the United States, which contributed 327,314 visitors last year. Plus, a new four-times weekly route is El Salvador– Medellin, which will strengthen the South American market.

Which routes would you like to see added to your network? We are already working on new or increased routes to Canada and we are interested in expanding connectivity to Europe, particularly Germany, Italy, France, Holland and Italy, which are important strategic markets.

What type of expansion or upgrade work is taking place or is planned for San Salvador’s airport? The Autonomous Executive Port Commission (CEPA) is working on a project named, ‘Rehabilitate, Modernize and Optimize the International Airport of

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NAME: Jose Napoleon Duarte Duran JOB TITLE: Minister of tourism, El Salvador Ministry of Tourism HOMETOWN: San Salvador El Salvador’. This project will cost about $67 million and includes the installation of new airbridges and runway resurfacing. There are also plans to expand the terminal area. The airport has recently been upgraded with new lighting and new restrooms. The upgrades are needed as the airport has seen increased demand with more than 1.6 million visitors in 2013.

What does San Salvador offer tourists? El Salvador is surrounded by natural landscapes mixed with a modern Latin American city life. This diversity means San Salvador offers a wide range of activities from high-end dining to modern shopping malls, traditional gastronomy and handmade crafts.

El Salvador is an ideal place for people who want a lot in short distances. Tourism routes include historic heritage, archaeological heritage, ecotourism destinations, picturesque villages and beaches that make us renowned as one of the top 10 surf destinations in the world.

What leisure activities do you suggest to Routes Americas delegates? Visit Suchitoto, a charming city with a strong identity and former capital of El Salvador. Go to Montecristo National Park, a cloud forest located in the northwest region of the country, close to the border of Guatemala and Honduras, and go to the beaches of La Libertad, which are major surf locations and also offer a variety of fresh seafood.

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The heat

IS ON Virgin Australia’s change programme has seen it turning to its shareholders for more cash – raising the fury of Qantas. Its chief commercial officer, Judith Crompton, discusses transformations and competition with Lucy Siebert.

smoky haze hangs in the air above Sydney on the day Routes News meets Virgin Australia’s chief commercial officer, Judith Crompton, at the airline’s harbour-side office. The November bush fires that swept across some of New South Wales – including parts of the Blue Mountains – had been brought under control just days before, and smoke lingered over the city on a hot spring morning. While the fires have thankfully been fully extinguished, the heat around Virgin Australia has increased, following the airline’s move to raise A$350 million in capital from its shareholders. This has seen its main shareholders, Air New Zealand, Singapore Airlines and Etihad, consider upping their stakes – prompting a furious response from Qantas, which argues this ownership model creates an uneven playing field,

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as the national carrier operates with foreign-investment limits. Qantas has gone as far as asking the government to withdraw Virgin's Australia's international license. Virgin Australia meanwhile argues the liquidity injection is needed to bring it up to speed with its competitors, but its refusal to issue a forecast for the 2014 financial year has raised questions in financial circles. The airline made a A$98.1 million net loss for the year to June 2013, compared with a A$22.8 million profit in the previous year. Qantas is also expected to make a heavy loss and has asked the government to guarantee its debt to avoid a ratings downgrade. While the outlook remains challenging, Crompton, a former Etihad executive, who is responsible for alliances, network, revenue management and

sales, is adamant Virgin Australia is well-placed to grab more of the lucrative Australian corporate and government market, while maintaining “the good work” on the leisure side of the business.

Australia-bound Crompton joined Virgin Australia in May this year, being reunited with John Borghetti, the airline’s CEO, after the two worked together at their now arch rival Qantas years ago. She made the move from London with her husband, an Australian, who returned to his homeland for work. Returning to Australia (Crompton worked for much of her career in Sydney) has not been a struggle. “Coming back to Australia was very easy – it was easy to slot back in and the players around town hadn’t changed and were all very welcoming,” she says. While the laid-back Australian lifestyle is legendary, Virgin Australia’s

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CHANGE AGENT culture is anything but slow and sleepy, says Crompton. “Things happen very rapidly in this company. Part of the legacy of being a low-cost carrier and part of our chief executive’s style is being nimble. Let’s not over-complicate things, and over-analyse. That doesn’t mean we cut corners, we absolutely do the analytical work, but we do it at a very rapid pace. If the decision on something is ‘no’, then that is the decision – let’s walk away and move on,” she says.

Vying for business Crompton joined the airline at a pivotal point in its history. While many of its full-service compatriots in Europe and the US are looking more and more like their low-cost peers, Virgin Australia is fighting against being associated with its former incarnation as low-cost Virgin Blue. Its efforts to throw off low-cost associations and compete head to head with Qantas for corporate and government business have seen Virgin Australia sinking millions into product innovations, including swish lounges around the country and a business class product across its domestic network. “We needed the product and facilities to attack the corporate market,” says Crompton. Lie-flat business class seats now feature on its A330 fleet that plies transcontinental routes, while ATR aircraft have been introduced to service the lucrative mining and resource industries in far-flung parts of the country. The business class in-flight product is supported by nine Virgin-branded lounges around Australia. “And there are more lounges opening – Cairns we just opened, plans for Darwin in the middle to end of next

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Judith Crompton started her career in a British Caledonian-owned retail travel agency, Blue Sky Travel, in southern England. She then made the move to London where she joined Kuoni, selling exotic holidays. One of her own long-haul trips to Australia saw her falling not only for the country, but for a man – so followed a move to the southern hemisphere. She transferred with Kuoni to Sydney to one of its corporate travel brands. Various roles followed, and next it was on to Qantas, where she worked closely with John Borghetti, before being transferred back to the UK to head up sales for the Australian carrier in London. She went on to join Etihad, heading up global corporate sales UK & Ireland before heading back to Sydney, where she quickly joined Virgin Australia, working for her former colleague, CEO Borghetti.

calendar year, and a refurbishment is happening in Melbourne at the moment on top of what was already a very nice refurb,” adds Crompton. “That has meant we had a good offering for the corporate market, but being mindful of never taking our eye off what we were doing with the leisure passenger,” she says.

