Airline Business Daily

From news from IATA AGM in seoul l MONDAY 3 JUNE 2019

De Juniac sees above IATA to head cost-of-capital returns 3 in 2019, but only just to Amsterdam for 2020 AGM

IATA will hold the 76th annual general meeting in Amster- dam in 2020, the association announced yesterday. The AGM will be held from 21-23 June 2020 in the Dutch city. KLM, which in October marks its 100th anniversary, will be the host airline. “For me it is an honour that Amsterdam has been decided to be the place for the IATA AGM in 2020 and at KLM we are proud to be the host air- line,” says KLM chief executive Pieter Elbers. “Hosting the AGM in the year of our 100th anniversary is very special.

BillyPix “Having the AGM in Am- sterdam next year provides a great opportunity to embrace co-operation and to work to- profits squeeze gether in the field of sustaina- bility as a licence to operate Outlook for 2019 cut by a fifth to $28 billion as fuel costs and slowing demand take toll and as a licence to grow.” It marks the third time that ATA director general Alexan- also been revised downwards to as the US-China trade war inten- IATA will have held its annual Idre de Juniac warned that the $30 billion. sifies. This primarily impacts the meeting in the Netherlands airline sector’s hard won ability “The business environment for cargo business, but passenger and the first time since to create value for investors is at airlines has deteriorated with traffic could also be impacted as ­Amsterdam hosted the event risk after downgrading industry ­rising fuel prices and a substan- tensions rise.” back in 1969. profits expectations for 2019 by tial weakening in world trade,” “The good news is that airlines a fifth as headwinds mount. IATA says. have broken the boom-and-bust The association had projected a On the cost side IATA now cycle,” the IATA chief adds. “A net profit for the industry of $35.5 expects a higher fuel bill for downturn in the trading environ- billion in its first outlook for 2019, ­airlines, as well as more expendi- ment no longer plunges the made in December last year. But it ture on labour and infrastructure. industry into a deep crisis. has now cut this year’s expecta- IATA has also trimmed its reve- “But under current circum- tions to $28 billion, amid rising nue expectations for 2019 by $20 stances, the great achievement of costs and slowing demand stem- billion. It now sees industry turn- the industry-creating value for ming in part from weaker trade. over growing 6.5% at $865 billion. investors with normal levels of A revised profit of $28 billion “Stiff competition among air- profitability is at risk. Airlines will for this year would mark a $2 bil- lines keeps yields from rising,” still create value for investors in lion reduction on the 2018 indus- says de Juniac. “Weakening of 2019 with above cost-of-capital IATA AGM try net profit, which has itself global trade is likely to continue returns, but only just.” going Dutch

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IATA outlook $28bn $15bn 2019 in 7.4% numbers Projected industry net profit Increase in costs expected Estimated profits for North in 2019, down a fifth on its this year driven by fuel, American carriers in 2019, previous forecast of $35.5bn infrastructure and labour $500m higher than last year THERE IS NO COMPARISON. NO EQUAL. THERE IS ONLY ONE. THE COMMERCIAL JET ENGINE IN A LEAGUE OF ITS OWN.

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Passur picks up Ourmieres- Widener will capacity crunch leave Flybe in July Passur Aerospace is exhibiting at the AGM for the first time and its chief executive Jim Barry believes collaborating with industry stake- holders to better use data and ana- lytics can play a central part in tackling capacity issues. Barry notes that IATA director general Alexandre de Juniac and others have flagged the capacity constraints the industry is facing Back to basics during the AGM here in Seoul. “What we’ve noticed, particu- key for Flybe larly at American airports, is demand is going up considera- going forward bly,” says Barry, noting capacity BillyPix is in many cases insufficient and Flybe has a “very profitable core” the right fleet” now that it will be world if you do not have the ap- often with particular times and on which its new owners can build a able to return its remaining leased propriate organisation and fleet periods having a disproportion- successful business, its outgoing Embraer 175s to their owners this and we never had that,” she says. ate impact – with a related impact chief executive Christine year “allowing us to move to a net- While Ourmieres-Widener says it on performance “we have to be ­Ourmieres-Widener believes. work which is much more efficient”. will be up to her successor to decide able to anticipate these demand Ourmieres-Widener – who is The departure of the 175s is on Flybe’s future fleet make-up, she capacity crises”, he says. leaving the airline in July - flags to “definitely consistent with going says long-term analysis by the airline He believes there is interest the UK carrier’s domestic point-to- back to a much more profitable has identified the Bombardier Q400 from airlines, airports and service point business as a segment on operation”, she adds. She says the as the backbone of the Flybe fleet, providers to work collaboratively which its new shareholders Virgin decision to order jets a decade while the carrier’s remaining 190s to use predictive analytics to help Atlantic, the Stobart Group and ago stemmed from a belief that can also could play a role. address the issue. “And it can be Cyrus Capital can develop after Flybe could become the “number “I am very happy to see that done now,” adds Barry. they took over the regional carrier three low-cost carrier” in Europe Flybe has a great future and I am through the Connect consortium after Ryanair and EasyJet. doing my best before my depar- earlier this year. “You cannot compete with the ture to organise a smooth transfer

KLM She says the carrier is “moving to Ryanair’s and EasyJet’s of this of the business plan,” she says. KLM concepts KLM has agreed to support ‘A321XLR’ by 2024: Airbus the development of a “Flying V” blended-wing concept Toulouse’s touted model could be available within five years, says commercial boss that promises up to 20% bet- ter fuel efficiency compared irbus says it could deliver ­single-aisle line-up. A321LR at this month’s Paris air with an Airbus A350. Aan extended-range “A321X- Asked when such a derivative show, backed by commitments The concept, developed LR” derivative within five years, could be available for delivery, he from customers. by Delft Technical University, but is yet to formally confirm the said: “The earliest you can expect The XLR variant is believed to features a V-shaped design status of the project. any new versions of an A321 with incorporate wing and weight that is passenger cabin, fuel Speaking at the IATA AGM, some serious work done on it upgrades to enable it carry around hold and wings in one, pow- Airbus chief commercial officer would be the 2023-24 timeframe.” 220 passengers over 4,000nm ered by a pair of rear-mount- Christian Scherer hinted at plans Airbus is widely expected to (7,410km). It could also feature a ed turbofan engines. for “extended-range versions announce the go-ahead for the revised cockpit incorporating the [plural]” of the A321 in its extended range version of the latest technology from the A350. ■

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where to find us Executive editor Graham Dunn Asia reporter Alfred Chua Printers Korean Studies Information Our editorial team is located Quadrant House, The Quadrant, Managing editor Lewis Harper Design & production Terence Executive director content in the Media Room Sutton, Surrey, SM2 5AS, UK Senior reporter Oliver Clark Burke, Chris Gardner, Lin Ning, Max Kingsley-Jones Americas managing editor Rachel Warner, Christine Zhang Commerical director Stuart Burgess Ghim-Lay Yeo Photography Ian Billinghurst Vice-president FlightGlobal Connect © Airline Business 2019 Deputy Asia editor Ellis Taylor Advertising Richard Perry and Conferences Mark Pilling flightglobal.com/airlines 3 June 2019 | Airline Business | 3 news

Executive viewpoints Senior airline chiefs were put through their paces again by CNN’s Richard Quest in the regular CEO panel debate at the World Air Transport Summit yesterday. While the grounding of the Boeing 737 Max was first on the agenda, the wide-ranging debate also tackled issues as diverse as competition, environment and ownershship

Richard Quest Robin Hayes Christine News anchor Chief executive Ourmieres-Widener CNN JetBlue Chief executive Flybe

Talking about my young generation

Young aviation professionals shared their vision of what’s to come in the airline industry in a panel yesterday. In-flight connectivity and a seamless travel experience with the help of technology will top the wishlist of the younger generation of travellers, said the panel, comprising (left to right): moderator Andrew Stevens, Young African Aviation Professional Association founder and president Fadimatou Noutchemo Simo, CBS News transportation ­correspondent Kris Van Cleve, FlightGlobal Ameri- cas managing editor Ghim-Lay Yeo and ­Cathay Pacific GM of corporate affairs Kinto Chan. BillyPix

4 | Airline Business | 3 June 2019 flightglobal.com/airlines Goh Choon Phong Carsten Spohr Chief executive Chief executive Singapore Airlines Lufthansa Group

