LONDON – Airways acquired exclusive access to the Skift Aviation Forum that is taking place over the course of today to discuss the future of the industry, especially with COVID-19 decimating aviation currently.
The eight-hour conference will be split up into a plethora of topics from both industry experts as well as CEOs or executive staff members of airlines and airports.
So without further ado, this is where the industry is currently – Check back between 1430-2230L BST for more updates across the day. Be sure to follow @AvGeekJames on Twitter who will be posting updates over the course of the day also.
Airlines in a World Upended: An Outlook from Airline Weekly with Jay Shabat
Jay Shabat, who is the Co-Founder and Senior Analyst for Airline Weekly started proper proceedings off with his outlook for the airline industry at the moment, following a warm welcome from Skift President Carolyn Kremins.
Shabat was key to note the calm before the storm recorded on January 1 this year where airlines anticipated another good year.
Fuel costs were still low and enjoying the fruits of consolidation due to a good economy and strong corporate demand.
Nowadays, April was recorded as the low-point due to global lockdowns, with the summer providing quite the disappointment.
Next milestones for the industry are Thanksgiving and Christmas period as well as the Florida peak season in the U.S and the global 2021 summer peak as well.
Looking ahead into this month and beyond, Shabat stated that there is still confidence over flying, with the idea of quarantining being the problem and not the actual fear of the virus.
Airlines need to countervail cost winds such as heavy future debt payments and more. With the MAX return imminent and the A321XLR due to make its debut in the next few years, there could be room for success in the industry.
With Mass Vaccinations likely by mid-2021, it could be in time to salvage the Summer peak in particular, with markets in Florida, the Mountains, Mexico and mid-continent routes doing very well.
How To Navigate Aviation’s Greatest Crisis with Gary Kelly
The conference then moved on to Southwest Airlines CEO Gary Kelly who went into detail about how the industry can defeat the Coronavirus.
He said that it has been a very stressful time period, with people rallying to the cause when necessary, taking care of the airline’s customers.
Kelly also emphasised what the airline has done to make travel safe during the pandemic. Kelly said that the rate of improvement that the airline was hoping for this month was not what it expected.
This is due to economic activity being slowed due to lockdowns and cases of COVID-19 rising, but stated that September and October results were positive towards demand.
Kelly also stressed that the airline is spending around $10 million per day, with the airline forecasted to be 20% over-staffed, but is trying his best to ensure no lay-offs take place, but is looking increasingly likely every day.
The Southwest CEO also dismissed claims of the airline becoming a hub and spoke carrier, with the airline wanting to continue with a single-aircraft fleet, being the 737 Family. Customer flows, he did concede, are slowly shifting to non-stop travel in the United States.
Kelly also confirmed that the airline will be launching schedules for Sarasota and Savannah today, which is part of the airline’s strategy of a perfect balance between leisure and business travel, with business travel being soft currently.
In terms of international travel, Kelly confirmed that six of 14 international routes have been reinstated, and the rest are dependent on international restrictions imposed by the respective governments.
As a final thought from Kelly, he believes that the pandemic will be behind us soon, with the lives of people changing permanently in some ways, referring to people working from the office not being conducted in the same way anymore. He believes the industry won’t return to normal until 2022 at the earliest.
Weathering Europe’s Bumpy Recovery with Anne Rigail
With 2024 looking like the likely year for recovery of the industry, Air France CEO Anne Rigail discussed how we can get to that point and maybe exceed the target.
The conversation started off with Rigail discussing the support given by the French and Dutch Governments over the Air France-KLM organisation.
Rigail mentioned that the priority for the airline at the moment is to maintain the balance sheet. She did state that advance bookings look to be VFR (Visiting Friends & Relatives)-based for the Summer 2021 season next year.
There has also been a lot of activity on the domestic, African and Caribbean markets. The African market is a complex market currently due to security difficulties in the different destinations.
The Domestic routes have been subsidised by the French government, due to Air France accruing losses of over 200 million EUR and have been made worse due to the COVID-19 pandemic.
Rigail discussed the long-haul program with Air France and the decision to retire the Airbus A380 was decided before the COVID-19 crisis due to economic reasons. The pandemic accelerated the speed of retirement, with the A340s following the same fate as well.
She did state however that the First Class product would be staying permanently, but capacity has been reduced on such flights due to the pandemic.