Network review The product innovation has been pricey but relatively straightforward, whereas extending the airline’s network reach internationally was more tricky, says Crompton. “We looked at how we could expand into the global marketplace and would we do that alone, with our own metal, or would we do that with an alliance partnership? The decision was we would go down the path of the alliance partnerships. Running an airline in one of the most remote parts of the world and actually trying to make a decent profit, to far-flung places, is very, very hard,” she says. And so the partnership model was born. “We started conversations with four

very good quality carriers in Etihad, Singapore Airlines, Air New Zealand and Delta. We formed those very strong strategic alliance partnerships.” Under the structure, Etihad holds 19.9% (potentially rising to 22.2%), Air New Zealand holds 22.9% (rising to 24.5%) and Singapore Airlines 19.8% (potentially rising to 22.1%). Virgin Australia also operates a joint venture agreement with Delta in the US, while the Virgin Group holds 10% of the airline. This ‘partnership’ network gives Virgin Australia customers access to more than 400 points around the globe, with “a couple of gaps, but most of the world is covered,” says Crompton. Virgin Australia operates its own B777 services from Australia to Los Angeles – daily from Sydney and three times weekly from both Melbourne and Brisbane – as well as daily flights to Abu Dhabi. It codeshares on Etihad’s services onwards from the Gulf. The chief commercial officer describes the partnerships as “enjoyable and healthy relationships”, but there is no getting around the fact that it is a

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Virgin Australia Virgin Australia says it is flying the flag for competition in Australia, but Qantas fiercely opposes its ownership structure and has gone as far as calling for its international license to be revoked.

complex business model and one that is fiercely opposed by Qantas. But Crompton says the model works because of aligned cultures at the four partners and due to good, frequent communication between teams and executives. “I meet with my counterparts quarterly officially for an alliance board meeting, and I speak to them weekly,” she notes. In addition to these alliances, Virgin Australia owns 60% of low-cost operator, Tigerair Australia. Crompton believes this “completes the group” and insists that the two brands operate as separate companies.

Changing the game The Game Change plan implemented by Borghetti in May 2011 sparked a huge review in the network department. Crompton says this work is largely completed now, although the team, led by Hope Antzoulatos, continually analyses route performance and looks for new opportunities. “From day one, it was looking at the network and making changes. We took a really long hard look at our network [and asked], ‘where do we want the coverage around the country? And what do we want to do with these international partnerships?’ “We also needed to look at our regional growth. Over the three years, we have grown our ATR fleet – they

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have given us the opportunity to look at those regional opportunities. Our growth into regional Australia has been quite rapid – and a lot of that has been going into what were monopoly markets.” Once Virgin has access to monopoly markets, Crompton says, fares drop by 35% on average. “There are still about 30 monopoly markets around the country but some of those are regulated. One that has opened up to us in about 12 months’ time is Weipa in northern Queensland – we will start flying there in about a year,” she says. With work on the domestic network reach nearly completed, Crompton says the focus is now on frequency. “We are constantly looking at frequency, schedules, timings, making sure if tweaks have to happen, they happen,” she says.

Neighbourhood watch One network opportunity that remains is Australia’s nearest neighbour, which also happens to be one of the biggest and most powerful countries in Asia: Indonesia. While most Australians still associate Indonesia merely with Bali’s beaches, business and trade between the two countries is on the up. In an attempt to cater to increased demand, Virgin Australia has increased flights from Australia to Denpasar.

“From the middle of December, we will increase [Denpasar] services out of Brisbane once a week, Sydney twice a week, and three a week out of Melbourne. There was demand for that, so we have opened it up,” says Crompton. It has also sealed a new deal with SilkAir, aimed at grabbing a greater share of Indonesian and Asianoriginating passengers. “We have direct flights into Bali, but this is an expansion of the SilkAir agreement. They fly in their own right into Darwin. This will dovetail across that and give us the opportunity to codeshare with that across their Indonesian services. That is for the intra-Asia market travelling into Indonesia,” she explains. So with Virgin Australia declining to provide a profit forecast for 2014, what can we expect from the airline in the year ahead – besides, of course, its fierce fight with Qantas? Crompton doesn’t give much away. “We’ve publicly stated capacity will stay below 4% growth for the first half of the year. Capacity will be in line with corporate and leisure growth,” she says. There is, however, a small hint at more new developments planned for the year. “We do have some exciting things coming up – they are still under wraps. You will see the same brand focus, drive on corporate customer growth and, with that growth, then opportunities that could potentially open up,” Crompton concludes.

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TIGERAIR: Sharpened claws Operational consistency and listening to its customers tops Tigerair Australia’s priorities for 2014, its commercial director, Carly Brear, tells Lucy Siebert.

t has been a year of dramatic change for low-cost Australian carrier, Tiger Airways. In that time, a new CEO, Rob Sharpe, has come on board, while a rebrand and new livery followed in July. Just three days after the new look was revealed, it was confirmed Virgin Australia would be taking a 60% stake in the LCC. Tigerair Australia’s network too has been under review, with the most recent rejig seeing changes to its North Queensland offering. This will see Sydney–Mackay getting chopped in April and replaced by an alternative gateway to the region, Proserpine. Meanwhile, Melbourne–Mackay is getting a frequency increase. While this is not a huge shake-up, the airline’s commercial director, Carly Brear, tells Routes News it is an example of how Tigerair Australia is working to right-size capacity to demand through rigorous network reviews and listening to customers. “Most airlines don’t announce route exits but it is important to us that people understand that this is demandled. My commitment to the Mackay region is absolutely still there. We have had an incredible amount of support since we went into that market, but it is in no one’s interest for us to operate routes where the demand isn’t there,” she says. The small airline has faced huge challenges since its start-up in 2007, not least of all its 2011 grounding over safety concerns.

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It is not a period on which it likes to focus, but its history is also not something it shies away from, Brear says. “While we like talking about the positives, looking at where we have come from helps us understand where we are heading to. The business was certainly not first choice in the market and now our focus networkwise and from a commercial point of view is on how do we move into being in a more appealing position. We believe we have come a long way,” she says. While the rebranding was aimed at communicating how the airline has changed since the dark days of 2011, Brear says operational consistency and service delivery are its core areas of focus. Within the Tigerair team, it is now all about the customer, she adds, which is primarily the leisure, budget market, while from a network perspective, the focus is on right-sizing capacity to demand and utilising existing aircraft more efficiently. Brear says that on the network front, it will continue to look at destinations where it believes it can stimulate new markets at a budget price point. She cites Alice Springs in the Northern Territory as an example. “NT Tourism and the government there have been extremely supportive, as have the airport. It is a really good example of a town in its own right and a gateway to some of the best bits of

Australia that just weren’t open or accessible,” she says. While Brear is keen to talk up the budget carrier’s effect on tourism to destinations, she is more tempered when it comes to talking about growth plans. Tigerair Australia has stated it has plans to grow its fleet from its current 11 to 23 by 2018, with the first aircraft coming from Tigerair Holdings. “For the size of our business, that is significant, but for the market, it is still a relatively measured approach, and staggered growth, which is obviously subject to demand and other factors,” she says. It is refreshing to hear Brear’s honest approach to Tigerair Australia’s challenges, but with Virgin Australia on board, she now believes brighter times are ahead for the carrier. “The business is in a healthy place from an investment and support perspective. All the changes take time for people to see the benefits of all those things – we always made it clear it wasn’t just us coming out with a new logo, and that we now have to work hard to show we have changed,” she says.