Max return dominates the horizon

Panelists question wider certification issues raised by phased grounding of the type which are key toservice return

lack of harmony in when ury”, said the carrier’s chief exec- SilkAir, says Goh. “It would be difficult to explain to A global regulators lift the utive Goh Choon Phong, the only Uncertainty remains over passengers that the aircraft is safe grounding on the Boeing 737 panelist whose airline group when the global grounding on in some parts of the world but not Max will further complicate the operates the type. the 737 Max will be lifted. The safe elsewhere,” he says. plans of international carriers “Everything I operate is inter- US Federal Aviation Administra- The aftermath of the 737 Max to restore the troubled aircraft national,” he says. “Beyond hav- tion, which was the last major grounding has upended long- to revenue service, said airline ing the approvals of authorities regulator to ground the aircraft, held assumptions over the role chiefs during a lively panel in Singapore, we would need has been criticised for not taking played by the FAA in contribut- ­debate at IATA’s World Air approvals of other countries we action earlier. Concerns continue ing to today’s aviation safety Transport Summit yesterday. operate to.” to linger over whether the regula- track record, says JetBlue chief Carriers operating in large Singapore Airlines’ subsidi- tor allowed the 737 Max to be executive Robin Hayes. countries like the USA and Can- ary SilkAir has six 737 Max 8s rushed through certification. “It’s an issue bigger than the ada may operate the aircraft on on the ground. The carrier Lufthansa chief executive Max,” Hayes says. “People start domestic routes after their regu- would require a “minimum via- Carsten Spohr says that while the to question the regulatory frame- lators allow the 737 Max to ble set of countries” allowing the FAA may allow the aircraft to work that has been largely suc- return to the skies, but Singapore 737 Max to fly in order for the return to service, other regulators cessful in promoting a safer Airlines doesn’t have “the lux- aircraft to return to service with may not so quickly follow suit. industry.” ■ flightglobal.com/airlines 3 June 2019 | Airline Business | 5 news

Kenya chief in final push for Air Baltic eyes funding options restructuring Air Baltic is weighing up different options for how it could raise the money ­necessary for it to convert 30 Airbus A220 options into firm orders. Outgoing Kenya Airways chief Air Baltic’s chief executive Martin Gauss says the Riga-based carrier executive Sebastian Mikosz says has identified three routes by which it could raise the €100 million the African carrier must continue ($110 millon) required to fund the pre-delivery payments on the restructuring if it is to sustain its 30 jets. economic recovery. One would be to raise a loan, the second would be to issue a Mikosz, who is leaving at the bond or the third option would be an injection of cash by a strategic end of this year, says the airline partner. Gauss says the first option is likely incur a “high interest” and is at a “crossroads” in its devel- indicates that the other two options would be preferential. opment. But he is confident he Air Baltic has 19 A220s in service and 31 on order with three due to leaves the African flag carrier in join the fleet this year. a “better position” today than Gauss says that the Latvian carrier’s business plan allows for up to 50 how he found it when he took A220s to be ­deployed within the Baltic region. Any aircraft ordered beyond over in May 2017. that number would need to be used for operations outside of the region. He describes his time with the He says this would likely involve Air Baltic opening new bases in airline as being “extremely chal- ­locations in Western Europe. lenging”, with a number of very Separately, Gauss says Air Baltic is closing in on an agreement to sell difficult moments, but commends its six owned Boeing 737 Classics with the proceeds providing a cash it for managing to “stay afloat de- boost for the carrier. He says he expects to finalise a deal with a buyer spite huge cash constraints”. or buyers for the jets later this year. Gauss wants Over the remaining seven The carrier has an additional two leased 737s whose contracts are capital to firm months of his contract, Mikosz due to expire next year. A220 options

says he is “determined to con- BillyPix tinue all the internal restructur- ing” adding that “lots of good deals” are coming over the coming weeks. Future of A350 order He says that he plans to make progress “fleet-wise” to finalise talks with pilots over working conditions and will oversee the part of KLM fleet review SkyTeam carrier beginning ser- vices to Rome and Geneva. Dutch carrier ponders simplification as it scrutinises orders for Airbus and Boeing types He says he will also push for a long-term solution which will LM is reviewing whether to orders for seven A350s, eight noting that it has achieved com- ­involve some form of asset Kretain or cancel its Airbus 787-10s and seven 787-9s. It has monality between the 787s and ­combination. A350 order. 13 787-8s in service. 777s which is “working very Mikosz says he still advocates Speaking to FlightGlobal, KLM Elbers says that KLM has done well for us”. more government involvement chief executive Pieter Elbers says a lot in recent years to optimise He says an important part of in the Nairobi-based carrier, be- the Dutch carrier is examining its fleet around Boeing types, KLM’s fleet strategy has been to lieving that there is no appetite progressively move to a for further private investment in ­simplified fleet, with the carrier Kenya Airways while it remains having phased out types such as in negative equity. Boeing MD-11s and Fokkers He says one solution that con- over recent years. tinues to be discussed is Kenya Elbers declined to give a time- Airways being combined with the line for when a decision on the Kenyan Airports Authority under future of the A350 order will be one parent company. Mikosz decided. says this solution would allow the The SkyTeam carrier is also African airline to “clean” its bal- progressively phasing out its ance sheet which would give it a fleet of 747s. Elbers says the car- different financial rating. whether to keep the seven jets it rier expects to remove them For such an outcome to work, has on order or remove them in completely by “2020ish”, but Mikosz says that the banks favour of Boeing 787s. “For today has not set a “hard stop date”. which have become sharehold- they [the A350s] are still on the He says that while the aircraft ers in the airline cannot “stay in books,” he says. have proven popular with pas- Elbers: Boeing the picture” – a proposition he Cirium’s Fleets Analyzer sengers, from an economic per- commonality believes they would welcome. shows that KLM has seven its spective the 787s are “doing “working very well”

BillyPix much better”. ■

6 | Airline Business | 3 June 2019 flightglobal.com/airlines Proud IATA Strategic Parter & Sponsor of AGM

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Oneworld has Smile to make connection 2020 vision for Thai subsidiary to become second airline join Star Alliance affiliate member scheme digital push hai Airways subsidiary Thai Oneworld expects to have be- TSmile will become Star Alli- tween six and eight of its ance’s second connecting partner members signed up to its digi- by the end of the year, joining tal platform by the end of this Shanghai-based Juneyao Airlines. year, and all to have some sort The airline will add another 11 of presence on it by 2020. unique destinations to the alli- Oneworld’s chief executive ance network. Cirium’s Fleets Rob Gurney says that those Analyzer shows that Thai Smile members who join will not flies 20 Airbus A320s to 26 desti- necessarily use the full suite of nations in Asia. Its parent Thai products available through Airways was founding member the digital platform, but of Star more than 20 years ago.

would be involved with it in Speaking during a media brief- BillyPix “one way or another”. ing at the IATA annual general Star chief Goh says alliance is not closed to having new members This might be flight infor- meeting yesterday, Star Alliance mation, check-in processing, chief executive Jeffrey Goh also tomer experience,” he adds. Global in November 2018, Goh or the issuing of boarding said the alliance was “not closed Thai Smile’s induction comes said that the alliance was work- passes, for example, he adds. to…having new members”, even as the alliance has been looking to ing to add new airlines to the Oneworld’s new digital as it shifts its strategy to bettering tweak its connecting partner model. connecting partner model. platform became active in customer experiences. “We took some time since the Connecting partners only need December 2018. In January, “[We] have to have [a] value model was rolled out, to under- to have commercial agreements Cathay Pacific and Qatar Air- proposition from the airline that stand more clearly what is the — like interline or codeshare ways became the first mem- wants to be part of the Star Alli- audience of this model, what is agreements — with at least three bers to connect to the plat- ance,” Goh says. the content of the model, and member carriers. The connecting form, enabling their “In this case, we are convinced what is the problem we are trying partner model was established in customers to use either air- [that Thai Smile adds value], to solve,” Goh says. 2016 to complement its member- line’s app and/or website to both in dollar value and cus- In an interview with Flight- ship model. ■ check-in and receive board- ing passes for connecting flights on either airline. It also offers the capability of delivering information and SkyTeam spreads service recovery updates on passengers’ con- SkyTeam carriers can now rebook “We continue to focus on our ers by end of 2020. necting flights – with Qantas customers from all its partner air- five key priorities which customers SkyTeam chairman Michael the first Oneworld member to lines on other member airlines’ have identified as their biggest pain Wisbrun adds: “That is the major deliver flight status informa- flights as part of efforts to make points when they travel between shift we made last year from the tion to its partners in this way. service recovery seamless. members,” explains SkyTeam chief footprint and service to a technol- Iberia and Finnair are also It forms part of the wider moves executive Kristin Colvile. ogy-enabled alliance where cus- “close” to completing their by the airline alliance to develop a “The one that is really being tomer experience is priority num- links to the platform. In the seamless customer experience rolled out quite aggressively now ber one, two and three.” coming days, the Spanish carri- across its members using its digi- is around service recovery,” she He says the priority is to close er will offer its customers the tal spine technology. adds. “All 19 members now are the current gaps to creating seam- capability to check in and re- able to rebook customers of any less service across the members, ceive boarding passes for con- airline on any airline. So if there is but notes, “in doing so all kinds of necting flights on the other air- any kind of disruption, we can take other opportunities will come up lines already linked to the care of our customers in a very in the coming years”. platform, Cathay or Qatar – ­different way. While the alliance is not actively with both now also enabling Progress on other areas include looking to add new members, their customers to check in and seamless seat selection – initially SkyTeam is open to using its digi- receive boarding passes for implemented between Aeromexi- tal technology to work with mem- connecting flights on Iberia. co and Delta. It aims to have at bers’ partners. Finnair will “very soon” en- least half of its members connect- “One decision we have taken able the other airlines con- ed with cross seat selection by the around our digital spine is to make nected to provide customers end of 2020. A bag-tracking initia- it an open platform and we will be

with connections receive e- BillyPix tive is also under way with four working with partners and affili- boarding, passes via these Wisbrun and Colvile tackling ­members already connected and ates of our members as a first partners’ apps or websites. customers’ pain points the aim for it to cover all 19 carri- step,” says Colvile.

