2017 CAPA Australia Pacific Aviation & Corporate Travel Summit – Day 1 News

The 2017 CAPA Australia Pacific Aviation & Corporate Travel Summit is being held in Sydney this week. Day 1 kicked off yesterday with a variety of thought provoking and interesting keynotes and panels discussions from high profile members of the industry. The CAPA team was in attendance capturing all the facts, figures and thoughts from every session, producing over 200 news briefs from the day. Take a look below at some the key quotes and register for upcoming events here.

Jetstar Group CEO Jayne Hrdlicka, stated:

  • The group continues to see interest from “price driven business travel”. Ms Hrdlicka stated the group understands the “price driven pressures” that exist for certain corporate customers, while citing the mining and resources sector as an example. “The price point needed to be sharper”, Ms Hrdlicka said, which saw Jetstar opening certain new routes with higher density aircraft instead of Qantas. She also highlighted the success of the Qantas/Jetstar dual brand strategy for the market segment.
  • Understanding the customer at a group level with Qantas is “what’s made us very successful”. Ms Hrdlicka highlighted the benefits of understanding “who wants to fly” and the reasoning behind flying. Ms Hrdlicka likened understanding the customer to the recent extension of the carrier’s SME fare flexibility options to the leisure market, stating increased flexibility to bundle features such as upfront seating and more carry on baggage have been a success.
  • The group is the “Walmart of Aviation”. “It is our obligation that people have the option to travel”, Ms Hrdlicka said, adding Australia‘s aviation market would be a “fraction of the size” without LCC penetration. Ms Hrdlicka said the Australian aviation market handled 37 million trips in 2004, and grew to 60 million in 2017. The Jetstar Group handles 37 million passengers p/a, including 20 million passengers in Australia.
  • Around two thirds of the group’s passengers travel at a fare of AUD100 (USD80.3) or less.
  • Both Australia‘s domestic and international markets are “in good shape”. Ms Hrdlicka stated Jetstar and Qantas Airways are “seeing growth” in both segments and in frequent flyer programmes.

 

Airlines for Australia and New Zealand (A4ANZ) chairman Graeme Samuel AC, stated:

  • There is a vertical relationship between airports and airlines, adding that “vertical relationships rarely leads to a partnership”. He said airlines and airports should further explore how the vertical relationship can be better structured.
  • A4ANZ has domestic airlines in both Australia and New Zealand as its members, while Board of Airline Representatives of Australia (BARA) is the collection of all airlines in the Australian market including international airlines.
  • Airlines have a vested interest in airport access and surface transportation options, noting their interest on the entire travel process, from home/work to the airport and onto the the aircraft. In reference to Western Sydney Airport, Mr Samuel stressed the importance of getting proper access to the site, citing Avalon as an example where inadequate surface transportation has impacted the airport’s position and success as a secondary airport.

 

Air New Zealand CEO Christopher Luxon, stated:

  • New Zealand‘s aim for 4.5 million tourist visitors by 2022 will “easily” be achieved”. Tourism has become the number one economic industry in New Zealand, with Mr Luxon stating growth has been “on the back of Air New Zealand over the last five years”. Mr Luxon said tourism accounts for 12% of New Zealand’s workforce and 21% of export earnings.
  • The company’s Pacific rim network has grown 35% since 2012. The carrier “can now connect emerging parts of the world through New Zealand“, he said, while emphasising the fastest way from Asia to South America is through New Zealand. The company continues to aim to improve long haul awareness, with Mr Luxon confirming campaigns have recently been “hugely successful”. 20% of Air New Zealand passengers on Auckland-Houston George Bush service are from Australia, Mr Luxon said.
  • Culture is important because “everything about an airline can be copied” in terms of hardware. Mr Luxon stated a “hard commercial practice” cannot be imitated, adding “We believe if we can build better leaders, we can build a better culture leading to positive engagement”. Air New Zealand is New Zealand‘s most attractive employer, with 60% of the country interested in working for the airline.

 

Sydney Kingsford Smith Airport MD and CEO Kerrie Mather, stated:

  • The airport’s agreements with airlines feature 28 KPIs. Ms Mather stated the agreements also act as a “data source to… guide our investment in infrastructure” and resource allocation, leading to collaborative approaches and shared solutions.
  • “We’ve aligned our technology strategy to our business and customer objectives”. A robust technology strategy enables stronger risk management and the ability to work together more effectively on safety and security issues, according to Ms Mather, and the ability to predict.
  • China is “transforming our passenger mix”. Ms Mather noted the facility’s Chinese initiatives, involving signage and Chinese speaking workers, while stating the tourism influx is likely to continue. Australia is the fourth most popular destination for Chinese passengers. Ms Mather also stated Sydney is in a “unique position” to serve China, with most destinations reachable in 11 flying hours. Ms Mather noted the 8-10 hour sector is an ideal length for long haul LCCs.

 

Australian Airports Association (AAA) CEO Caroline Wilkie, stated:

  • “Regional airports are very much at a disadvantage with negotiations with airlines”. Ms Wilkie also noted the challenges on relying on airlines’ commitments to air services, stating that for airlines, if a route “works it works, if it doesn’t, they are gone”. She noted that many regional airports have suffered from developing infrastructure and support services for airlines, who have subsequently withdrawn from the market, prompting her to question “how much you can rely on a guarantee for airlines” in terms of network presence.
  • Millennials will account for 30% of Australian outbound and 25% of inbound spend by 2020. Ms Mather stated the airport is aiming to maximise the “couch to gate experience” for millennials, who are seeking “great food and beverage and retail experiences”. The airport’s new retail experience is “designed to actually address that trend”, she said.
  • There are some “interesting discussions” around “who actually owns the customer”. She explained that airports are increasing seeing passengers as their customers, and not just the airlines’ customers.

 

CAPA – Centre for Aviation executive chairman Peter Harbison, stated:

  • Australia has one of the “most liberal regimes in the world particularly when it comes to the cities outside our four major gateways”. He said a “lot of countries could learn a lot” from Australia, citing Canada as an example where current regulatory policy is “very restrictive”. He explained that Canada has “lost out on several of millions of tourists”, with many tourists diverted from Canadian to US
  • The Australian Government needs to commit to the Western Sydney (Badgerys Creek) Airport“silver bullet” rail link, which he believes would be “miraculous” in terms of linking the city. According to Mr Harbison, the rail link would ensure an efficient, effective airport that serves the whole of what has traditionally been a divided city.
  • Every large digital operation – from Google to Amazon – is in the process of collecting data, and it is only a matter of time before they penetrate the travel sector.

 

Australia‘s NSW Minister for Tourism Adam Marshall, stated:

  • Sydney is the “welcome mat” for tourism in Australia. Mr Marshall emphasised the aviation sector is “absolutely crucial to NSW economy” and Australian economy as a whole.
  • Overnight visits in NSW reached 33 million for the year ended Mar-2017, an increase of 5.5%. The visits contributed AUD26.5 billion (USD21.3 billion) to the NSW economy. Mr Marshall stated Sydney Kingsford Smith Airport is “driving” the growth, with the facility accounting for 42% of Australia’s international flight growth for the period and 860,000 seats. Sydney Airport added 2574 extra flights during the period, and Brisbane Airport added the second most with 891.
  • Air services are “absolutely critical” for NSW, given the state’s unique geographic. Mr Marshall said “we can’t continue to be number one state for tourism” without strong, vibrant aviation sector. Additionally, the State’s partnership with Sydney Kingsford Smith Airport through Destination NSW has been “wonderful”, according to Mr Marshall.