ROUTES NEWS 8, 2013

AIRPORT Why has Swedavia launched the Connect Sweden initiative?

2014 will see record passenger figures. While we expect high growth, it might be a little bit less than in 2013.

According to statistics from the Stockholm Chamber of Commerce, Sweden’s attractiveness will increase and Stockholm is forecast to be the fastest growing capital in Europe until 2030. Stockholm is also ranked as the number one European region for growth in the future. With this in mind, there is good potential to further develop the Swedish market and improve connectivity, especially to fast growing markets outside Europe.

What industries and sectors are driving growth in Sweden?

How did you lobby local partners to get involved in the initiative?   Connectivity to markets is crucial for the Swedish business and hospitality industries, and it is important for attracting capital and talent to the region. Stockholm and Sweden are regularly ranked highly in studies into the competitiveness between countries and regions, except in one area – accessibility and connectivity. We have already closely co-operated with the Swedish tourism board and the cities of Stockholm and Gothenburg. This will be further developed and we will also work closely together with the business community.

For how long will the Connect Sweden programme run?   Initially three years.

How has Swedavia’s network transformed over the past two years? We have had fantastic growth and Stockholm Arlanda is one of the fastest growing airports in Europe. International traffic and especially European traffic has been growing fast during the past

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NAME:

Elizabeth Axtelius

JOB TITLE: Director

new & strategic accounts at Swedavia

HOMETOWN AND RESIDENCE:

Stockholm couple of years. During 2013, international traffic grew 6.2% and domestic 0.6%.

What has been your most significant route win in the past 12 months?  Seven new routes outside Europe opened and two more will commence at the start of 2014. There is scope for more intercontinental routes out of Stockholm and we are very happy about Emirates’ new service and Norwegian’s focus on the Swedish market, with new routes to New York, Bangkok, Fort Lauderdale, San Francisco and Los Angeles.

What is the traffic forecast for Sweden in the year ahead?   We expect growth to continue and

Tourism has been the fastest growing sector in recent years. Swedes are travelling a lot and surveys show they are spending more money on experiences, travel and eating out, and less on goods and electronics. The large Swedish companies are also travelling a lot and several smaller Swedish companies are expanding internationally. When global international companies are investing in Scandinavia or Northern Europe, most of them put their regional head offices in Stockholm, as it is the financial capital of Scandinavia. Other important sectors are industrial companies, mining, IT and pharmaceuticals. New growing sectors for Sweden are within IT development, such as gaming and app development.

How did you first get into the aviation industry? I started in the finance department at SAS and had several different positions within the airline – in departments such as marketing and sales, commercial/network, Snowflake (LCC start-up) and cargo. I also worked for a charter airline for a while.

Which other regions do you most admire for their route development initiatives?   Singapore is doing a great job as they seem to have a holistic perspective. I also think our Nordic neighbours are doing a good job, with different strengths in different areas.

ROUTES NEWS 8, 2013

City break Romania is tipped to notch up record growth in inbound tourism over the next decade, and has welcomed easyJet back from the UK to its shores. Gary Noakes travelled there to find out more.

t was a small step for easyJet, but a bigger one for Romania when the airline reinstated flights from the UK to Bucharest in October, after a five-year absence. EasyJet’s return cemented a period in which Romania’s connectivity has grown significantly, mirroring its economic growth and its population’s increasing prosperity and desire to travel and work abroad. Accession to the European Union in 2007 saw a number of multinationals invest in Romania, including GlaxoSmithKline, Vodafone, Royal Bank of Scotland and DIY superstore chain, Kingfisher, which operates the Bricostore brand there. Plus the country’s tourism industry is growing at a high average, while restrictions on Romanians working in eight EU countries, including the UK and Germany, will be lifted on January 1. “EasyJet coming back indicates that there is demand. All in all, there are 4,500 companies registered with UK capital with around £5 billion investment,” says Liviu Buzila, head of trade and investment at the British Embassy in Bucharest. Romania’s main gateway, Henri Coanda (Otopeni) airport, 10 miles (16km) north of Bucharest, accounted for 7.1 million passengers in 2012 and should reach 7.5 million this year. Its destinations mirror migration patterns, with Vienna, at 54 flights a week, topping the list. It is followed by London with 46, which, following easyJet’s arrival, has narrowly overtaken Rome, with 45, and Paris with 44. “I am convinced this is just the first route from easyJet,” says Valentin

ROUTES NEWS 8, 2013

Iordache, Bucharest Airports’ communication director. EasyJet’s four-times-a-week service, with a 156-seat Airbus A319, is expected to account for 65,000 passengers. It also previously flew there from Milan and Madrid, two routes it has not reinstated and has no plans to. Like the airline, Iordache believes the Gatwick–Bucharest route will principally serve UK leisure passengers, not Romanian migrants. “The Romanians that wanted to work in the UK are already there. We don’t expect a significant increase. The UK is important, but for tourism, not work; Romanians prefer to work in the Latin countries,” she says. EasyJet’s commercial manager, Hugh Aitken, echoes these sentiments. He says easyJet’s return after a five-year absence was not prompted by the easing of restrictions on migrant workers from Romania to the UK.

Aitken said these passengers were “not a focus” and predicted the majority of passengers would be UK-outbound. “I think initially it will predominantly be a leisure flight, particularly as our schedule is more weekend-centred,” he says. EasyJet’s decision to resume flights to Romania, hot on the heels of its debut in Russia in March, did not signal a major move into Eastern Europe, Aitken says, adding there was more to do in France and Italy first. Choice of destinations would also be limited by the airline’s policy of returning the aircraft to its base each day, he adds. “We believe in keeping the business model simple. In theory, our aircraft could go further, but the crew would have to stay overnight and that pushes up costs.” He adds that secondary cities in Romania and elsewhere in the region were not a focus. In contrast, Ryanair has made tentative steps into Romania,

Bucharest travel growth 2008–2013 FREQUENCIES

SEATS

2008

40,539

4,749,669

2009

42,319

4,994,808

2010

45,130

5,398,567

2011

42,860

5,091,095

2012

41,362

4,989,615

2013

39,690

4,923,397 Source: Routesonline.com

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EasyJet returned to Bucharest from Gatwick in October. However, there are no plans to reinstate flights from Milan and Madrid.

EasyJet’s Hugh Aitken and the crew mark their return to Romania.

but avoided the capital, instead serving Constanta from Pisa and Milan, and Targu Mures from Pisa and Charleroi. Aitken says the time was ripe for a return to Bucharest: “We were last here in 2008 and links with the UK have changed a lot since then; the economy has moved on massively.”