flightglobal.com/airlines 3 June 2019 | Airline Business | 9 news

SITA faces up Slattery: No E175 doubts to the future Commercial chief reiterates Embraer’s commitment to smallest E-Jet E2 variant of air travel Using facial recognition to mbraer’s commercial aircraft check in for a flight, clear se- Echief John Slattery dismiss- curity and immigration and es suggestions that it is looking board could be in wide- to exit the sub-100-seat market spread use within five years, but concedes that the delivery SITA believes. schedule for its smallest E-Jet, Sumesh Patel, the presi- the E175-E2, may be revised. dent Asia-Pacific of the avia- The E175-E2 is the last and tion technology company, smallest of the E-Jet E2 derivatives says that its trials at airports to be developed, with the first air- including Brisbane, Orlando, craft now in final assembly. Slattery:Committed to Miami and Boston have “We continue on a schedule sub-100-seat sector

proven hugely successful for that would have the first test flight BillyPix the airline, border agencies before the end of this year,” says and airports involved. Slattery, who is chief executive of of noise around the issue that the sales this year. This segment is “We had British Airways in Embraer Commercial Aviation. aircraft is not scope-compliant in very critical to us,” says Slattery. our pilot programme at Bos- The variant is due to enter the US from a weight perspec- Although scope-clause discus- ton. They had the full aircraft ­service in 2021 but its non-­ tive,” Slattery told FlightGlobal at sions are ongoing between US of 200 passengers checked compliance with current US the IATA AGM. airlines and unions, it is unclear in in 10 minutes at the gate,” pilot scope clauses by weight However, he adds that he if and when any changes could says Patel. could affect that schedule, says viewed a recent comment by “a be agreed. A recent survey by the Slattery. Uncertainty over the competitor” – believed to be “I can’t legislate for when the company showed that there timing of when the scope Bombardier – that Embraer was [E2] will fly in the US market. is already a strong pipeline clauses could be renegotiated exiting the sub-100-seat market We’re always reviewing schedul- of investment in biometric prompted Embraer to remove as “somewhere between laugha- ing of that programme,” says technology. Skywest’s 100 firm E175-E2 ble and amateurish”. ­Slattery. “There may be some “They said 77% of the air- orders from its backlog last year, “We have sold in the US mar- nuances on the entry-into-service ports and 77% of the airlines however the manufacturer reit- ket almost 600 aircraft since Janu- of the E175-E2, but it will not be have major plans for invest- erated that the airline “remains ary 2013 and we are continuing dictated by technology, it will ment over the next three committed” to the deal. to sell the 175 platform in the US more be dictated by the years on biometrics.” “I recognise that there is a lot market – you’ll see more [E1] ­marketplace.” ■ As such, Patel believes that biometrics could be widely rolled out within “three to five years.” Stumbling cargo to hit Asian profits Patel: Trials highly Faltering air cargo demand stem- profit of $6 billion in 2019. It had trade, and that, combined with successful ming from weak international originally anticipated the region higher fuel costs, is squeezing the trade is one of the key factors posting profits in excess of $10 region’s profits.” behind IATA cutting its expecta- billion this year. A profit of $6 After a strong 2017, the recov- tions for Asia-Pacific airline prof- billion would mark a deteriora- ery in air cargo growth began to its this year. tion on the $7.7 billion in 2018. falter last year and freight traffic IATA cut its industry net prof- “The region is showing a very has been decline over the start of its outlook for 2019 by a fifth to diverse performance,” IATA this year. IATA anticipates cargo $28 billion. The biggest change in notes. “Accounting for about volumes will be flat this year its outlook since its December 40% of global air cargo traffic because of the impact of higher forecast is it now sees Asia- makes the region the most tarrifs on trade. It likewise sees

BillyPix Pacific airlines making a net exposed to weakness in world cargo yields as flat for 2019.

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Steele bows out from IATA with a mission hope This year’s AGM in Seoul marks formulate and implement a trying to sell that to 192 countries the last one for IATA’s senior vice ­strategy to address its emissions. at in ICAO, and then having that president, member and external Steele, who had been chief op- agreement in 2016.” relations Paul Steele as he retires erating officer for the Worldwide The issue remains a key one from the association later this year. Fund For Nature, explains: “I was for the sector and Steele will stay “This is my 11th annual general so intrigued at the opportunity of on until after the crucial ICAO meeting,” he says, recalling at the trying to help a whole industry general assembly this autumn. time of his first AGM the industry move towards a more sustainable “The industry is more commit- was celebrating the roll-out of e- future – and that’s really been my ted than ever to address this ticketing but about to head into passion over the last 11 years. issue and I feel comfortable mov- the global financial crisis. “The biggest challenge of my ing on, that this is now something While he has latterly taken a life was making progress on the that is part of the DNA of the broader role with responsibility for sustainability agenda, particularly ­industry and the industry recog- the association’s AGMs and wider on climate change. Working nises without any question that governance – work Steele de- closely with governments it’s a huge responsibility we have Steele standing scribes as “challenging but re- through ICAO, developing the to solve sustainability issues in back after 11 warding” – his largest legacy will concept and idea of CORSIA ­general, and climate change in years at IATA

be in his work helping the industry BillyPix from the beginnings, and then particular,” he says.

Latin industry keeps positive Aerolineas retains faith in The Latin American airline sector remains resilient despite ongoing Max as pressures mount macroeconomic difficulties in the region and the recent grounding SkyTeam carrier still considering grounding aircraft type for planned aircraft order of Avianca Brazil, says the chief of the Latin American and Caribbe- erolineas Argentinas says nine in its orderbook, Cirium’s currency depreciation in Argenti- an Air Transport Association. Athe woes of the Boeing 737 Fleets Analyzer shows. na. Growing competition from “We have already grown 5% so Max has not dissuaded the ma- While Aerolineas has seen min- low-cost carriers in the country far this year,” says Luis Felipe de jority Boeing operator from con- imal impact so far from the 737 has also led to a loss of market Oliveira. “While there was a sig- sidering the aircraft for a planned Max grounding, Malvido says this share for the flag carrier, says nificant capacity increase of 30% order for new narrowbodies. is largely due to the current low Malvido. While domestic passen- in the international market last “We still trust in Boeing as our travel season in South America. ger traffic has steadily grown, fares year, the trend is now shifting to dominant vendor,” Aerolineas However, the airline now has to have fallen dramatically, he adds. more domestic market growth.... chief executive Luis Malvido operate its Punta Cana service “The big challenge we are Despite the crisis, we will have a tells FlightGlobal. Malvido was from Buenos Aires with a ­facing is competition, that’s positive outcome for the region.” appointed to lead the Argentine technical stop en-route why we are putting in a Latin American carriers are ex- state-owned carrier in mid-2018, with the 737-800, big effort in customer pected to grow 5-7% in 2019. becoming the airline’s third chief which “affects the service,” he adds, The region is facing difficult mac- in under three years. product”, acknowl- noting that the air- roeconomic conditions, which Malvido says he believes the edges Malvido. line recently un- has forced airlines to reconsider 737 Max will be a “good air- “The main chal- veiled a new website capacity plans for the year. Air- plane” for Austral, Aerolineas’ lenge is July which is to offer a more digit- lines serving Argentina, for in- regional subsidiary which cur- the second high season ised experience­ to stance, have been battling cur- rently operates an Embraer 190 in the year,” he says. passengers. ■ rency depreciation and inflation. fleet that will be replaced. “What “We would have to in- Elsewhere in Latin America, the happened with the Max is not a crease utilisation [of the Mexican and Brazilian markets reason to not consider the Max,” 737NGs].” are not developing as expected, says Malvido. The aircraft grounding notes De Oliveira. However, he reiterates that the is yet another chal- The recent suspension of opera- carrier is also considering other lenge for Aerolin- tions by Avianca Brazil has also narrowbodies, including the Air- eas, which has reduced growth for the year, but bus A220 and A320 families and seen soft yields he reiterates that the low pene- the Embraer E-Jet E2. alongside other tration of air travel in the region Aerolineas was operating five Latin American leaves room for growth. 737 Max 8s prior to the ground- carriers due to

ing in March. It has an additional high inflation and BillyPix

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Norwegian’s transatlantic 737 Max deployment had dwindled Heikki Saukkomaa/Shutterstock

