The Blue Swan Daily brings you a roundup of the most thought-provoking and interesting comments from those industry leaders in the know.
Virgin Australia CEO John Borghetti on his plans for the carrier
“To keep de-leveraging the carrier and paying down debt and to focus on Asia for development.” Virgin Australia reported earlier in Aug-2017 that it reduced financial leverage for the 12 months to 30-Jun-2016 by 11.9%, cutting this from a 5.9 to 5.2 ratio of adjusted net debt to EBITDA. Mr Borghetti commented that while the domestic Australian market will remain the carrier’s core product and “backbone”, Asia “is our future because a lot of it will flow onto our domestic network”.
Cathay Pacific CEO Rupert Hogg on the carrier starting an LCC
“Broadly speaking, we have no plans to start a low cost airline… But we compete with low cost carriers on different routes and we have to have a proposition that price sensitive travellers, new travellers and first time travellers find attractive and prefer”.
Cathay Pacific chairman John Slosar similarly stated: “I don’t think passengers honestly care what your business model is… Just because we consider ourselves a full service airline does not mean we can’t compete with the so called low cost airlines. They may be low cost but they are not low price all the time”. Mr Slosar said the carrier could match LCCs and the needs of cost conscious passengers through its existing product, offering more “value for money” tickets for passengers. “It is not the case that just because we are a full service airline doesn’t mean we can’t compete with so called low cost airlines… If you look at their pricing, they may be low cost, but they might not be low price”, he said.
Germany‘s Federal Minister of Transport and Digital Infrastructure Alexander Dobrindt on the take over of airberlin
“It is imperative that Deutsche Lufthansa AG be able to take over significant parts of airberlin. We need a German champion in international air transport… We are in… a European and international market environment, so monopoly can no longer be viewed by single regional sites”
airberlin CEO Thomas Winkelmann regarding the carrier’s insolvency proceedings and confirming the aim for a Sep-2017 sale of the carrier.
“We have spoken with more than 10 interested parties, among them several airlines. There won’t just be one, but two or three bidders”.
Qantas CEO Alan Joyce on additional security at Australian airports
“I do not expect airfares to increase in the next 10 years due to any additional charges to improve security at Australian airports. Qantas will move to implement any additional security measures and intends to do so in a fashion that does not require it to raise fares. Security and the travelling experience is a shared responsibility across airlines and airports and we have to make sure we have the resources to make sure the travelling experience is still very good, and the security experience is what the government and professionals tell us to implement”.
Singapore Airlines CEO Goh Choon Phong
“There is no doubt that 2017 will be a tough year, primarily because of overcapacity in the market”. Mr Goh reported falling yields on long haul and regional services with pressure in the market caused by supply exceeding demand. Mr Goh said: “Clearly, there has been growing competition from low cost carriers, the Gulf carriers, and, more recently, the Chinese carriers. We were aware of this trend six or seven years ago and we determined that there would be a structural change in the market that wouldn’t go away. We knew that we must react to the change, to go beyond our traditional focus of selling tickets in the premium sector”.
Singapore Airlines CEO Goh Choon Phong on the value of alliances
“There is still value in Star Alliance”, noting most carriers with which the airline has deeper ties are Star Alliance partners. Mr Goh said: “The alliance is a great platform for deeper discussions. As well as the joint venture with Lufthansa, we have strong commercial cooperation with Air New Zealand and SAS. Outside of Star, we also have a deep partnership with Virgin Australia”.
Ryanair CEO Michael O’Leary on the European airline industry
“I expect the carrier to ‘clearly’… play a role in the consolidation of the European airline industry, given that we’re the biggest airline in Europe. Mr O’Leary confirmed interest in Alitalia along with airberlin, adding: “Everything will all get consolidated into four or five big groups” in the next five years. He concluded: “It’s always hard to predict the demise of an individual airline but that’s what happens”.