Market forces While easyJet is not pitching itself at the migrant market, migrant travel patterns have had a marked effect on Romania’s aviation development. Hungary’s Wizz Air and Romanian budget carrier, Blue Air, have cornered regional flights, connecting all the major secondary cities with points in Europe, for example, with seven destinations between them from London’s Luton airport. Wizz has similar route networks from Paris Beauvais and Germany. Flag carrier Tarom has been slow to follow and last year lost its status as market leader to Wizz; however, it began flying to Luton from Iasi in Moldavia, during October.

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Bucharest Airport is now pushing for easyJet to open a base there. It offers an incentive scheme for new carriers, particularly for long-haul flights. Since Delta Air Lines’ New York service was axed in 2009, the airport has been left with Doha and Dubai, the latter with flydubai, as its furthest direct flights – a problem exacerbated by Tarom’s Skyteam membership, which means carriers will only offer connections from Europe’s major hubs.

15% rise

IN TOURISM’S CONTRIBUTION TO ROMANIA’S GDP LAST YEAR “It is difficult, with alliances, to convince one of the members to come here because they already have a member here,” Iordache admits. Travel from Romania is mainly point to point within Europe, with, for example, up to nine departures

a day to Paris. The main business traffic is to Germany and Austria and Iordache names Budapest as the main competitor, as it attracts passengers from Romania’s northwest.

Airport development Henri Coanda underwent a refurbishment programme beginning in 2011, with an extension to the main passenger areas opening in November 2012. “Medium- to long-term, we have plans to build another terminal between the two runways. This will allow us to increase capacity from 12 million to 30 million,” Iordache adds. Nothing will start before 2018, as purchase of land already designated for development has to be finalised. Bucharest Airports also operates the city’s original airport, Baneasa, five miles (8km) from the centre, which is now surrounded by housing. Baneasa, a landmark building originally designed for only 600,000 passengers, but which at its peak served two million, is currently

ROUTES NEWS 8, 2013

Romania

LITTLE PARIS OF THE EAST It is not difficult to see how Bucharest earned its tag as Little Paris of the East, such is the resemblance of some quarters to the French capital’s avenues and art nouveau architecture; indeed, the city is complete with its own Triumphal Arch, a scaled down version of the Arc de Triomphe. Turn a corner, however, and you are confronted with some fine examples of Stalinist monoliths that are remnants of the former Soviet regime. Nicolae Ceausescu, perhaps Europe’s most notorious Stalinist, left his mark on the city in the form of the Palace of the Parliament. Ceausescu, who was executed in the 1989 revolution, ordered the demolition of 50,000 homes in an historic district to construct the building, the world’s largest after The Pentagon. The Palace, the work of 700 architects and the mind of an egomaniac, with its vast, empty interiors, is a must-see in Bucharest. Other remnants of the former era remain. The burned-out shell of the 19th century building that once housed the Securitate secret police now shrouds a plate glass construction filled with multinationals’ offices. Budget flights are changing the character of the city, with its old art nouveau district now housing a strip of bars offering cheap beer, ‘massage’ and table dancing, pandering to the stag party market in a way that Prague and other eastern European cities have done on a bigger scale. The centre is big enough to cater for all tastes, however, and with more and more cheap airline access, travellers of all types can enjoy this charming and historic city.

being refurbished. An ambitious plan envisions the airport attracting business traffic and private aviation, akin to the London City model, with flights operating with more than 50% business traffic. Plans include hotel check-in, valet parking and a promise of no more than 15 minutes from car to aircraft and five minutes from arrival to car.

Inbound tourism growth When it comes to tourism, the growth in outbound travel will be key in

ROUTES NEWS 8, 2013

attracting new carriers, with Romanians showing a taste for Greece, Spain, the Dominican Republic and Thailand. However, inbound visitors are the main driver behind air services. The World Travel & Tourism Council (WTTC) estimates tourism’s direct contribution to Romania’s GDP in 2011 was 1.4%, or $2.51 billion. This was due to grow by almost 15% last year – the world’s second highest rate – and at almost 7% per annum until 2022 (compared with a world average of

2.7%), when it will account for 7.5% of GDP. Visitor numbers, now around six million, will jump to 11.5 million in the same period, the WTTC estimates. Germans top Romania’s visitor list, followed by Italians, French and British. Romania’s tourism staple has been budget ski packages accessed via Bucharest in winter, plus city breaks – the latter increasingly driven by cheap alcohol and stag and hen parties.

7.5% TOURISM’S DIRECT CONTRIBUTION TO ROMANIA’S GDP BY 2022

Older visitors are attracted to rural areas, particularly the Saxon villages restored by the Mihai Eminescu Trust, which has Britain’s Prince Charles as Royal Patron, and to the east, Moldavia, which boasts numerous frescoed monasteries and forests. “The big opportunity is the villages; there are so many that are unspoilt,” says Ana-Maria Caia, a Bucharest-based tourism consultant, who also names the Danube Delta, an area attracting a reputation for wildlife tourism, as another growth area. Romania is keen to attract younger visitors to rural areas as well. Next year it will start a campaign to highlight soft adventure options such as mountain trekking. Razvan Marc, director of the country’s tourist office in London, tips the Black Sea resort of Mamaia as growing in popularity as a clubbing destination in the next few years. “The plan is to transform it into a kind of Ibiza,” he says, adding that charter flights to Constanta, the nearest airport, are under discussion.

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Mixed bag EasyJet is 18 and is all grown up; Ryanair is going all soft and cuddling up to the business market; and British Airways is charging for bags on some short-haul routes – Adam Coulter investigates shifts in the UK market.

ack in the early 2000s, when easyJet first started making a play for the business travel market by making its tickets available on the GDSs, it raised a lot of eyebrows – and questions. Would business travellers ever fly on a low-cost airline, with its orange livery, inflexible tickets, lack of lounges and paid-for in-flight meals? Fast-forward 10 years, and as easyJet marked its 18th birthday in November, the short answer is ‘yes’. The airline says its business passenger market has grown from 7.5 million in 2008 to 10 million this year – a sixth of its total passenger share. Meanwhile, something is also afoot at Ireland’s Ryanair, traditionally the ultimate critic of travel agents, third-party distribution systems, flexible tickets and allocated seating, and also one of the biggest airlines in the UK. Recently, Ryanair has started accepting American Express again (after dropping it almost a decade ago due to high fees) and has revealed that about a quarter of its customers are travelling on business. Its new, friendlier image includes the introduction of allocated seating from early 2014 and a brand revamp. And it is not just the low-cost carriers that are blurring the lines.

ROUTES NEWS 8, 2013

British Airways introduced ‘handbaggage only fares’ earlier this year, offering passengers at Gatwick the option to pay for hold luggage – something it swore it would never do.