Oliver Clark London began scaling back its long-haul Max network. The carrier suspended services Next-generation games from Edinburgh to Hartford in March 2018, ended services to While low-cost operators outlined an array of transatlantic routes that the new wave Providence in October, before of re-engined narrowbodies would open up, progress has stalled amid challenges scrapping transatlantic services involving both the aircraft types and the carriers themselves over the past year from the airport altogether in March 2019. The airline blamed ow-cost carriers have been initial routes for the jet, connect- until late June. In the interim, Nor- the Scottish government’s failure L enthusiastic early adopters ing Hartford, Newburgh Stewart wegian was forced to temporarily to follow through on a commit- of new generation, long-range and Providence in the USA with operate some of its new transatlan- ment to reduce and ultimately narrowbody equipment for six points in Western Europe – tic services with 737-800s. scrap air passenger duty (APD) transatlantic services, but a mix- Belfast, Bergen, Cork, Dublin and In an interview in February for its decision. ture of technological and deliv- Shannon – that summer. 2018, Norwegian’s chief commer- Norwegian went on to suspend ery problems, commercial chal- Norwegian had hoped to take cial officer Thomas Ramdahl told US services from Belfast in Octo- lenges, and airline failures have delivery of its first Max jet in May FlightGlobal the Max and new ber 2018. The carrier cited lower marred those efforts to date. of that year, but issues associated routes were “living up to our demand during the “quieter” The most high-profile techni- with the jet’s CFM International expectations”. Nevertheless, it winter period. cal issue has been the grounding Leap-1B engines delayed these was not long before Norwegian A similar reason was given of the Boeing 737 Max fleet, fol- when the Oslo-based carrier dis- lowing a second fatal crash Norwegian 737 Max-operated transatlantic flights closed that it would also be halting involving the type in March. Origin Destination Flights Mar 2019* Flights Mar 2018 services from Cork and Shannon to Norwegian has been at the fore- Belfast Providence 0 2 Providence that winter. Services front of efforts to bring the 737 Belfast Stewart 0 9 from Bergen have also been halted. Max 8 on to transatlantic routes Bergen Stewart 0 9 By the time of the global and ultimately plans to do the Dublin Providence 26 15 grounding of the Max jet in same with the Airbus A320neos Dublin Stewart 25 26 March 2019, Norwegian – which and A321LRs it has on order. Dublin Hamilton 1 0 operated 18 of the type – had The Scandinavian carrier Edinburgh Hartford 0 7 either suspended, or planned to sought to use the Max’s low oper- Edinburgh Providence 0 10 suspend in the following weeks, ating costs and 3,550nm range in Edinburgh Stewart 17 14 a majority of the transatlantic a 189-seat configuration to open Cork Providence 0 10 routes it operated with the type. up markets that had limited or no Shannon Providence 1 11 Since the Max grounding Nor- transatlantic connections. Shannon Stewart 1 10 wegian’s services to Stewart from In 2017, the carrier outlined 12 Source: Cirium schedules data. *Flights scheduled before Max grounding was taken into account Cork and Shannon have been re- ❯❯

14 | Airline Business | 3 June 2019

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❯❯ routed via Dublin, a service With these developments it the airline is operating with a 787. seemed that Norwegian was set to Norwegian tells FlightGlobal become the first budget carrier to that services from Cork and Shan- use the A321LR on transatlantic non are not expected to resume routes, having been scheduled to until August/September when the receive its first of the type this year. Max is expected to be cleared to In his interview with Flight- resume commercial services. Global in February 2018, Ram- In 2018, Westjet also began dahl said the jets would be used operating transatlantic routes with by Norwegian to connect the Max 8 when it began services medium-sized airports in the from Halifax to Paris and London. USA with European capital cit- ies. He named Berlin, Brussels, AIRBUS ALTERNATIVE Budapest and Prague as possible Prior to its collapse earlier this European destinations.

year, Iceland’s Wow Air was the This has now been thrown into Airbus only budget carrier operating doubt after it revealed in April that Wow Air was deploying a range of aircraft on transatlantic routes A321neo services on transatlan- it was rescheduling delivery of an tic routes, using the jets alongside unspecified number of A320neo revealed plans to use the Airbus To date it has not specified which A321ceos and A330s on services jets and four A321LR aircraft, narrowbodies to enter the transat- destinations it plans to serve. from its Keflavik base to points in which form part of its leasing arm, lantic fray. In April it outlined But it is not just low-cost and the USA and Canada. Arctic Aviation’s orderbook, to plans to begin services from New leisure carriers seeking to deploy Scandinavian budget carrier reduce capital commitments. York JFK and Boston to one or the A321LR on transatlantic ser- Primera Air had also utilised the more unspecified London air- vices. IAG group carrier Aer Lin- aircraft when it briefly expanded Norwegian has been ports in 2021 using A321LRs it gus plans to introduce the Airbus into transatlantic market last year. has on order. A321LR on flights to Hartford in In 2017, Primera announced at the forefront of More immediately, Canadian July, marking the debut of the plans to begin services to Newark leisure carrier Air Transat looks set long-range narrowbody to the and Boston Logan from Birming- efforts to bring the to operate the long-range version North Atlantic market. ham, London Stansted and Paris 737 Max 8 on to of the jet on transatlantic routes. SAS is leasing three Airbus Charles de Gaulle in the summer The carrier has begun taking deliv- A321LRs from Air Lease with the of 2018. All services were to be transatlantic routes ery of 15 of the jets on lease from first due for arrival in 2020. operated by the A321neos it AerCap as part of a plan to convert already had in service and would to an all-Airbus fleet by 2022. MODEL CHALLENGES be bolstered by more of the jets. Air Transat says it plans to use Commenting on the problems The carrier also had ambitions The airline has not revealed the A321LRs on longer interna- encountered by low-cost carriers to use Max jets on transatlantic when it expects to receive these tional services from Canada, in developing routes with new services and was in line to be the aircraft, but a financial presenta- principally on thinner routes to generation narrowbodies, Rich- launch customer of the A321LR. tion produced as part of its first- Europe, the Caribbean, and Cen- ard Evans, senior consultant with But before these routes began, quarter results briefing showed it tral and South America. Ascend by Cirium, says he Primera had already cancelled has capital commitments for one Following Primera’s collapse, believes that the “issue has been plans for services from Birming- A320/A321 in 2019 and four in Israeli leisure carrier Arkia the business model of the early ham – a decision it blamed on 2020. These aircraft are ear- became the launch customer of adopters, rather than an intrinsic delays to its A321neo deliveries. marked for Hong Kong Express. the A321LR in late 2018 when it barrier to their operation”. While the carrier subsequently It should also be noted that took delivery of the jet in a 220- He points out, for example, that announced plans for services Norwegian is in the midst of a seat configuration. In November both Air Canada and Icelandair from Brussels, Madrid and Ber- strategic review, under which it is 2018, Arkia’s marketing director had introduced the Max on trans- lin, Primera’s grounding last win- seeking to slow growth to bolster Franck Navallon mentioned that atlantic routes and would still be ter ended its brief entry into the its financial performance. the jet would allow the airline to doing so had it not been for the transatlantic space. JetBlue meanwhile has reach new transatlantic markets. global grounding of the type. He suggests that low-cost carri- Israeli leisure operator Arkia ers might have been early adop- was A321LR launch customer ters of the type due to the “low barrier of entry” compared with acquiring a twin-aisle aircraft. Evans says he believes the A321LR could prove a more pop- ular choice for transatlantic ser- vices for carriers in the future, but says that he is not “absolutely sure” this will be the case for budget carriers. “It may be a little short of hold baggage space at high-density layouts, due to the

Airbus [fuel] tanks,” he adds. ■

3 June 2019 | Airline Business | 17 OWNERSHIP

Lewis Harper London Foreign owners still a taboo subject Strict rules and regulations governing who can and cannot own and/or control an airline have endured for decades. More than 10 years since IATA’s last push for reform, there are few indications that industry is ready to embrace change

irlines are all-too-familiar immune from regression. Wit- comes to ownership,” states ana- The loss of momentum since Awith upheaval reverberat- ness, for example, the Dutch gov- lyst John Strickland, director of then is partly explained by how ing through the sector after ernment’s decision in February JLS Consulting. “We don’t see the industry’s story has played out. events such as 9/11 and the to take a larger stake in Air this restriction in other global Airlines have often been suc- global financial crisis. France-KLM. industries. This would allow for cessful in finding ways to circum- Throughout such develop- It is not just governments and much more flexible and dynamic navigate ownership and control ments, however, one thing has regulators leading this charge, airline operations.” rules through initiatives such as endured as a fundamental tenet either. There are plenty of recent immunised joint ventures and of the industry: tight national examples where airlines and OLD AGENDA minority equity investments regulations on foreign ownership labour unions have resisted a It is more than a decade since the where the “control” element of and control of airlines. For a sec- more liberal approach to the issue. last great effort to change foreign the equation is difficult to quan- tor that sometimes likes to pride In this environment, many ownership and control restric- tify (and sometimes controver- itself on being the “business of industry observers agree that tions worldwide through the sial). Alliances have also matured freedom”, this perseverance in while liberalisation of foreign “Agenda for Freedom” spear- as a simple way for airlines to the face of liberalisation across ownership and control rules headed by then-IATA director harness the advantages of work- most other business types can would be beneficial to the indus- general Giovanni Bisignani. ing together. look counter-intuitive and argua- try overall, the appetite for such “We fight crisis after crisis with Alongside such developments, bly self-defeating. moves is currently too small to our hands tied because flags, not many carriers have found suffi- With some exceptions – such effect real change. brands, define our business,” cient domestic sources of capital, as in the Latin America region – “It is ironic that there could Bisignani said in June 2008. reducing the need for overseas the industry appears, if anything, hardly be a more global industry “This must change. Airlines injections of cash. to have become more entrenched – the whole ethos is about con- would be free to innovate, free to IATA has therefore cooled its on the issue in recent years. Even necting people and goods – yet it compete, free to grow, free to dis- line on the issue and no longer relatively liberal markets, such is shackled by predominantly appear, and free to become finan- actively promotes its Agenda as the European Union’s, are not national considerations when it cially healthy.” for Freedom. ❯❯