Rigail seemed to agree with Gary Kelly’s thoughts on recovery, offering a trajectory of 2024. Like what Kelly said also, there will be a change in travel purposes from business to leisure as most travellers may not travel to New York from Paris for a 2-hour meeting and then travel back.
She also stated that the France/Europe corridor with the United States are on the way in order to restore transatlantic travel.
Rigail ends with the point that the pandemic can be used as a catalyst for transformation, with business structures being able to be changed to make airlines more ready for any future challenges ahead.
Gulf Carriers: Are The Glory Days Over? With Adel Ahmad Al Redha
Emirates’ Chief Operating Officer Adel Ahmad Al Redha next discussed quite an important question that is being asked at the moment, especially with the prevalence of ME3 carriers, etc.
The discussion started with the airline being the first to offer COVID-19 insurance for travellers coming into Dubai.
It was able to be executed in a quick matter, Al Redha said. Al Redha also mentioned that it was about being safe as well as feeling safe onboard.
The vaccine, Al Redha believes, will give governments the opportunity to relax its restrictions, in order to add more flights into different countries around the world.
On top of this, Al Redha highlighted that its Dubai World Centre cargo hub holds the correct equipment to hold the doses of the vaccine, potentially making the airline and the airport a key player in such distribution.
When it comes to the A380, this is very different compared to the perspective of Rigail. The A380 will remain the Emirates flagship with Al Redha confirming the airline will be taking the last remaining aircraft for delivery.
Al Redha ends with the point that “2021 will be the year for the industry”, in terms of potential positive growth coming a lot earlier than the 2024 targets.
Network Planning in a Post-Pandemic Era with Juha Jarvinen, Purnima Nerurkar, and Brett Catlin
Juha Jarvinen, the Virgin Atlantic Chief Commercial Officer was joined by Purnima Nerurkar, the General Manager of Commercial Operations for Air India, and Brett Catlin, the VP of Network & Alliances for Alaska Airlines to discuss how route networks can be planned as we come to the end of the pandemic.
Jarvinen believes that network planning a post-pandemic era will be reset from the traditional methods before COVID.
Nerurkar stated that Air India is using past network examples as a way of benchmarking what services can be reinstated and which ones can’t, depending on passenger preference.
Catlin stated that historical data has become less valuable. Planning networks have gone from planning months in advance to just weeks in advance. Catlin also noted that VFR leisure is much stronger than business, similar to what Kelly said earlier today.
Nerurkar added that with India being a significantly large domestic market for Air India, the operating environment remains the same as it is a domestic market, but planning for the long-haul of course is nowadays different.
Domestic capacity in India is currently fixed at 75%. She also added that VFR leisure is contributing to filling up planes onboard Air India flights, especially with current struggles.
Jarvinen added that Virgin Atlantic is still looking at destination launches based on the cargo contribution. If it is break-even or above, then the airline adds passengers to that specific destination.
Whilst passenger load factors at the airline are at 22%, cargo flights to the likes of New York and Hong Kong are very profitable still.
Nerurkar stated that Air India is therefore learning new lessons in network planning, with more focus needing to be placed on crisis management on top of the usual market share acquisition.
How Can Airlines Take the Stress Out of Travel? With Bill Lentsch
Delta Air Lines’ Chief Customer Experience Officer Bill Lentsch then moved the conference on to a key component of flying during the pandemic. How can airlines take the stress out of travel?
Lentsch emphasizes that it is taking a “people before profit” approach and all decisions taken are influenced by the customers, employees and stakeholders at the airline.
Lentsch stated that the action the airline is taking is playing “the long game” to provide loyalty and trust, and therefore seeing premium revenues being experienced by the airline.
The customer is willing to pay for the middle seat block and will only change that when the customer is confident about sitting next to passengers again.
Lentsch talked about the mask policy in late April to May. If the customer is unwilling to wear masks, crew will approach them softly the first time before giving them the notice to say they can’t fly with Delta again. Over 600 passengers have been placed on the no-fly list so far.
Lentsch concluded the conference with customer feedback. Three years ago, it used to be based on scheduling and pricing. It is now on social distancing and cleaning.
Designing a Smoother Flight Crew Experience in 2021 with Mike Appleton
Mike Appleton, the Hotel Connections and Travelliance for Fleetcor Companies discussed how flight crews can experience smoother operations going into the new year.
Appleton has built an automated app that reduces the workload in organizing accommodation and crew relief.
“Operationally, we need to get heads in beds immediately”, he said. Such workflow with Hotel Connections flows all the way through all processes of organisation.