Spot the difference So have the lines become so blurred between legacy carriers and low-cost airlines on short-haul routes from the UK as to be almost indistinguishable? According to easyJet spokesman, Paul Moore, the answer is ‘yes’…but it is also ‘no’. From a customer point of view, it’s ‘yes’. “For the customer there are three things they care about: value, service and route network. They don’t care about a bigger seat, champagne or getting a free sandwich,” says Moore. But from an industry point of view, it’s ‘no’. “It’s the difference between starting from a low-cost base – using the same type of aircraft, one class of travel, quicker turnarounds – and the legacy carrier cost base,” he says. “There are inherent cost advantages in the low-cost model; flag carriers haemorrhage cash more than they make money. So the legacy carriers may mimic our business model, but they don’t have our business model.”

In step However, Moore admits when it comes to the GDSs, easyJet has taken a “step or two towards them, and them to us”. In two significant developments, easyJet has made it easier for business travel agents to search and select its seats on GDSs. First, in September, it announced an agreement with Amadeus, which will allow agents to book its fares with the same pricing, ticketing and booking functionality as the GDS offers for traditional carriers. Then, in October, it boosted its presence on Sabre Travel Network by allowing agents to select and pay for specific seats on easyJet flights, as well as providing enhanced search capabilities to look for the cheapest options across a range of dates. EasyJet has also introduced a £99 flexifare, aimed squarely at business travellers, which allows multiple ticket changes at no extra cost.

Regional challenges Meanwhile, regional carrier Flybe has been operating a hybrid model for almost a decade, offering third-party lounges; extra legroom; allocated seating; and recently introduced ‘New Economy’ tickets. These allow extra

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legroom, lounge access and a piece of hold luggage for an extra £25. Director of marketing, Simon Lilley, says: “We were the ones that launched this hybrid model [in 2002]. And now we’re seeing a polarisation of full service and ‘hard-core’ low-cost.” But Lilley admits: “There is a challenge in terms of trying to find differentiators, as to why people should choose us over another airline. Where we have advantages are our regionality, flight frequency and the number of airlines we codeshare and interline with.” While Flybe’s financial performance appears to be improving – it posted pre-tax profits of £13.8 million for the six months to October, compared with a £1.6 million loss the year before, the landscape remains challenging. Flybe also plans to make 500 people redundant, with chief executive, Saad Hammad, saying: “These are challenging times”.

Fully flexible Despite consumers becoming increasingly comfortable with these ‘blurred lines’, BA’s move to introduce the baggage-only fares at Gatwick earlier this year seemed to signal a real step change. BA makes it very clear in both its advertising and on its website – where it hosts a fare comparison calculator – that it offers a full service. So how can it justify introducing ‘hand-baggage only fares’? Robin Glover Faure, head of short-haul fares, says: “These new fares are about

giving our customers more flexible options. The hand-baggage only fare has proved popular at Gatwick and we are now introducing the same fare types across our short-haul network. “Some customers are going on short trips and only taking hand luggage so a lower price point is attractive to them, especially as the price of the ticket includes food and drink, and flights to centrally located airports.” BA has also introduced a semi-flex fare, which offers more changes than the standard fare, but comes in a lot cheaper than the fully-flex fare. When asked if the lines between low-cost and full service carriers have become so blurred to be indistinguishable, Faure says: “We believe we differ significantly from no-frills airlines. We continue to offer all the benefits of a full service airline.” While BA might stick to its tune of arguing it offers a full-service offering on short-haul routes, the fact is that economics are forcing a shift to a no-frill offering while legacy airlines still need to maintain their short-haul feed into their hubs. And low-cost players need to become increasingly innovative and aggressive in securing their share of the business travel market. The result is a real mish-mash of models, with no clear distinction between them. Whether or not the British public cares, as long as it can get a cheap fare and good service, is another matter.

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ROUTES NEWS 8, 2013

2013

Snapshot It’s been a frenetic year of change in the airline industry – Routes News rounds up some of the biggest news stories from 2013.

JAN EGYPT UNREST Political protests flared up during the year, causing nationwide unrest and flight cancellations. u

QUITO AIRPORT OPENS

AIRASIA INDIA ANNOUNCED Joint venture between AirAsia, Tata Sons and Arun Bathia was announced in February and hopes to attain AOC early next year.

ROUTES NEWS 8, 2013

Thomson Airways, the first UK airline to fly the Boeing 787, celebrated the arrival of the first Dreamliner at Manchester Airport.

The LCC launched its 100th destination from London Gatwick. u

VIRGIN LITTLE RED LAUNCHES

JUN JETSTAR HONG KONG

Virgin Atlantic’s first ever domestic service took its first flight from Manchester Airport.

FEB STANSTED SALE Manchester Airports Group bought the airport from Heathrow for £1.5 billion.

DREAMLINER FLIGHTS FROM THE UK

MAR EASYJET TO MOSCOW

DREAMLINERS GROUNDED The world’s Dreamliners were kept on the ground for 123 days following battery issues.

MAY TUI – FIRST

Low-cost start-up from Qantas and China Eastern was joined by Shun Tak in June, but continues to face opposition from local competitors.

APR EMIRATES AND

QANTAS PARTNERSHIP LAUNCHES

LUFTHANSA STRIKE AGAINST COST-CUTTING PROGRAMME Hundreds of flights were delayed when ground crew took a stand.

JUL

BRITISH AIRWAYS RECEIVES FIRST A380 AND DREAMLINER ETHIOPIAN BUYS 49% STAKE IN AIR MALAWI The deal pushed Kenya Airways off the top spot for Malawian aviation.

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SEP CHENGDU NEW ROUTES

FASTJET GETS INTERNATIONAL FLIGHTS OFF THE GROUND

British Airways launched flights to the Chinese destination, while United caused a stir with its plans for a San Francisco link. u

LAX TOM BRADLEY TERMINAL OPENS

DUBAI WORLD CENTRAL OPENS TO PASSENGERS

THOMAS COOK NEW BRAND AND LIVERY The group announced a company-wide introduction of the ‘sunny heart’ logo and livery.

www.routesonline.com

OLYMPIC AND AEGEAN MERGER

Brazil’s second busiest airport was purchased for $8.3 billion by the Aeroportos do Futuro group.

ETIHAD PARTNERS Another big year for equity deals for the UAE carrier, with most recent conquest Darwin Airline paving the way for Etihad Regional.

The deal received European Union’s approval.

NOV RIO’S GALEÃO SOLD

RYANAIR PROFIT WARNING Shares in the LCC dropped 10% when it announced that its profit forecast had been lowered to €500 million.

VOLARIS AND VIVAAEROBUS DEALS The Mexican airlines placed major orders for A320neos.

US MERGER SETTLES American Airlines and US Airways reached an agreement with the US Department of Justice, removing the last obstacle in creating the world’s biggest airline.

NEW INDIAN AIRLINE Singapore Airlines and India’s Tata Group announced plans for new airline to be launched next summer.