Dutch and French finance ministers met to discuss Air France-KLM’s future CHRISTOPHE PETIT TESSON/EPA-EFE/REX/Shutterstock

18 | Airline Business | 3 June 2019

OWNERSHIP

Bisignani spearheaded the last great push for reform

❯❯ “There appears to be no dearth of capital available to air- lines from domestic sources, which means that the airlines have not found a compelling need to campaign for a change in national law that they know would be controversial in many countries,” the airline industry body said last year. “Moreover,

the advent of immunised joint Michael Probst/AP/REX/Shutterstock ventures among airlines and global branded alliances is crescendo of rising profits being be traced back to the 1944 Chi- Government protection of air- delivering most if not all of the achieved as airlines began look- cago Convention that established lines can also be the result of consumer benefits – seamless, ing like viable long-term invest- some of the core principles for something more visceral – a global connectivity; robust com- ments for the first time. commercial aviation. sense that local airlines are a petition on a global scale – that In this “new normal”, the geo- They are therefore partly a con- patriotic marker. See, for exam- cross-border mergers, if permit- political environment has sequence of the bilateral air ser- ple, Air India reminding its crews ted, would deliver.” become more fraught. Knee-jerk vice agreements that underpin earlier this year to supplement in- Other factors have also come nationalism has become de flight announcements with the into play over the past decade rigueur – see Brexit and the “Reform would allow phrase, “Jai Hind” (Hail the or so. presidency of Donald Trump, motherland). Then, in March this among other examples – and for much more flexible year, Pakistan announced that it FINANCIAL CRISIS governmental appetite for the will drop its open-skies policy When IATA was last pushing opening up ownership of air- and dynamic airline under a new civil aviation initia- hard for reform in 2008, the lines has slumped. operations” tive. That was pitched as an effort global economic environment “Progress has been, at best, to boost beleaguered national car- was very different. The world faltering,” states Andrew Charl- John Strickland rier Pakistan International Air- was on the verge of a financial ton, managing director of the Director, JLS Consulting lines, which has faced strong crisis and would-be rescuers of Aviation Advocacy consultancy. competition from foreign carriers struggling airlines were being sty- “In a world that is seeing a rise in recent years. mied by draconian foreign own- in protectionism, it is harder to much of today’s connectivity ership restrictions. The industry make the case, and in the short between countries and blocs. LOSING CONTROL fallout from 9/11 was also fresher term the favourable results for Such arrangements feature a defi- Looking at the current state of the in the memory. many airlines has made it a less- nition of what gives a particular industry, “I am not sure how Fast-forward to 2019, and the pressing issue.” airline the right to take advantage achievable [reform] is”, says outlook has changed. The airline Restrictions on foreign owner- of the agreement – specifically, Cowen research analyst Helane industry as a whole has done ship and control of airlines are how an airline can be said to Becker. “It’s really about jobs and pretty well post-credit crunch – a older than most carriers, and can “belong” to a particular country opportunity, and when you give or bloc. In reality, regulators up rules that require local owner- could choose to overlook such ship, you give up some control requirements, but that path is over where the growth will be rarely, if ever, tested. and where the jobs are created.” Bilateral agreements are not Charlton expresses frustration the only reason for the prolifera- that the airline industry is still tion of foreign ownership and subject to such forces. “Aviation control restrictions. Commercial continues to be ‘politics flying’ aviation remains, to this day, an and that is a problem if it also industry that national govern- wants to be a mature, interna- ments tend to guard jealously. tional industry,” he states. “It Citing considerations such as remains a national industry that safety, national security, defence sometimes allows its players to fly and other strategic factors, to other countries, and it remains ­governments mostly continue to very much an ‘immature industry’

Air Italy mandate majority local owner- demanding of special favours Qatar Airways’ involvement in Air Italy has been criticised by Delta ship and control of carriers. from regulators.” ❯❯

20 | Airline Business | 3 June 2019

OWNERSHIP

AirAsia has long lobbied for liberalisation of regulations

lawmaker attempted to introduce a bill in early 2018 that would eliminate the cap on foreign own- ership of US airlines and allow US-based subsidiaries of foreign carriers to operate domestic flights. The so-called “Free to Fly Act” would have improved the customer experience by bringing more competition to US carriers, suggested documents released by bill sponsor Dave Brat, a Republi- can from Virginia who lost his seat in the US House of Repre-

Ahmad Yusni/EPA/REX/Shutterstock sentatives later that year. The bill achieved little traction ❯❯ For Maybank Investment These comments reflect the than it reflecting an epiphany and ultimately stalled. Bank analyst Mohshin Aziz, fact that while progress on the on the benefits of foreign owner- In Asia meanwhile, Tony Fer- there is an imperative for airlines issue has been limited, foreign ship of carriers. nandes continues to speak out in to support change and better ownership and control has at the Elsewhere in Latin America, favour of liberalised ownership reflect travel in the modern era. very least refused to go away as a Norwegian Air Argentina’s and control rules as he seeks to “The reality is that airline seats talking point. It has even risen up arrival in the market last year expand AirAsia across the region are becoming more and more of a the agenda with developments reflects an openness to overseas in the face of a patchwork of commodity, especially when you such as UK carriers grappling carriers operating in the country’s national regulations that compli- consider that China, India and with their ownership structures recently liberalised market – cate progress towards that aim. the ASEAN region are churning as Brexit approaches. even if restrictions on foreign But even when it looks like hundreds of millions [of citizens] Indeed, the UK is seeking to ownership and control remain progress has been made, the real- in the newly minted middle- leave an EU bloc that is one of the largely in line with global stand- ity has sometimes fallen short of income group,” he states, adding: few success stories globally in ards. Jetsmart – backed by Chile’s expectations. “We know that middle-income terms of a market relaxing Indigo Partners – is also set to air travellers opt for best-value national rules on airline owner- launch services in Argentina in FEW ANSWERS proposition and are not entirely ship and control. EasyJet and the coming months. Most stakeholders appear to have loyal to a brand. Faced with this Ryanair, for example, have been given up on phase two of the reality, airlines need to put more able to enter markets across the “Airline seats are US-EU open skies deal coming focus on their ability to provide continent that do not touch their into force any time soon. Signed the best schedule… The best way home countries. becoming more and in 2010, it was intended to relax to resolve this is of course capac- US limits on foreign ownership ity consolidation and there is no MARKET ACCESS more of a commodity” and control of airlines. better way by consolidating own- Efforts to effect change have been Mohshin Aziz The ASEAN open-skies agree- ership of airlines at both ends of seen elsewhere. In February, Analyst, Maybank Investment Bank ment meanwhile includes a tar- the destinations.” Qatar Airways called for govern- get to “commence discussion on Aziz’s comments echo those of ments across the world to “relax further liberalisation of owner- Singapore Airlines chief execu- restrictive airline ownership and In June last year, the Canadian ship and control of airlines of tive Goh Choon Phong, speaking control rules, which underpin Transportation Agency loosened ASEAN Member States, includ- in October last year about the the bilateral air services system”, restrictions that limit foreign ing the concept of an ‘ASEAN ASEAN open skies agreement. arguing they were “constraining ownership of Canadian airlines, Community Carrier’” in a 2016- “From a perspective for the rationalisation of market access”. enabling foreign investors to own 2020 timeframe. Progress on that industry and for the convenience In December last year, mean- up to 49% of local airlines – a sig- is yet to materialise, however. of passenger travel, obviously a while, Brazil issued a presid­ nificant jump from the previous MALIAT, the Multilateral fully liberalised ASEAN aviation ential decree to remove foreign cap of 25%. Agreement on the Liberalisation market is very much welcomed,” ownership limitations on local Canada still prohibits foreign of Air Transportation, was signed Goh said. “Then you can ensure airlines. In this case there were airlines or foreign investors from in 2011 by countries including that if there is demand, carriers suggestions – denied by the owning or controlling more than the USA and Singapore with from any part of ASEAN can ­government – that the decision 25% of the voting shares of a ambitions to liberalise the airline actually be able to deploy the was directly related to rescuing Canadian carrier, however. market. But like IATA’s Agenda resources to fulfil the demand.” ailing Avianca Brazil, rather Also in North America, a US for Freedom, it saw an initial ❯❯

