Catch up on some of the most thought-provoking discussions and keynotes from the CAPA ACTE Global Aviation and Corporate Travel Summit in London. Below is a snap shot of key quotes from some of our honoured guests in attendance to discuss what is affecting the industry in this part of the world.
CAPA – Centre for Aviation executive chairman Peter Harbison, stated:
- While the aviation industry is thought to predominantly concern “flying aeroplanes”, the most “tremendous” upcoming change in the industry concerns distribution. “That’s the real challenge”, Mr Harbison said, emphasising selling and marketing as a key profitability driver;
- “Super connectors” in the Middle East and Turkey are “losing steam”, after “transforming aviation” over the last 20 years. Mr Harbison stated an average growth estimate of 13% p/a over the last ten years slowed to just 0.5% in 2017. Mr Harbison said seat growth at Emirates, Etihad, Qatar Airways and Turkish Airlines increased 159%, 210%, 253% and 241% respectively, over the past decade, slowing to 2.8%, -3.6%, 0.8% and 1.8% in 2017;
- An “understated” estimation of 40,000 travel apps currently under development;
- Any projections regarding China’s aviation and tourism market are “likely to be an underestimate”. Mr Harbison said “ripples” from the growing Chinese international segment are gradually spreading to other regions. Citing Australia as an example, Mr Harbison said China is challenging New Zealand as the country’s largest tourist market;
- I believe low cost long haul will become the best way of getting places, based on the efficiency of long haul point to point travel. Mr Harbison believes low cost long haul carriers are “here to stay… because they’re going to evolve”. Mr Harbison stated the business model may begin to become aligned in more partnerships.
ACTE executive director Greeley Koch, stated:
- Research on the modern business traveller suggests a shift in “how travellers want to be taken care of”. Mr Koch highlighted a growing consistency in new recruits requesting to review company travel policies. He said travel policies are now affecting both recruitment and retention, with one third of ACTE members reporting a growth in inquiries for travel policies;
- More employees are generally requesting extra days away from work, in order to achieve a stronger work/life balance. Mr Koch stated whether personal or for leisure, this was largely seen more in the under 40 year old corporate segment. “However, there’s now a shift”, Mr Koch said, with over 40s expressing more interest in work/life balance;
- Duty of care in the form of safety and security as a growing corporate travel concern. Mr Koch also outlined corporations are seeing more issues related to border control and immigration. Mr Koch believes Brexit and other political events, such as the US travel ban, to contribute to the new safety and security concerns.
American Express GBT VP and GM UK Jason Geall, stated:
- Millennials are of growing importance in corporations. He said they continue to “build influence” with all generations of the workplace, largely through technology and innovation;
- No one is sure what Brexit means for open skies and borders. “What could happen”, he said, are business bodies moving across markets, from the UK to other regions.
IATA chief economist Brian Pearce, stated:
- The general consensus is “pretty good shape” for the economy and global travel market. Mr Pearce said the airline industry generally sees a four category, eight year economic cycle, with the industry currently going through a positive eight years. “I’m not going to say that it won’t continue”, Mr Pearce said, however “we need to work at it” to support the positive economic environment;
- Recent “political shocks” could have “easily” affected the current positive operating environment in the global airline industry. Mr Pearce noted the rise of alternative political parties in developed economies, stating populist pressures have potential to disrupt the industry. Mr Pearce however said other factors have driven past uncertainty, which was not initially expected by IATA. Mr Pearce outlined key drivers including strong business confidence, emerging tourist flows from China and big exchange rate shifts. The shifts “made the US less competitive”, while enabling struggling economies such as Brazil “come out of recession”;
- Changes in travel markets since the global financial crisis (GFC). He said before the GFC, the economy and supply chains were were geared towards globalisation, and borders were “yesterday’s thing”. “That has changed”, he said, particularly noting a changing cargo operating environment. Mr Pearce explained supply chains have “moved closer to home”, instead of being “spread” globally. Mr Pearce warned similar policies moving to the passenger transport sector could see “borders much more difficult to cross”.
London Heathrow Airport CEO John Holland-Kaye, stated:
- The airport has been at capacity for the last 10 years, and “now the time has come where we need to be bigger”. Mr Holland-Kaye stated a third runway by 2025 now has “cross party support”, with the Government now “clearly” understanding UK economic growth constraints associated with non-expansion. Mr Holland-Kaye said currently, it is very difficult to get from the UK to parts of Asia including China, South America and Africa due to the constraints;
- “I am pretty confident” airport charges will remain “close to current prices” following expansion of the facility;
- Heathrow’s catchment area within one hour will double in the next 10 years, with better access to the West, South and Wales. Mr Holland-Kaye acknowledged Heathrow is lagging competitors in France and the Netherlands in terms of connectivity, with the new scheme aimed at catching up;
- Certain airlines from China and India have expressed interest in operating to Heathrow but are not interested operating to other UK airports while Heathrow adds capacity.
Norwegian CEO Bjørn Kjos, stated:
- Operating transatlantic services to small, regional airports often benefit from “fairly large” catchments. Mr Kjos stated it is also “very cheap” to operate to the facilities, and some sectors are operated with 80% Americans onboard;
- The carrier’s distribution agreement with easyJet has potential to be replicated under new environments in South America or North Asia;
- the carrier is moving to distribution under a combination of online sales and GDS sales. Mr Kjos believes a key prospect moving forward is the ability to adequately utilise data, instead of only collecting it. Mr Kjos highlighted the airline industry has not been able to achieve this to the level of other industries.