IRELAND AXES AIR TRAVEL TAX The Irish government announced the duty would be chopped from April 2014.

AIRASIA X THAILAND READIES FOR LAUNCH Thailand’s Ministry of Transport gave the green light by granting air operator’s licence.

OCT QATAR AIRWAYS

The European Commission launched an investigation into whether Poland broke competition rules when it gave about €200 million in state aid to its money-losing airline, LOT.

Launched services between Dar es Salaam and Johannesburg.

The South Concourse of the new facility opened its doors to the travelling public.

JOINS ONEWORLD ALLIANCE

LOT AIRLINES

SAA RESTRUCTURING Buenos Aires route became another casualty of South African Airways’ restructuring.

ROUTES NEWS 8, 2013

Love thy neighbour? Despite its location next to one of the biggest hubs in the world, Stuttgart Airport is chasing transcontinental links to complement its short-haul network, reports Piers Evans.

hen Professor Georg Fundel, Stuttgart Airport’s managing director, reels off his gateway’s strengths, at the top of the list comes location. “We have Germany’s third largest catchment area, with eight million people living within 90 minutes’ travel time,” he says. “We have high salaries and a lot of export-oriented industry.” Other benefits of being the gateway for Baden-Württemberg regions include strong demand for VFR travel and a stack of tourist attractions. Yet Fundel also has a “big challenge” regarding the airport’s location. “If you look at the distance, Zurich Airport is our closest neighbour – it’s about 120km away,” he says. “Frankfurt is about 160km and Munich about 200km. We are exactly in the centre of these three hubs.” Fundel believes Stuttgart Airport can measure up to these neighbours in a straight stand-off: “Munich has a catchment area of about six million – it’s much smaller than Stuttgart,” he claims. But the German flag carrier’s strategy changes everything for Stuttgart’s neighbours, leaving Stuttgart focused on point-to-point traffic.

ROUTES NEWS 8, 2013

“Lufthansa’s network will always be over the hubs. They are trying to bring our guests from our catchment area into their hubs. Feeder traffic is very expensive and if they can fly passengers straight from Frankfurt, Zurich and Munich, it costs nothing.” Fundel’s route strategy has two main goals: to plug network gaps in Europe, while trying to build links with hubs on other continents. “Our system is point-to-point connections in Europe and North Africa and to be connected to the big hubs in the next 10 years,” says Fundel.

Making tracks Stuttgart is also bolstering its appeal through a series of infrastructure projects headed by Stuttgart 21 – a rail linking to neighbouring cities and, it is hoped, grabbing some of their air traffic. “Today, we know the country of Baden-Württemberg is losing about 40% of its passengers to the neighbouring hubs,” says Fundel. “If we have the fast train, it will bring a lot of this 40% who are going to Frankfurt, Munich and Zurich, directly to Stuttgart Airport.”

Professor Georg Fundel.

Stuttgart hopes to gain as much as 1.2 million additional travellers when the link opens, a sizeable boost on its traffic last year of 9.7 million. The airport has also started an airport city construction, which will become a home to Ernst & Young and 1,600 of its staff from autumn 2015. “Ernst & Young will be the start of attracting companies operating in Europe or worldwide,” says Fundel. In total, the airport operator is investing €568 million in various infrastructure projects. As well as Stuttgart 21 (€359 million) and the Ernst & Young office (€133 million),

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FRANKFURT

GERMANY STUTTGART MUNICH ZURICH

KEY UNSERVED ROUTES 1. MADRID 2. STOCKHOLM 3. BILBAO

Stuttgart’s T1.

4. MANCHESTER the airport is helping to construct a bus terminal (€36 million), a new airport office (€28 million) and a combined heat and power (CHP) plant (€12 million). Stuttgart is already among only six airports in Germany to stay in the black last year, with a net profit of €30.3 million on a turnover of €230.5 million.

Spreading the net For its current connectivity, Stuttgart Airport relies mostly on Germanwings. Lufthansa’s switch of short-haul routes to the Germanwings brand was pioneered at the gateway, with encouraging results. “The Germanwings product is very attractive,” says Fundel. “It is very competitive in price and quality.” After Germanwings, which in 2013 was flying 31.7% of Stuttgart’s traffic, comes airberlin, with a 19.4% share; TUIfly with 7%; Lufthansa with 6.4%; and Condor with 4.5%. These carriers offer coverage within Europe, although the airport says there is demand on the unserved routes of Madrid, Manchester, Nice and Stockholm, as well as the Baltic States and Scandinavia. For the long-haul network, the US is already linked with two daily connections: a long-established Delta flight to Atlanta and a more recent United service to Newark. But Fundel is convinced demand would also support long-haul links to the Middle East, India and China. “To China – to Beijing or Shanghai – there would be enough to fly on a daily basis, so we are looking to national carriers to feed traffic into their hubs,” he claims.

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Emirates is also keen to start flying, but it must overcome Lufthansa’s steadfast defence of its traffic rights, says Fundel. “Emirates has tried for eight or nine years to get the traffic rights to Berlin and Stuttgart,” he says.

A new image for Stuttgart Yet Fundel also sees Stuttgart as an undiscovered gem that tends to be overlooked by the domestic market. “In inbound tourism, there is a lot to do,” he says. “The image, even in Germany, is that Stuttgart is an industrial city.” The city is far removed from this outdated perception, he adds. “Even in the centre of the city, there are vineyards,” says Fundel. Along with food and wine, Stuttgart offers cultural delights, with a highly rated opera, he adds. “Within a short distance, you have the Lake of Constance, you have the Black Forest, you have Heidelberg. If you want to stay for a fortnight, you will not be able to see everything that the region offers,” he says. In his view, once flights open, new markets will soon pick up on the attractions. “This is what we see with the Russians,” he says. “It took a long time to convince Aeroflot to fly to Stuttgart, but they operated successfully from the beginning and we see it everywhere, in the hotels, in the shops.” For Russians, the city’s Mercedes and Porsche car museums are leading drawcards, along with retail attractions. “If you like shopping, we have the Metzingen outlet city, where Hugo Boss is located,” he says.

5. NICE 6. BEIJING 7. SHANGHAI 8.

TEL AVIV

9. OSLO 10. DUBAI Source: Routesonline.com

“A lot of people, especially from Asia, come not for the culture, not for the food, but just for shopping.”

Pulling back the traffic A further boost for Stuttgart could be new aircraft models, according to Fundel. Like many in the aviation industry, he expects that B787s and A350s will alter the economics for point-to-point connections, spurring Stuttgart’s links to overseas hubs. “I think one day these will be perfect aircraft to feed into big hubs,” he says. “For example, today into Atlanta we have a B767 and to New York it’s the B757, and these aircraft are at a certain limit on the distance.” Each Delta flight to Atlanta is already stuffed with cargo, and there could be scope to operate a larger aircraft, he adds. “We have a lot of passengers, but our country is also a champion for exporting goods, expensive goods,” he says. “So if there is coming this new generation, this will open markets to China, where the distance is critical. The size of the aircraft would be perfect.” For Stuttgart Airport, its neighbours will always be its biggest challenge, but the gateway hopes it can see this equation eventually starting to tilt in its favour.

