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Overheard at the Boyd Group’s International Aviation Forecast Summit

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Overheard at the Boyd Group’s International Aviation Forecast Summit

Overheard at the Boyd Group’s International Aviation Forecast Summit
August 31
07:06 2017

LAS VEGAS —  The 22nd annual Boyd Group International Aviation Forecast Summit was the place to be to hear airline, airport, and manufacturing executives offer their views on the present and future of the commercial aviation industry.  Below are quotes from presenters at this premier event.

Sen. Dean Heller (R-Nev.), member of the Commerce, Science and Transportation Committee and the Senate Travel & Tourism Caucus: “We haven’t raised the [Passenger Facility Charge] cap in 17 years. FAA reauthorization needs to occur before the end of September and PFCs are one of the most contentious issues. Conservative groups call it a tax increase and [Commerce Committee] Chairman [John Thune (R-S.D.)] says he won’t move the PFC cap raising forward until a majority of Republicans approve it. He has my support, and the Democrats are there too. Airports need capital for expansion in order to offer a good experience for every passenger.”

Brad Tilden, CEO, Alaska Airlines: “Alaska Air has proudly been an all-Boeing 737 fleet. The 737 is a terrific aircraft. But when we bought Virgin America, we went from a single to double fleet.

We have leases on Airbus A319s and A320s, so absent something happening, we will have a dual fleet for some time. But we’re giving both manufacturers a chance to come in and make their case, but we have the scale now to run both fleets efficiently.

We’re Excited about [Embraer] E175 services with Horizon Air and SkyWest. This aircraft adds utility to smaller markets. And the [Bombardier] Q400 is still a fantastic plane for us. It’s a clear winner over a jet on flights of up to 300 miles in terms of cost.”

Photo: Alaska Air

Andrew Watterson, Executive Vice President and Chief Revenue Officer, Southwest Airlines, in his presentation about the battle for California, he noted that a lot of airlines are focusing on the state. “This is not new, and it has come and gone through the years. It’s certainly not the first time airlines have tried to displace us there. But Southwest is the airline of California. We carry more passengers to, from, and within California than any other carrier. We serve 25,000 passengers a day within the state. We have leading positions in seven out of the top 10 leading airports in California, and we are a close second at Los Angeles International Airport.”

Lukas Johnson, Senior Vice President, commercial, Allegiant Air in his presentation on whether the ULCC model is dead, asserted that it is not dead. “In the last decade, this sector has been most profitable, providing consistent returns. Looking back 10 years, ULCCs have doubled down to stimulate traffic to offer the lowest fares to passengers. Thirty percent of ULCC passengers only buy the base fare, while only four percent buy the combined checked bag, carry-on bag and seat selection package. Even with all our fees, we’re still cheaper than Southwest Airlines. By the end of 2017, ULCCs will be everywhere in terms of domestic and some international capacity.”

Peter Ingram, EVP & COO, Hawaiian Airlines communicated the airline’s unique advantages. “We are the transportation network for the state. There’s no surface transportation between the islands, so passengers travel with us for their everyday needs. Our neighbor island network is a unique asset that carries six million passengers a year. In 2015, we redid the interiors for the Boeing 717, used on these flights. We made them standard across our operations and added slimline seats that were comfortable enough for a 30- to 40-minute flight.”

Trey Urbahn, CCO, TAP Air Portugal had a buoyant story. “We’re a hub-and-spoke airline that’s been around for 72 years. It was privatized in 2015 through an investment group led by JetBlue and Azul founder David Neeleman. he invested because he saw the airline was fixable and offered a unique opportunity to take a legacy airline and make it better. Because we were a state-owned airline, our costs were frozen for 10 years and that gave us a good platform to compete against legacy carriers like Aer Lingus, Air France, Lufthansa, and Alitalia because we could blow them away on cost. So now WizzAir, RyanAir, etc is who we compete against. So we’re now a hybrid airline that needs to compete with both legacy carriers and low-cost carriers like Ryanair and Wizz Air.”

Dr. Zhihang Chi, vice president and general manager, North America, Air China: “The problem of Chinese citizens getting visas to visit the United States is a big barrier. We have 6,000 salespeople in China working for Utah-based Nu Skin. They all applied for visas at the different consulates to attend a sales meeting in the United States and 3,000 of them were denied. We see that visa denial rates are going up even though the State Department will not publish the data. It astounds me because Chinese people spend an average of $6,000 per trip.  Our citizens are a ready-made sector that will come here and spend money because they love America.”

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About Author

Benét J. Wilson

Benét J. Wilson

Mother, Aviation Queen, Veteran Aviation Journalist, AVgeek since age six, number one fan of the Boeing 747 and Student pilot (can't stick my landings). I would actually pay rent to live in an airport. bwilson@airwaysmag.com @AVQueenBenet

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