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Frames, Fees & Fun: Day 2 at the International Aviation Forecast Summit

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Frames, Fees & Fun: Day 2 at the International Aviation Forecast Summit

Frames, Fees & Fun: Day 2 at the International Aviation Forecast Summit
September 01
18:53 2015

MIAMI— Day two of the International Aviation Forecast Summit saw presentations from aircraft manufacturers, airports and a few more airlines, providing an interesting mix of information. Similar to day one the smaller companies were more provocative and open in their ideas and views.

Aircraft Manufacturers

In the aircraft manufacturers session Airbus and Bombardier offered up the boldest statements.

For Airbus it was Christian Kley, VP Strategic Marketing, presenting the company’s outlook and talking to the new aircraft market. He was particularly keen on the A321neoLR and the potential it offers for mid-size airlines looking to expand into longer markets. Most notably, Kley called it a “low risk” way for those airlines (i.e. Virgin America or JetBlue) to try long-haul service with a common flight deck experience and operational needs.

The main difference is the addition of extra fuel tanks to increase range. And, as Kley explained, if the long-haul service doesn’t work out, the extra tanks can be removed to operate as a “normal” A321neo. Yes, there would be a cost to that attempt, but it is a lower risk approach than adding a new type to the fleet.

To Bombardier, the big issue was that bigger planes are causing service cuts to smaller markets. The company showed off a map of routes dropped from the Southwest route map as the AirTran 717s were retired and it is impressive.

Bombardier believes that its new CSeries aircraft fill the gap from a CASM perspective and hopes that the operational and scope clause issues are resolved so that the CSeries is adopted in the US market.

Nok Air

Arguably, the biggest splash of the day was Nok Air’s CEO Patee Sarasin talking about his company’s growth and future plans. Whether detailing his company’s efforts to be on the forefront of technology (Nok sold tickets at 7-11s early on and can sell via Apple Watch now) or his ideas of new routes (Bangkok – Honolulu is one he’s pushing hard for), the details are intriguing. The Honolulu service could be either on 787s or 777s, depending on demand and Sarasin is hopeful that Hawaiian Airlines

The Nok-Scoot partnership was something of a surprise given the financial stake Thai Airways has in the Nok operation. Sarasin was able to explain that away somewhat easily, noting that the legacy carrier is far too slow to react and adapt as his upstart needs to shift. Which is not to say that Nok didn’t lean heavily on the Thai Airways brand to build up passenger traffic in the early days, but it is not as tied to that anymore.

Allegiant

The carrier works the ULCC market hard, and often is seen as only pulling from small markets to large markets on a day of week basis. SVP Jude Bricker suggested to the group that it can also operate between midsize markets efficiently, and even where other carriers are in the market. Southwest Airlines and Frontier have three daily services between them on the Austin – Las Vegas route. Allegiant added service 4x weekly and all three carriers are still flying with high load factors. Bricker suggests that’s because his company it picking up the exceptionally price-sensitive customers which were likely “spillage” from the other two carriers. The ability is not limited to these markets – Bricker is confident that “Leisure customers can be stimulated in just about any environment.” By responding with price point shifts and capacity adjustments the company remains profitable and Bricker is “really confident that I can put people on airplanes.”

Alaska Airlines

John Kirby, Alaska Airlines’ VP Capacity Planning, focused on his carrier’s ever evolving route network and trying to shift away from being focused only on the Seattle and Portland markets. Kirby mentioned, “I like dot connecting” in speaking on how he expects to see more routes added to the network. Southern California will continue to expand as well.

Airports

Representatives from the Las Vegas and New Orleans airports shared the stage, talking about the challenges they face with securing staffing for their immigration and customs facilities and managing the ride sharing services which are showing up at their front doors. Iftikar Ahmad, Director of Aviation for Louis Armstrong New Orleans International Airport, was keenly focused on operating costs and making sure they stay low, “If we could lower costs I could get the Spirits and Allegiants of the world to come in and bring fares down.” That’s good news for passengers but not necessarily for the airlines hoping to drive yields up. This is just one area where the two parties are fighting.

Ahmad believes that, ultimately, the costs for improvement projects are going to be borne by the airlines anyways and rolling it into the PFCs rather than the fares through higher landing costs or other means is arguably more transparent to the passenger. Then again, it is harder for an airport to waive PFCs or rebate them back to the airline so perhaps that’s part of the challenge.

 

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Seth Miller

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