ROUTES NEWS 8, 2013

AUSTRALIA SYDNEY

Middle man Canberra is Australia’s newest international airport and it is now on the hunt for fresh overseas links, writes Lucy Siebert.

ustralia’s Canberra Airport hopes to secure a low-cost carrier in 2014 and is also lobbying international carriers for new services. The airport, which serves Australia’s capital city and home of the government, is located halfway between the powerhouses of Sydney in New South Wales and Melbourne in Victoria, in the Australian Capital Territory. Despite its lower profile than the other capital city hubs, the airport, which was voted Australian Airport of the Year for 2013 at the Australian Airports Association’s National Airport Industry Awards, is determined to boost its route network. This is currently made up of nine domestic points. This comes after the airport opened its new terminal redevelopment called ‘AirVolution’ earlier this year. The project included a new road system, five new

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CANBERRA MELBOURNE

NEW TERMINAL: FAST FACTS • A$447 million investment • New, two-level, dual-lane, axial road system • Five new car parks

car parks and four new aircraft parking positions, in addition to the main terminal upgrade. The new terminal building now has 44 check-in counters – triple the previous number; 10 new aerobridges; new lounge areas; and an expanded F&B offering. Matthew Brown, head of aviation, told Routes News: “Our $420 million investment including a new terminal allows for international expansion.” The airport is forecast to serve about three million passengers this year, but Brown said it could handle an increase of up to 12mppa “without spending another cent”. He said: “We are currently locked in low-cost carrier negotiations and hopefully we will see some news in 2014.” He added Asian and Middle Eastern carriers are the main targets for new international services, but that the airport was also keen to add new connectivity to New Zealand.

• 3,700 car spaces • Four new aircraft parking positions • New 55,000sqm terminal building • 44 check-in counters • 10 new aerobridges Canberra is traditionally a high-yielding government and business market, served by the full-service Australian carriers, Qantas and Virgin Australia. It serves a catchment area of 800,000 people within two hours’ driving time and growing tourism is a major focus for the airport and region as a whole. Brown said the airport was actively marketing the region with Tourism Australia, as well as regional tourism partners, Destination New South Wales and ACT Tourism. “We happen to be in ACT but we service New South Wales,” said Brown. He added that Canberra aims to become the gateway to the “pristine New South Wales coast, with its adventure tourism and some of the finest food and wine in Australia”.

ROUTES NEWS 8, 2013

@Irelandwest ‘Sizzling’ launch of @flybe new @bhx_official service from Ireland West Airport this week.

Being social

Caroline Cook rounds up the latest aviation social media news making headlines.

@EtihadAirways We’ll now offer 50 weekly flights to four destinations in #SaudiArabia, which, along with #Medina, include Dammam, Riyadh & Jeddah.

News GOOGLE INSIDE GATWICK Gatwick has scored the largest implementation of Google Streetview indoors in Europe. The project, which is available across both terminals, is aimed at making it easier for passengers to navigate their way around the gateway through Google Indoor Maps and Indoor Streetview, the airport said. The concept involved 2,000 Indoor Streetview ‘stitched images’ of the inside of the airport. This allows users to take a virtual tour through check-in areas, the departures and

arrivals halls, and shops and restaurants. Interactive indoor maps of both terminals also pinpoint information hubs, charging points, play areas and toilets. The airport said ‘location-aware services’ allow passengers to identify where they are straight away, while route planning allows them to plot the fastest way to their gate. The maps can be accessed from desktop browsers, Android phones, iOS and tablets, via the Google Maps website and app, or through Gatwick’s own responsive website.

@easyJet Happy Birthday to us! 18 years ago today our very first flight took to the skies. Thanks to all who have flown with us since!

FACEBOOK ‘LIKES’ SURGING

O’LEARY IN THE TWITTER FIRING LINE Newcomer to Twitter, Ryanair, held its first #GrillMOL live Q&A with its boss Michael O’Leary. Despite a rocky start, O’Leary told followers to expect a “big digital re-launch coming soon”, and hinted at brand redevelopment.

ROUTES NEWS 8, 2013

Airlines continue to chase ‘likes’ on their Facebook pages, with some top brands crowing about their recent social media milestones. UK leisure brand Thomson said it had reached half a million Facebook fans – which is claimed was almost double the number of equivalent UK companies. Meanwhile, AirAsia and Qatar Airways have each gained more than two million fans on their respective Facebook pages. AirAsia quickly turned the milestone into a promotional opportunity, offering free domestic seats to its Facebook fans. And in Doha, Qatar Airways said its Facebook fans had grown by 500% in the past 12 months. It put this down to using Facebook for promotions, including exclusive airfares, and its sponsorship of the Barcelona football team.

@Ryanair Good news for passengers. @Ryanair to introduce fully allocated seating from Feb 1, 2014.

@DeltaNewsroom We think this is the beginning of a beautiful friendship – @Delta and @VirginAtlantic announce new summer schedule.

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Social media

ONLINE WITH: Jessica Roberts, client partner, travel & tourism at Facebook, on how the travel industry can use the social network to drive more arrivals. Why are travel and Facebook a good match? I like to think about the traditional five stages of travel – dream, plan, book, experience, share. Facebook not only impacts each one, but it has also evolved the five stages. Sharing is no longer the last stage; it is now at the heart of every stage. The last stage is now “reflect”. People are dreaming about travel on Facebook; planning travel on Facebook; and are influencing booking decisions on Facebook – travellers are 80% more likely to book a trip from a friend liking a page. Experiencing – users are updating their status and sharing photos while on holiday. People return home and reflect on their favourite holiday photos on Facebook.

What is Facebook users’ propensity to share travel-related content? Forty-two per cent of stories shared to users’ Facebook timelines were travel experiences, more than double that of the next category. Eighty-three per cent said they feel more confident when friends and family make a holiday recommendation. Ninety-four per cent use Facebook

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for vacation-related activities after booking, for instance posting a status or a link.

What types of advertising can Facebook offer destinations or airports? Facebook Exchange (FBX) allows real-time bidding (RTB) on ad placement and retargeting. RTB lets advertisers bid in real time on a specific ad impression rather than a larger group, allowing advertisers to show more relevant ads and run more effective campaigns. For instance, if a person is looking at a certain hotel on that hotel’s website, the next time they log into Facebook, that hotel’s ad can show up in the person’s news feed (which is the most engaging part of Facebook). Custom Audiences allows marketers to find their current customers on Facebook and reach them with relevant ads. For example, if an airline has a database of the emails for the people who flew to Hawaii last Christmas, they can use Custom Audiences to reach that same group of people on Facebook and show them an ad on Facebook for a discounted rate to Hawaii this holiday season.