Appleton has said that it has taken 21 years to automate the processes to the point of what can be advertised today.
Preserving the Low Cost Advantage in Europe with Eddie Wilson
Another highlight of the conference came from Ryanair’s CEO Eddie Wilson, discussing how low-cost carriers can thrive in a difficult environment, especially with Norwegian Air applying for bankruptcy protection.
Wilson started out by discussing its updates around the airline. It has managed to keep all of its pilots current with their licenses, meaning no cutbacks needed at that point.
Services resumed in July this year, with load factors hitting 70% throughout the Summer and into September. Winter cutbacks, he believes, appears to be undoing that work, but believes there is a light at the end of the tunnel.
On the topic of lockdowns, Wilson stated that they are difficult for governments at the moment in terms of coming up with an alternative view.
He has criticised some states for its “knee-jerk” reactions but there is un underlying problem that lies for the industry ahead. This is due to the uncertainty about whether borders are going to be reopened and shut very quickly.
Wilson also went on the warpath, in true Ryanair form, about other airlines receiving state bailouts. “The European Union has said that there should be a free market but an airline that used to be owned by a government gets bailed out”, he said.
In terms of destinations, Wilson says that he remains very opportunistic on where the airline places traffic. COVID has helped secure additional slots to destinations in the Greek Islands and more so it means it will put the capacity there.
For the 737 MAX, Wilson stated that even with the regulatory breakdown between Boeing and the FAA, Ryanair is working very closely over receiving such aircraft, and is a happy customer, and is excited about deliveries in 2021.
On the Norwegian news from yesterday, Wilson stated that the airline is ahead of everybody else, due to secondary airports and bases, and the high productivity levels it offers. He also stated on Skift that the airline “has gone into the wall”.
Airlines & Airports: Resetting for the Road Ahead with Robert Isom & Sean Donohue
Robert Isom, the President of American Airlines joined Sean Donohue, the CEO of Dallas Fort Worth International Airport on how airlines and airports need to take a step back and assess what has gone on so then it can provide a solution.
Isom started out by emphasising the focus for passengers flying, especially during the Thanksgiving period being safety. In terms of concerns over spreading the virus, Isom and Donohue remain confident that fliers will be responsible.
He also mentioned how AA is making passengers as safe as possible due to its multi-layer systems in place to deal with the pandemic.
Isom dominated the majority of the discussion with Leslie Josephs, stating that demand has been dampening and that bookings are in free-fall.
Donohue then chimed in eventually, stating that DFW has been working with AA and healthcare providers for a month testing passengers heading off to Hawaii. He also mentioned that the next step in COVID testing is on international flights, as “that is where the value is”.
Revenues at DFW Airport in the last six months have dropped by 40%. But Donohue boldly stated that it isn’t that big of a deal compared to what airlines and concession stands have been feeling during this pandemic.
Isom thanked Donohue for all of his work as “DFW is key to American going forward. They have been fantastic partners”, and used the Terminal E expansion as an example.
Isom is aiming for growth in international services out of DFW, especially with more routes being added from Terminal D, which is the international terminal.
He also added that he was going to review the joint ventures with the likes of British Airways, Japan Airlines, Cathay Pacific and Qantas to use a “launching pad” for a reinvigorated route network.
AA currently has around $14.5bn worth of cash-on-hand, according to Isom, which is double what the airline normally has. It has taken measures such as furloughing and retiring over 100 aircraft in recent times.
Boom or Bust: Aviation Analysts Call It As They See It with Helane Becker & Stephen Trent
Helane Becker, the Managing Director of Industrials at Cowen was joined by Stephen Trent, the Director for Americas Airlines and Latin Transports to discuss how the industry has been more difficult to predict, due to COVID offering that high level of volatility.
Becker started off proceedings by mentioning that the vaccine has increased the stock values of airlines in the industry and is encouraging people to buy such stocks.
Trent added to this point, saying that passengers are coming back to the U.S travel market, which is positive news and the figures look “attractive”. The market was vying on the news of the vaccine and a route out of the pandemic.
He also stated that there is a lot of short-term money in the airline industry at the moment. He exemplified Warren Buffett from investing and then exiting shortly after.
Becker predicts that recovery for domestic travel is three to five years, with international travel due to take five to seven years, which is an alternative view on such recovery rates in the industry.
