LCCs are ‘environmentally irresponsible for the industry’, 737 MAX certification concerns and JetBlue’s London airport dilemma – news from the IATA AGM in Seoul

The big headlines from the International Air Transport Association (IATA) AGM in Seoul, South Korea will focus on the expected reduced profitability of the airline sector as it faces increasing headwinds. But, there has been a lot going on besides and The Blue Swan Daily provides details on some of the discussion areas as well as industry news from the sidelines of the event.

WIRED UK: Aviation ‘is going to be transformed more’ than other industries over next decade
WIRED UK founding editor David Rowan stated the aviation industry “is going to be transformed more than many more industries over the next decade”. He highlighted how consumer behaviours are changing due to digital and technological development. “We are already starting to see investment and innovation. I don’t see it as science fiction. It is going to be simplifying what we do now, taking things out the way”, he said. Mr Rowan stated new technologies and data usage will support the journey to personalisation and “remove any friction”. But, he warned that risks and concerns related to expectations, security, activism, denial and innovation theatre will challenge its success. Mr Rowan said businesses need to “use data to create more value”. He added: “Data is everywhere, it has always been there, but it has not been as visible as it has now. We have to learn how to use it”. But most significantly the industry must take friction out of the consumer experience is key to future business models. He said transport needs to “make the industry more responsive to consumers’ short term needs”. He added: “When you have the ability to analyse and make decision at real time, you can process people in a way that eases friction”.

Lufthansa chairman and CEO: Some LCCs are ‘environmentally irresponsible’ for the industry
Lufthansa executive board chairman and CEO Carsten Spohr described the strategy of some LCCs as “environmentally irresponsible” for the industry. He said: “Ticketing below EUR10 is impacting the whole the market and has a serious knock on impact for capacity both on the ground and in the air”.

SIA CEO: Reactivation of 737 MAX fleet will require recertification from several countries
Singapore Airlines (SIA) CEO Goh Choon Phong stated that in order for the group’s Boeing 737 MAX fleet to be reactivated, several countries need to recertify the aircraft, the pilot community needs to accept the changes and public confidence needs to be restored. Mr Goh pointed out that SIA does not have a domestic market and therefore requires “a minimum viable set of countries” to recertify the 737 MAX. The US or Canada is different as MAX operators from those countries have a vast domestic market. “For Singapore Airlines I don’t have that luxury. Everything we operate is internationally”, he said. SIA subsidiary SilkAir has six grounded 737 MAX 8s and 31 aircraft on order. “I think the MAX issue is well reported and the requirement is obviously to ensure the regulators are going to allow the MAX to resume operations. For SIA in particular we need more than that”, said Mr Goh, as Singapore does not have a domestic market.

JetBlue ‘still working on what London airport to fly into’
JetBlue Airways CEO Robin Hayes stated the carrier is “still working on what London airport to fly into”. He added: “We are working the angle you would expect us to”. Mr Hayes pointed out that by operating A321LRs rather than widebody aircraft, JetBlue has more flexibility, enabling it make secondary airports work and to have a successful year round operation. “Everyone can make summer work”, Mr Hayes said, adding: “The challenge has been the winter”.

Flybe CEO: Our troubles caused by a ‘perfect storm’ of Brexit, exchange rates, fuel and competition
Flybe CEO Christine Ourmières-Widener stated the airline’s financial troubles were caused by a “perfect storm”. She said: “In our situation it was a perfect storm – pound weakness related to Brexit, Brexit hit consumer demand, competition was part of the reason and then the fuel costs impacted too”.

Lufthansa: Industry needs to talk about its benefits, rather than focusing on its problems
Lufthansa executive board chairman and CEO Carsten Spohr stated the aviation industry needs to be more positive about its benefits rather than focusing on its problems. He said: “We complain at these AGMs about airports, about ATC, environmental taxes and more. We need to talk about what this industry does and how the world would look if we didn’t link continents”.

CBS News transportation correspondent: Millennials ‘want to go nonstop, on time, at a price’
CBS News transportation correspondent Kris van Cleave, speaking at the 2019 IATA AGM and World Air Transport summit, highlighted (02-Jun-2019) that millennial travellers “want to go nonstop, on time, at a price”. He added: “They want to go places their parents haven’t gone. They are more environmentally aware, but will not be afraid to wander through the wild flowers to get the perfect Instagram photograph”. He stated that fundamentally, younger generations want “connectivity and choice”. But, he said we will not see mobile voice calls onboard aircraft just yet. “It quickly moves to zero adoption in studies. I think everybody is scared of being sat next to the person that is breaking up with their partner over a three hour call”, he said.

Korean Air to configure A321neos with 182 seats across two classes
Korean Air managing VP passenger network and sales Bo-Young Song stated the airline will configure its A321neo aircraft with 182 seats across two classes. Korean Air has 30 A321neos on order and plans to take delivery of the first in 2020. It also has 30 737 MAX 8s on order, which will be configured in a two class, 158 seat layout. Deliveries of the 737 MAX aircraft were originally slated to start in 2Q2019.

Fiji Airways to use incoming A350-900s to serve routes to Los Angeles and Sydney
Fiji Airways CEO Andre Viljoen reported the airline plans to use its new fleet of A350-900s to serve routes from Nadi to Los Angeles and Sydney. Fiji Airways has committed to leasing two A350-900s for delivery in Nov-2019 and Dec-2019. Los Angeles is served daily with a mix of A330-300s and A330-200s, while Sydney service is operated with A330-300, A330-200 and Boeing 737-800 aircraft. Transitioning to A350-900 operations will enable Fiji Airways to better meet demand for more cargo and passenger capacity.

CHECK OUT… The three CAPA Daily publications produced during the event for more insights…