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❯❯ flurry of signatories before In an earlier example of interest petered out. national insecurities over foreign In India, Qatar Airways ownership and control, Jetstar recently tested relaxed ownership Hong Kong failed to get off the requirements as part of an effort to ground in 2015. That followed

establish a carrier in the country. objections by local airlines, AFA It claimed last year that its which culminated in Hong Norwegian’s ownership structure was behind protests in the USA approach had been “stifled”, how- Kong’s Air Transport Licensing ever, by authorities saying “an air- Authority rejecting the operator’s Qatar Airways was “giving” Air ship and control, there is often at line cannot own 100%, nor any- application for an AOC on the Italy – in which the Doha opera- least one step back. body can own 100%. It has to be basis that it contravened a law on tor holds a 49% stake – “billions The appetite for change 49% and it has to be done through “principle place of business”. of dollars’ worth of new air- endures, however, even if expec- an investment authority”. The ruling was based on a per- planes”, and suggested that this tations are low. In the USA, Virgin America is ception that Jetstar Group would was to create a proxy for fifth- “It has to be worked at,” states disappearing as a brand follow- ultimately be in control of the freedom flights to the USA. Strickland. “We’ve just seen the ing its merger with Alaska Air- business, despite reassurances to Back in 2017, Southwest Air- Dutch government take an lines. While the carrier was the contrary from the Australia- lines unsuccessfully opposed increased stake in KLM, which is majority US-owned, it was also based operator. plans by Volaris Costa Rica to indicative of the political sensi- seen as a bellwether for the con- launch US services, pointing out tivities that remain… There are cept of launching a non-US air- “Some quarters of the that the airline was controlled by numerous restrictions around the line brand into the market. Its Mexico’s Volaris and had no world – just ask AirAsia about merger into Alaska means it has world understand the Costa Rican ownership. the challenges of running a multi- provided few answers on the via- Then there was the “flag of con- country group… However, we are bility of such developments. need for strong airlines venience” argument over Norwe- a long way from seeing any tangi- Progress on the issue can also gian Air International’s desire to ble breakthrough.” be reversed in more overt ways. in a global industry” fly into the USA. Opponents to Charlton concurs that change Kazakhstan formally introduced Andrew Charlton that move, including pilot groups is needed, and agrees there is still restrictions on foreign ownership Managing director, Aviation Advocacy such as the Air Line Pilots Associ- some way to go. “Some quarters of domestic airlines as part of a ation, fought to persuade the of the world – Latin America and wide-ranging effort to “enhance Department of Transportation to Europe – continue to understand civil aviation legislation” in mid- The Hong Kong example shows deny NAI’s air permit, claiming its the need for strong airlines in a 2017. An act adopted by the coun- that the tendency to resist signs of parent company established the global industry but they are not try’s parliament allowed non-resi- liberalisation in airline ownership unit in Ireland to skirt Norway’s winning the argument for the dents to have no more than 49% in has often extended below the gov- labour laws. They also said NAI’s moment,” he says. joint stock capital of locally regis- ernmental and regulatory level to presence in the US would nega- Aziz notes that “one bold tered air transport enterprises, the airlines themselves, and asso- tively affect labour standards. country” taking action on the showing that governmental inter- ciated labour groups. NAI eventually secured its per- issue one day might be enough vention on foreign ownership and In a similar vein, Delta Air mit in December 2016, but a Con- to prompt wider adoption of control regulations need not Lines chief executive Ed Bastian gressional panel approved an more liberal regulation. But always be in a liberal direction. claimed at the end of 2018 that amendment in June 2017 that there are no guarantees this will seemed aimed at preventing sim- happen. “Don’t be surprised if it ilar carriers from launching happens real quick, and don’t future flights to the USA. be surprised if nothing happens at all,” he states. “I only hope POOR CONNECTIVITY that in my lifetime, we will see Meanwhile, Africa is rich with this ­happening.” examples of governments As things stand, IATA is launching and/or protecting fun- unlikely to be a source of any damentally flawed or failing local momentum on the issue. “In airlines – the most recent exam- short, because the restrictions on ple being the suspension of plans foreign investment in airlines do for Nigeria Air in September last not appear to have impeded the year just weeks after the pro- industry’s growth or develop- posed flag carrier was launched. ment, the issue is not on IATA’s

Ted S Warren/AP/REX/Shutterstock Ted Ultimately, for every step agenda,” it said last year and reit- The Virgin America brand is disappearing after its Alaska merger ­forward regarding foreign owner- erated in early 2019. ■

3 June 2019 | Airline Business | 25 MARKET OUTLOOK

Capacity snapshot: July 2019 Using the latest Cirium schedules data, we take a close look at the year-on-year passenger capacity figures at a selection of the biggest airlines in each region, as the industry continues to see strong growth trends overall

North America Seats ASKs Airline July '19 Change Change % July '19 Change Change % Air Canada 6,154,817 (109,787) (1.8%) 18,015,384,414 (448,970,099) (2.4%) Alaska Airlines 5,310,475 20,124 0.4% 9,849,403,474 193,381,327 2.0% Allegiant Air 2,011,950 272,805 15.7% 2,712,089,213 325,818,841 13.7% American Airlines 23,485,658 578,179 2.5% 42,926,654,138 175,543,937 0.4% Delta Air Lines 22,217,250 881,585 4.1% 42,848,461,514 1,577,166,650 3.8% Frontier Airlines 2,534,912 452,332 21.7% 4,263,748,916 796,756,280 23.0% Hawaiian Airlines 1,309,790 (22,593) (1.7%) 2,862,624,438 (871,848) (0.0%) JetBlue Airways 4,604,460 330 0.0% 9,128,726,459 401,549,808 4.6% Southwest Airlines 18,433,436 (188,082) (1.0%) 22,594,777,454 (1,285,145,653) (5.4%) Spirit Airlines 3,832,388 598,496 18.5% 6,156,615,889 667,623,743 12.2% United Airlines 17,949,571 221,602 1.3% 42,758,293,812 1,131,944,193 2.7% WestJet* 2,639,593 (207,286) (7.3%) 4,612,827,731 (193,602,682) (4.0%)

Source: Cirium schedules data. Note: Change versus July 2018. *Excludes Swoop

Airlines for America (A4A) forecasts that a record 257.4 million passengers will fly on US airlines be- tween 1 June and 31 August, despite the grounding of Boeing 737 Max aircraft (American Airlines jets pictured), which took some 200 daily flights out of service for the summer travel season. The trade group estimates the grounding results in a loss of 35,000 daily seats for the peak season. Three US car- riers – American Airlines, Southwest Airlines and United Airlines – operated a combined fleet of 72 737

Max aircraft before the grounding, with more due for delivery. American Airlines

Latin America Seats ASKs Airline July '19 Change Change % July '19 Change Change % Aerolineas Argentinas 1,560,114 44,275 2.9% 2,763,240,146 83,522,947 3.1% Aeromexico 2,327,978 (71,509) (3.0%) 4,752,752,662 1,158,451 0.0% Avianca 3,176,903 78,520 2.5% 4,628,512,165 186,752,352 4.2% Azul 3,149,348 477,336 17.9% 3,528,819,767 695,800,444 24.6% Boliviana de Aviacion 439,713 22,937 5.5% 325,529,199 (21,930,688) (6.3%) Copa 1,528,858 18,454 1.2% 3,533,427,402 (29,694,521) (0.8%) Gol 4,224,630 119,088 2.9% 4,881,044,764 162,393,570 3.4% InterJet 1,624,014 76,002 4.9% 2,184,731,242 141,306,773 6.9% LATAM Airlines 7,959,439 498,136 6.7% 12,211,815,673 438,512,440 3.7% Sky Airline 450,834 13,338 3.0% 535,423,517 51,033,399 10.5% VivaAerobus 1,343,352 265,518 24.6% 1,498,068,473 337,172,646 29.0% Volaris 2,371,118 488,403 25.9% 3,560,551,745 655,034,879 22.5%

Source: Cirium schedules data. Note: Change versus July 2018

Africa Seats ASKs Airline July '19 Change Change % July '19 Change Change % Egyptair 1,162,107 105,582 10.0% 2,701,428,626 242,625,354 9.9% Ethiopian Airlines 1,672,059 106,297 6.8% 5,279,209,085 268,737,907 5.4% Royal Air Maroc 1,246,076 172,760 16.1% 2,913,049,085 469,694,863 19.2% South African Airways 903,159 65,629 7.8% 2,075,021,758 7,048,779 0.3%

Source: Cirium schedules data. Note: Change versus July 2018

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A future strategy for the UK aviation sector London 17 October 2019