What types of client have used these solutions? MGM Resorts has used Facebook to acquire new customers, convert them into guests, and ultimately brand loyalists. It has consistently seen returns on ad spend higher than three times for each stage of

the purchase. The brand looks to inspire and engage with their fans through branding and awareness on Facebook that highlights the unique, one-of-a-kind experiences available at each of its resorts. Using products Custom Audiences and retargeting on Facebook Exchange, MGM Resorts has seen a five times return on ad spend using Custom Audiences targeting and 15 times return on ad spend using Facebook Exchange.

What are your tips for airports and destinations that are using Facebook? One of the biggest problems is that companies have built a fan base that has little affinity for their product or destination. A good example of a successful campaign is Tourism Australia, as it follows these basic principles: the foundation of their fan base consists of Australians who are passionate about their country; their fans have friends who have visited Australia; and fans who may not know anyone living in Australia, but have visited the country and have enough passion for it to continue engaging. Nearly 90% of its posts are user-generated. Your best marketers are friends that have been to the destination.

GET INVOLVED! Do you want the global route development community to hear what you have to say? Email: lucy.siebert@routes-news.com

ROUTES NEWS 8, 2013

eventsupdate

DOUBLE ACT World Routes will return to the USA next year with the 20th anniversary event taking place in Chicago.

orld Routes will return to the US next year, following the event debut in the country

this year. The event will take place in Chicago, Illinois, in September, hosted by the City of Chicago Department of Aviation (CDA) and Choose Chicago. They are aiming to increase international air services to the city and to showcase everything the city has to offer to the global air service development community. Speaking at World Routes in Las Vegas, Rosemarie Andolino, commissioner of the CDA, said: “On behalf of Chicago mayor, Rahm Emanuel, we are thrilled that Chicago was selected to serve as the host city for the 20th World Route Development Forum in September 2014. The forum will provide us with the unique and significant opportunity to showcase Chicago’s O’Hare and Midway International Airports to airline

ROUTES NEWS 8, 2013

executives in charge of planning service to new destinations.” “Tourism is a vital, essential part of Chicago’s economic strategy,” added Don Welsh, Choose Chicago president and CEO. “Hosting World Routes 2014 is an important component of our aggressive strategy to achieve mayor Emanuel’s goals for increased visitation from across the globe. Working together with the Chicago Department of Aviation, we intend to deliver a successful conference and memorable experience for attendees in Chicago next year.”

Visitor’s delight Chicago is one of the most popular tourist destinations in the world; it is the home of the skyscraper, with two of America’s tallest tower buildings standing among its iconic skyline. The city attracted 46 million visitors in 2012 and is a major domestic and international transport hub and home of

FAST FACT

The 20th anniversary event will be held at McCormick Place, the largest convention facility in the western hemisphere.

United Airlines and Boeing, as well as two internationally renowned airports. Chicago’s main airport, O’Hare International, is the second busiest airport in the world for traffic movement and the fifth busiest in the world for passenger traffic. Meanwhile, Midway is the busiest airport in Southwest Airlines’ system – meaning Routes delegates will enjoy next year’s conference in a city that is rightly regarded as a true aviation hub. “We are delighted to be bringing the 20th World Routes to Chicago next year,” said Adrian Newton, group director, Transport and Technology, UBM Live. “The North American market is strategically important to UBM. This will allow more delegates from North America to attend World Routes and will make it easier for delegates from other worldwide markets to attend because of the global flight accessibility that Chicago’s airports offer.”

www.routes-news.com

Events update

upcoming events

Get with the programme AirAsia X boss features in Routes Asia Strategy Summit. Azran Osman-Rani, CEO of AirAsia X, has confirmed he will deliver the keynote address at the Routes Asia Strategy Summit. The Strategy Summit will open the 12th Routes Asia event on March 9, which will take place in Kuching, Sarawak, Malaysia, hosted by the Ministry of Tourism Sarawak and co-hosted by Malaysia Airports Holdings Berhad. The Strategy Summit is open to all delegates. Osman-Rani’s keynote address will be followed by three moderator-led panel discussions. Osman-Rani’s session will be followed by three moderator-led panel discussions with high-level speakers addressing key air service development issues affecting commercial aviation in the region. These will include: SESSION 1

The Future of LCCs in Asia – Innovate or Stagnate will discuss how LCCs might respond to the challenges and opportunities during the next decade. This session will also take a look at which LCCs will take the lead in the market; whether the traditional short-haul, point-to-point and quick turn operational model of LCCs will still guarantee their success; whether the long-haul LCC model will work; how the LCCs are responding to changes in international demand patterns; and which airports are serving LCCs and what do they require?

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SESSION 2

The Battle of the Hubs – Middle East vs. Far East will take a look at how airline mergers and joint ventures are shifting traffic patterns across the hubs. The panel will ask how the changes affect the hubs and what the Far East hubs are doing to respond to the continued and ambitious expansion plans of the Middle East hubs. It will also ask who will be the ultimate victors in this battle and will Dubai go on to become the world’s largest airport.

World Routes September 20–23, 2014 Chicago, USA The global meeting place for every airline and airport

Routes Americas February 23–25, 2014 San Salvador, El Salvador Routes Asia March 9–11, 2014 Kuching, Sarawak, Malaysia

SESSION 3

Emerging Outbound Tourism Markets will be moderated by Vijay Poonoosamy, Etihad’s vice president international and public affairs. This will look at how the rapid expansion of outbound tourism from the emerging markets of China, India and South East Asia is changing the tourism market. This final session will also address how countries are responding to the shift in the market, who is leading the way and how these shifts will affect air services, and ask what airports, airlines and destinations are doing to respond. Routes Asia is expected to attract around 800 delegates.

Routes Europe April 6–8, 2014 Marseille, France

Routes Africa June 22–24, 2014 Victoria Falls, Zimbabwe

Routes CIS TBC

ROUTES NEWS 8, 2013

P O T e h t m o r f W E I V FACTFILE ORGANISATION: WEBSITE:

go The International Air Car www.tiaca.org

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SECRETARY GENERAL

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ROUTES NEWS 8, 2013

ld What structural reforms wou you like to see? ernments The key is collaboration. Gov role our l must first recognise the vita industry plays in national and ment international economic develop erstand und and employment, and then us as with the importance of engaging re The s. part of the legislative proces scros re also needs to be much mo global government co-ordination and s such area standards development on tion as air cargo security and avia ntries emissions. We do not want cou ting crea or economic trading blocs dards. and enforcing unilateral stan

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