Why Prevention Is The Key To Consumer Confidence with Angela Rasmussen, Ph.D., and Saskia Popescu, Ph.D
Angela Rasmussen, Ph.D., who is an Associate Research Scientist at Columbia University was joined by Saskia Popescu, Ph.D., an Epidemiologist and Assistant Professor for Biodefense at George Mason University discusses the strategies of COVID prevention being the underlying goal to consumer confidence in the industry.
The discussion began with the CDC advising people not to travel during the Thanksgiving period. Rasmussen states that getting the vaccine is good news but there are only 20 million doses available for this year, which doesn’t cover all of those who work in the healthcare system.
Popescu brought up the point that the possibility of an “immunity passport” could be the way of getting more people in the air, so then less testing has to take place.
Both panellists agree that maintaining social distancing and mask mandates can be difficult because of the psychological behaviour of wanting to “just get on the plane” and get to your destination.
Rasmussen went as far as suggesting that airports need re-designing, even post-COVID, so then if there is another pandemic in the future, then crowd and infection control can be accounted for.
Airways asked Popescu about whether middle seat blockages are useful. She replied back saying that whilst the policy isn’t perfect, it can be worth it on the feel-safe perspective.
A Latin America Perspective and How Aviation Can Emerge Stronger with Anko van der Werff & Peter Cerda
Next on the list to present was Anko van der Werff, the President and CEO of Avianca, who joined Peter Cerda, the Regional VP for the Americas at the International Air Transport Association, discussing primarily how Latin American aviation can come out of COVID looking stronger.
The conference started on the topic of Latin American travel outlook, with Cerda stating that it is “much better than it was a month and a half ago”.
IATA is waiting for the likes of Argentina and Chile to reopen its borders. van der Werff stated that markets have been slow to grow upon opening and has slots ready in Argentina. He even said that “We may not even fly there at all” if the country does not open up anytime soon.
Cerda even went as far as saying that “Getting anyone on planes at the moment is so difficult”. He criticised governments for lack of collaboration between countries, which has made it difficult for the industry to reopen borders on an agreement-basis.
Anko van der Werff also took the time to comment on its relationship with United Airlines, calling it “a fantastic relationship that works on a professional and personal level”. Joint ventures between the two carriers looked quite likely before the pandemic but discussions still need to take place again.
Cerda interestingly noted that for the industry to properly thrive, it needs to enable aviation to those lower on the socio-economic ladder, so then more low-cost carriers are needed.
Airways asked van der Werff about how the airline will recover from the pandemic on top of the volatile Latin American political situation.
He said that the airline is more focused on the pandemic, but the political front can be offset by the long-term visions of the continent and the type of classes and people that are working who would prefer to fly than get a bus to work.
Finding an Agile Path Towards Profitability with Ted Christie
Spirit Airlines CEO Ted Christie continued with that theme of emerging stronger with ways of airlines being able to make money during a difficult period.
Christie started off by saying that “It’s been a challenging year for the industry. It comes down to the practicality of forecasting demand that is the issue”.
The airline has been experiencing a seasonally disrupted period of time, like with the rest of the industry worldwide currently.
Christie is expecting to return back to profitability depending on the capacity it can offer over the next few months. It also means there have to be people onboard too.
Cash burn at the airline has been reduced to $2 million per day from $2.4m and is still continuing to be lowered.
Christie also addressed its route launches into Colombia, with VFR being the biggest market for the airline. Barranquilla and other destinations have been very helpful in securing additional revenue.
Southwest Airlines Returns to Its Business Travel Roots with David Harvey
David Harvey, Southwest’s VP for Business then discussed how the airline is now beginning to cater to business travelers once again, even in the wake of remote working during the pandemic.
Harvey starts off by talking about the rich history of the airline from its roots out of San Antonio, Texas, by “getting people off the roads and into the skies”.
He also addressed concerns about travel hesitancy, by saying that the airline “understands that there is a level of anxiety and discomfort on taking that first flight”. Harvey related to the COVID safety protocols being implemented by the airline.
Harvey also stated that “the whole industry has been punched in the gut”. He said that this enabled Southwest Airlines to fill the gaps in its route network and get the airline ready post-COVID, which has been seen with the launch of 10 new routes, including Sarasota and Savannah as mentioned earlier today.
Finally, Harvey accepts that Southwest Airlines has been penetrating the leisure market more than the business market in the last few years. And the airline is pledging to focus on such business travel in the future.