Airlines 2050 is a landmark event bringing together leading industry and government figures to share unique insights on

Boosting competitiveness in the UK airline sector

Futureproofing the UK’s position as a global aviation hub

Achieving a more diverse, inclusive and resilient industry

How best to capitalise on innovation to drive a sustainable future

Speakers include

Shai Weiss Alex Cruz Baroness Vere Sir Tim Clark Richard Moriarty Chief Executive Officer Chairman and CEO UK Aviation Minister President Chief Executive Officer Virgin Atlantic British Airways UK Government Emirates Airline UK Civil Aviation Authority

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Europe Seats ASKs Airline June '19 Change Change % June '19 Change Change % Aeroflot 5,497,130 188,769 3.6% 13,331,075,562 838,301,340 6.7% Air France 5,147,818 (34,808) (0.7%) 15,925,934,591 165,731,326 1.1% Alitalia 2,922,778 164,151 6.0% 4,696,513,892 115,236,921 2.5% British Airways 5,924,740 52,318 0.9% 17,553,465,700 286,908,643 1.7% EasyJet 10,170,534 580,260 6.1% 11,695,668,135 829,741,794 7.6% Iberia 2,363,575 203,109 9.4% 6,411,933,024 621,854,195 10.7% KLM 3,693,586 93,316 2.6% 10,894,092,179 241,326,353 2.3% Lufthansa 8,347,940 129,819 1.6% 18,954,476,010 633,731,372 3.5% Norwegian 3,966,787 (69,677) (1.7%) 9,687,579,099 426,205,114 4.6% Ryanair 14,411,628 705,348 5.1% 18,650,577,476 1,034,321,408 5.9% SAS 3,250,584 48,660 1.5% 4,972,368,890 38,613,332 0.8% TAP Air Portugal 2,125,743 223,506 11.7% 5,222,102,197 718,392,618 16.0% TUI Group 3,412,515 32,702 1.0% 8,746,787,347 102,816,917 1.2% Turkish Airlines 9,067,366 439,596 5.1% 17,216,414,718 963,154,466 5.9% Wizz Air 3,727,358 69,452 1.9% 5,328,548,637 32,235,051 0.6%

Source: Cirium schedules data. Note: Change versus July 2018

Asia-Pacific Seats ASKs Airline July '19 Change Change % July '19 Change Change % Air China 8,153,789 350,284 4.5% 17,209,266,208 738,750,577 4.5% AirAsia* 3,553,560 337,320 10.5% 3,793,450,803 179,098,165 5.0% ANA 7,582,151 (27,424) (0.4%) 10,983,344,041 241,720,906 2.3% Asiana 2,058,000 6,599 0.3% 4,873,137,487 (28,375,678) (0.6%) Cathay Pacific 2,746,148 169,682 6.6% 12,954,672,065 1,076,259,847 9.1% China Eastern Airlines 11,882,314 906,574 8.3% 17,917,384,233 1,555,495,342 9.5% China Southern Airlines 12,728,415 1,125,713 9.7% 21,338,883,680 2,320,367,375 12.2% Hainan Airlines 4,931,534 426,221 9.5% 9,228,254,651 982,558,020 11.9% Indigo 7,615,560 1,331,064 21.2% 8,086,254,799 1,706,492,147 26.7% Japan Airlines 4,627,764 45,992 1.0% 7,541,289,874 137,747,476 1.9% Korean Air Lines 2,917,456 (6,685) (0.2%) 8,756,035,814 129,689,692 1.5% Lion Airlines 4,475,756 (138,603) (3.0%) 3,986,073,404 (323,394,200) (7.5%) Qantas 3,525,616 93,894 2.7% 8,972,039,597 (182,219,581) (2.0%) Singapore Airlines 2,289,047 124,606 5.8% 11,098,029,733 801,558,363 7.8% Vietnam Airlines 2,757,760 123,183 4.7% 4,247,127,347 193,098,887 4.8% Xiamen Airlines 4,001,447 354,454 9.7% 5,498,880,139 437,238,279 8.6%

Source: Cirium schedules data. Note: Change versus July 2018. *Malaysian operation only

ANA’s first A380 service on the Tokyo Narita-Honolulu route started on 24 May, with the type operating on the route a thrice-weekly basis, increasing to 10 times weekly from 1 July. The Japanese carrier’s first A380 (pictured) was joined by its second in mid-May – around three weeks earlier than originally planned. ANA’s second A380 features a unique ‘Emerald Green Flying Honu’ livery, similar to the Sky Blue Flying Honu livery featured on the first A380 that was delivered in March. Cirium’s Fleets Analyzer indicates that

ANA’s third A380 is tentatively scheduled for delivery in September. Scheiber/EPA/EFE/Shutterstock Frederic

Middle East Seats ASKs Airline July '19 Change Change % July '19 Change Change % Emirates 7,001,787 (86,520) (1.2%) 33,917,591,082 (403,816,836) (1.2%) Etihad Airways 1,981,183 (43,721) (2.2%) 9,215,385,451 (610,841,222) (6.2%) Qatar Airways 4,215,145 187,770 4.7% 20,147,456,667 1,141,587,071 6.0% Saudia 3,769,001 (38,234) (1.0%) 7,620,057,567 (230,763,068) (2.9%)

Source: Cirium schedules data. Note: Change versus July 2018 flightglobal.com/airlines 3 June 2019 | Airline Business | 29 Distribution

Greg Waldron Singapore quick wins at the consumer level, Hannak says Lufthansa is collecting data to understand lightGlobal’s inaugural Reach proud of its NDC progress customer needs and preferences, FYour Customers conference in tracking customer satisfaction, Singapore saw airline executives and working to increase loyalty. and other industry players ex- The airline has a five-step pro- plore today’s technological issues cess to help improve sales on in distribution. They also dis- mobile platforms. These are iden- cussed practical tips for dealing tifying consumer problems, deter- with an emerging environment. mining priorities to be addressed, Perhaps the biggest theme to establishing timelines for delivery, emerge is that no single airline working with vendors to develop can go it alone. Success will rely features, and finally measuring not solely on airline distribution and evaluating outcomes. teams, but on a range of actors One example where the com- including online travel agents pany has driven mobile bookings (OTAs), evolving initiatives from is the removal of unnecessary established global distribution fields, such as requiring mobile

systems (GDSs), and consultants FlightGlobal users to enter their physical with a nuanced understanding of address. Another is a clear call to airline systems and issues. action for passengers when offered “We’re always talking about Airlines reach out a flight selection, which helps the revolution in distribution and move them towards a booking. In how everything will change, but Airlines have myriad ways to reach out to passengers, addition, the airline has made it one thing about this industry is but the relentless pace of technological change means easier to search for flights by repo- how much we depend upon each expectations are high and rising. The distribution game sitioning the search query module other,” says consultant Michael so that no scrolling is required. Moore, who chaired the confer- has never been easy, and is about to become harder ence. “Every airline wants to be CHANNEL, CHANNELS number one, but it’s pretty diffi- vary depending on the channel, Famously, the airline sent Frederic Saunier, director airline cult in this industry to go it on such as the airline’s website or a shockwaves through the industry distribution at Amadeus, gave a your own.” GDS. With an interline ticket, in 2015 when it introduced a presentation detailing the pro- passengers may be unable to pur- charge for flights booked outside its found changes distribution is THE AMAZON EFFECT chase ancillaries if a second car- own systems. Hannak notes that undergoing. These include per- James Whitelaw, SkyTeam’s vice- rier is involved. the airline now has 2,200 partners sonalisation across all touch- president for airport services, laid “Our industry and landscape in its NDC Partner Programme. points, new technologies, the fur- out the disruptive forces confront- are shifting,” says Whitelaw. He says that a key element of ther development of NDC, more ing the industry. He cites an “Airlines and alliances must this growth is a strong sales team insights from traveller data, as “Amazon Effect”, whereby con- stay relevant to customers or risk that has allowed Lufthansa to well as what he terms “mega sumers are enjoying a new world becoming flying metal. We are at pitch its NDC solution to external meta OTAs”. of fast, easy retail opportunities. a crossroads as it relates to how partners. This coincided with Airlines therefore need to be This influences consumer expec- commercial offerings are made investments in technology and adept at distributing across all tations about airlines, and low-cost to customers.” personnel to continually improve channels to help growth. carriers have proven fast adopters SkyTeam’s Digital Spine, a pro- its direct distribution capabilities. “Traditionally, distribution at embracing these trends. prietary platform for the alli- In addition, the airline is eager to has been an industry of slow He notes that one of SkyTeam’s ance’s member airlines, is work with partners on products change, and today this industry focus areas is dealing with basic intended to help with issues such and bundles for specific markets. is moving very fast, with distri- expectations. For example, in as interline passengers’ inability Hong Kong low-cost carrier bution facing unprecedented distribution, a ticket’s price can to view seat maps, select seats, Hong Kong Express shared that it change,” says Saunier. change seats, or buy ancillaries. has had strong customer conver- Saunier highlighted this with a sion rates – where visitors buy a forecast on gross bookings by GETTING NDC RIGHT ticket – through its mobile app. The channel. In 2018, approximately Lufthansa discussed its success carrier is so strong in the mobile 53% of Asia-Pacific bookings with IATA’s New Distribution arena that an Accenture and Google came from offline channels, 29% Capability (NDC) over the past regional report rated the company from direct online, and 19% from four years, with direct distribu- as top for mobile experience. OTAs. By 2022, offline bookings tion of tickets hitting over 50% of The airline’s major market is will fall to 44%, direct online will the total during the last six Hong Kong, where 70% of cus- grow to 32%, and OTAs to 24%. months, both through NDC chan- tomers come through its mobile “The share of OTAs is growing nels and the company’s website. app or its mobile web version. faster than the share of airline dot “This is something we’re quite Sally Mok, general manager of com,” he says. ■ proud of,” says Paul Ignaz Han- e-commerce and distribution at nak, senior manager sales prod- the airline, said that HK Express Find out more about the

