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September 2022, Virtual
September 29 2022, Virtual
BBT editor Paul Revel reports from the event in Helsinki, attended by senior aviation and technology figures, as well as travel buyers.
CAPA’s chief financial analyst, Jonathan Wober, said world airline operating margins are set to grow for 2015, with low oil prices a chief factor.
He forecast a full-year figure of 5.9 per cent, up from 3.5 per cent in 2013. However, despite his prediction of world RPK (revenue per passenger kilometer) growth rising year-on-year in 2016 (6.1 per cent in this year to 7 per cent in 2016), he believes airline operating margins will fall to 5.2 per cent next year. Again, oil price is a factor, with a rise forecast in 2017.
“We are at the top of a cycle,” he said. “Next is a dip.” But this is not a bad thing.
“Downturns are good, for three reasons. First, a downturn is a stress test: most airlines say they’ve been on a restructuring programme to achieve sustainable profitability – we’ll only found out if they’ve achieved that in a downturn.
“Second, consolidation makes weaker players exit the market – that’s a good thing because there are still too many airlines. Thirdly, stronger airlines that have the cash will be able buy smaller airlines at lower price – but there will still be restrictions on foreign ownership control. Maybe at theat point there will be greater pressure on reducing those restrictions.”
Wober also pointed to figures showing that low-cost carriers in Europe (LCCs) generally showed more profitability than the traditional carriers in 2014.
A session on distribution and NDC (new distribution capability) saw forthright debate between IATA’s David Rutnam, Travelport’s Ian Heywood and Svend Leirvaag from Amadeus.
Rutnam said: “We believe a single standard is good for the industry, and will lead to lower development costs for airlines. Legacy systems have limitations. They were built in the 1970s and relied on that era’s technology and data standards. Data storage space – the amount and airline or agent could record was very limited. And communicating data was costly, therefore it had to be concise.”
He said those old standards are still underpinning today’s distribution platforms, hence the need for NDC to enable a “one-stop shop” for rich content that will benefit everyone in the supply chain.
Travelport’s Heywood said that while he supported NDC, all the benefits IATA claimed it will achieve is already offered by Travelport and its competitors.
“We've been doing it for quite a while. We have the LCCs connecting to us and we distribute their content in aggregated form to all our agents." He said airlines were already selling "rich content" through Travelport, citing Finnair's new A350, making its maiden flight that day from the Airbus factory in Toulouse – rich content about the product was already uploaded on the platform.
He added that NDC could make transparent, like-for-like fare comparison more difficult than it is today.
Amadeus’ Leirvaag said: “We've wasted so much time and energy discussing NDC, and IATA has wasted $60 million on trying to inject propaganda into this industry since 2011.”
Leirvaag showed a slide of two aircraft seatmaps, one NDC and the other "so-called legacy technology", pointing out their strong similarity. "technology-wise we leapfrogged IATA standards 10 years ago when we started XML with the low-cost carriers in 2006.”In another session on the future of managed travel, the concept of a ‘mobile policy’ was mooted. Sari Viljamaa, managing director of the Finnish Business Travel Association was commenting on the pace of change in technology and fragmentation of channels. She said the travel management community needs solutions to help them “be enablers of mobility, not controllers”.
She added: “Companies should have a ‘mobile policy’ that is an umbrella to your travel and meetings policies. We need to think about mobility first – how you make your people mobile, what devices and apps they can have and use, and how you this can be built into policy. Our role should be finding the best things to enable them to travel safely.”
Next year’s CAPA Aviation summit will take place in conjunction with the ACTE autumn global conference, in Amsterdam, on October 26-28.