Rebuilding Through Understanding Consumer Demand and Building Loyalty with Mark Nasr
As the second half of the conference begins to take shape, the attention then moved over to Mark Nasr, the VP of Loyalty and E-Commerce for Air Canada who brings up good points on how to bring back repeat business post-pandemic.
Nasr started the discussion by talking about the new loyalty program launched by the airline called Aeroplan and how it was a successful launch in the midst of a global pandemic.
Nasr developed this program from scratch, and wanted to make it a sustainable program for every cycle in the airline industry and would also benefit passengers at the same time.
The goal for the airline was to develop a system that wouldn’t hurt the airline too much but benefits the most.
Business Travel’s Rebound: Finding a Balance Between Realism & Optimism with Andrew Nocella
Moving over to the US3, Andrew Nocella, United Airlines’ Executive VP, and Chief Commercial Officer spoke about how the airline industry needs to be careful with what it launches, especially when restrictions imposed by governments can be changed at any time.
Nocella started off by saying that United is experiencing a drop in bookings and cancellations are increasing. However, cancellations are beginning to be offset by the no-fees change policy that is being heavily utilized.
He said the airline is fully prepared for the fourth quarter. The Pfizer announcement is also helping bookings too as they are being made in advance, as far as 11 months as “people wanna get out of their bedrooms”.
Nocella also mentioned that as soon as the virus hit Italy, the airline took steps to improve its strength financially and operationally. He mentioned that the airline is a couple of steps ahead of the virus, especially with the implementation of COVID testing on transatlantic flights for example.
He also stated that the way our cultures work, is that we are “social creatures” as we all want to be out and about so he predicts demand will come in the next year or so.
Nocella confirmed that Los Angeles will NOT be removed from the United hub list, but will actually be a part of United’s strategy for expansion in the future, especially as the airline is running out of room at San Francisco. The airline has obviously learnt its lessons from JFK, which it will be returning to soon.
Airports Innovation: Retooling to Soften the Landing with Tamara Vrooman and Robert Horton
The second to last talk comes from Lynette DuJohn of Vancouver Airport who joins Robert Horton, who is the VP of Environmental Affairs at Dallas Fort Worth Airport on how airports can innovate during these hard times.
DuJohn started with the notion of digital innovation being at the forefront of Vancouver’s future strategies, even if passenger numbers are down.
She believes that the way to get through the COVID-19 pandemic is to acquire new technologies and innovation to keep pushing the airports forward.
Horton mentioned that the number of efficiency programs that DFW partook in resulted in energy consumption being reduced by 80% and costs down by 30%, which puts the airport in a better financial position in the pandemic.
He also mentioned that the COVID-19 pandemic has also encouraged an enhancement in airport sustainability programmes around the world as a strategic priority.
Managing the Cyclical Changes of Aviation Out of a Crisis with Steven Udvar-Hazy
Finally, Steven Udvar-Hazy, the Executive Chairman of the Board for Air Lease Corporation looks at how the industry can manage the significant change caused by the pandemic.
Udvar-Hazy started out by stating that events such as COVID-19 are never forecasted by the industry and that only periods of growth are tracked as well as what he calls “earthquakes”.
He also mentioned that the length of recovery comes with a different curve, and that is something that airlines are struggling with, which comes especially with the routes that they can and can’t launch on a sustainable level.
On the same topic of recovery times, Udvar-Hazy also mentioned that the recovery times for business travel is going to be a lot more sluggish than the likes of VFR and leisure travel.
Also, he mentioned that over the next 12-18 months, the market will be strongly cargo-orientated, as it will be something that will help the industry recover further.
Udvar-Hazy also mentioned that the Airbus A321LR and XLR variants are the hottest aircraft on the market at the moment, especially with the way commercial traffic will be like in a post-pandemic perspective.
With that in mind, he also made the point that the new trend towards route portfolios is the “frequency game”, rather than placing two or three flights per day on a popular route with a widebody.
He further stuck a knife in the back of Boeing by stating that Airbus has been working very hard on producing solutions to the current market conditions, whilst Boeing has been distracted by the 737 MAX crisis.
Today has been a very insightful day for the industry, with Skift completing a successful event that has provided both hope and scepticism to the industry.
Some are saying that recovery will happen next year with others not expecting it to happen by 2024.
Either way, it is always positive to know what airlines are doing to try and counteract this pandemic as much as possible.
In the meantime, only time will tell how the recovery will take place with the most important question of when.
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