FlightGlobal ucts and programmes distribu- has worked at becoming cus- Reach event at: Whitelaw: disruptive forces tion Asia-Pacific for Lufthansa. tomer centric by identifying flightglobal.com/Reach

30 | Airline Business | 3 June 2019

DELIVERIES Airline fleets boosted by fresh metal While the grounding of the 737 Max takes the headlines, deliveries of other types from the big airframers are continuing Airbus Airbus

Air Transat updates fleet with A321LR First of many A330neo jets for Delta Air Transat has begun a key part services from Canada, principally Airbus delivered the first A330- claims offers 25 percent lower of its fleet renewal programme thinner routes to Europe, the 900 to Delta Air Lines in Toulouse fuel burn per seat compared with with the delivery its first of 15 Air- Caribbean and Central, and on 24 May. its predecessor. bus A321LRs in early May. South America. The US carrier has 35 A330neos Delta will initially base its A330- The 199-seat A321LR fleet is Airbus says the A321LRs will re- on order to add to its fleet of 42 900 fleet at Seattle-Tacoma Inter- being acquired on lease from Aer- place older aircraft in the Air A330-200s and -300s. national Airport, where it will op- Cap. Five more are due this year Transat fleet. The airline is one of The Delta crew ferried the new erate flights to Shanghai, Seoul and the remainder by 2022. the last remaining operators of A330-900 back to the company’s and Tokyo Narita. Airbus says the A321LRs are passenger Airbus A310s, with six Atlanta base using a jet fuel blend- The aircraft are configured for part of a larger leasing deal Air currently in service. ed from conventional sources and 281 passengers, including 29 in Transat has with AerCap to con- Air Transat A321LRs are config- non-petroleum synthetic fuel. business-class suites, 28 in premi- vert to an all-Airbus fleet by 2022. ured with a two-class cabin com- The A330neo family is an up- um economy, 56 in extra-legroom The A321LRs are being de- prising 12 premium seats and 187 dated, re-engined development economy seats, and 168 in stand- ployed on its longer international economy seats. of the A330 twinjet which Airbus ard economy. Boeing Embraer

African debut for E175 in Mauritania ANA completes set as it takes 787-10 Mauritania Airlines has become ing parked its Boeing 737 Max 8, The first Boeing 787-10 for All plane and ANA is honoured to be the first airline in Africa to take de- Mauritania has an active fleet that Nippon Airways arrived in Japan the first Japanese airline to fly the livery of an Embraer 175. comprises two 737 Classics (both on 31 March, before entering rev- aircraft,” says ANA’s executive In a ceremony held on 28 -500s), two 737NGs (a -700 and an enue service in late April on the vice-president Hideki Kunugi. March, the Mauritanian flag carri- -800) and an Embraer ERJ-145. Tokyo Narita-Singapore route. “ANA now has the distinction er was presented with the first of “The introduction of the E175 Cirium’s Fleets Analyzer shows of being the only airline in Asia to two E175s it ordered last year. in our fleet will allow us to add that the aircraft is the first of three operate all models [787-8, 787-9 Both will be long-range variants, more frequencies and new desti- ordered by the airline. and 787-10] of the 787 aircraft.” Cirium’s Fleets Analyzer indicates. nations whilst enhancing the qual- While ANA is retaining the ANA’s 787-10s will focus on serv- Embraer says the second air- ity of passenger experience, and same business-class seat used on ing destinations in southeast Asia, craft will be delivered to the offering greater comfort with the its long-haul fleet, new seats have with the type to operate on the Nouakchott-based operator dur- best cabin in this category,” states been installed in premium econo- Narita-Bangkok route from 1 July. ing the second quarter. the airline’s chief executive, Mo- my and economy classes. ANA’s two other 787-10s are Fleets Analyzer shows that, hav- hamed Bennahi. “The 787-10 is a cutting-edge due for delivery before April 2021.

32 | Airline Business | 3 June 2019

INTERACTIVE

FlightGlobal’s Paris play conference Airlines 2050 lightGlobal is gearing up to Airlines 2050 is a landmark Fprovide full coverage of one-day summit organised Paris air show in mid-June. jointly by FlightGlobal and Much has changed since the partners Airlines UK, Board 2017 show. Two years ago in the of Airline Representatives French capital, a buoyant Boeing in the UK (BAR UK) and launched the 737 Max 10, while its IATA. The London event big competitor Airbus was touting will take place on 17 enhancements to the A380. October, bringing together A large team from our global key UK aviation stakehold- offices will be on site in Le Bour- ers and international air- get this year, generating real-time lines serving the UK. news and four issues of Flight Participants will include

Daily News, distributed each day Max Kingsley-Jones/FlightGlobal C-level speakers from during the event. Le Bourget again hosts year’s biggest aerospace gathering ­major UK and international Flight Daily News will be carriers, to give an insight packed with the latest news and The show will take place at the Among the attendees in 2017 into what is driving the lo- photography from Paris, while Le Bourget Parc des Expositions was French president Emma- cal airline sector, and how it our online channels will carry up- from 17 to 23 June, bringing to- nuel Macron, who flew into Le can stay competitive in a to-the-minute stories and analysis. gether players from the global in- Bourget on a French air force fast changing and evolving Our websites will also carry dustry around the latest techno- Airbus A400M. business and political­ land- the ever-popular Paris Order logical innovations. To view the last set of daily scape. More details at: Tracker, providing all the key The last show featured some newspapers and to find out more flightglobal.com/­ data on commitments made dur- 142,000 trade visitors with around about this year’s event, visit: airlines2050 ing the event. 140 aircraft on display. flightglobal.com/Paris

PODCAST Judges’ verdicts are in

udging is now complete for Jthis year’s Airline Strategy Awards, which takes place on 14 July in London. And as the big day approaches, FlightGlobal is delighted to wel- come Collins Aerospace as the lat- Talking points est sponsorship partner. Collins, a Make sure you subscribe leading provider of intelligent so- to the Airline Business lutions to the aerospace and de- Podcast. Executive editor fence sectors, joins existing spon- Graham Dunn and manag- sors CFM International, Tampa ing editor Lewis Harper are International Airport and Volantio. joined every month by As ever, the winners have been

journalists from our global picked by a team of high-profile BillyPix team to discuss the latest judges from the industry, who The 2018 recipients with Awards host Max Kingsley-Jones (left) industry developments. gathered in the UK capital for a FlightGlobal team mem- meeting in May, hosted by event ed out on the night, alongside a Last year’s winners included bers also dial in to debate partner Korn Ferry. They decided new award for Diversity in Lead- Calin Rovinescu of Air Canada, key topics and talk through on the recipients across six catego- ership. Both categories are judged Ajay Singh of SpiceJet and Dimi- the latest chief executive ries: Executive Leadership, Sector separately from the main awards. trios Gerogiannis of Aegean Air- interviews. You can sub- Leadership, Low-cost Leadership, This year marks the 18th run- lines. Other awards went to Azul/ scribe via the Apple or Finance, Marketing and the new ning of the awards and the third TAP Air Portugal, Air New Zea- Android app and the pod- Digital Innovation award. time Airline Business has part- land and Singapore Airlines. The cast is also available to lis- The judges were asked to nered with Korn Ferry, a leading Airline Business award was hand- ten to via web browsers choose from a list of nominations human capital management firm. ed to Aengus Kelly of AerCap. using Soundcloud. that was drawn up after several July’s invitation-only ceremo- To find out more, including in- flightglobal.com/ months of deliberation and in- ny takes place at the Honourable formation about attending and ABpodcast depth research. A special Airline Artillery Company in London’s sponsorship opportunities, visit: Business award will also be hand- financial quarter. strategyawards.com

34 | Airline Business | 3 June 2019 flightglobal.com/airlines

Destination for World’s Capital for Most Visited U.S. Medical Meetings Modeling, Simulation Destination with 75 in the U.S.m & Training (MS&T) Million Visitors in 2018m