Aviation Festival: Brexit, fuel prices, consolidation and technology on the agenda

posted on 6th September 2018 by Justin Burns
Aviation Festival: Brexit, fuel prices, consolidation and technology on the agenda

The uncertainty of Brexit, the impact of rising fuel prices, consolidation within the airline industry and the lack of female pilots formed much of the debate in the first session at the Aviation Festival today.

The ‘Plenary’ session at the Business Design Centre in Islington, London was hosted by Bloomberg presenter Guy Johnson who fired questions at three airline chief executive officers (CEO) on the biggest challenges they are grappling with.

easyJet CEO, John Lundgren was clear what the main issue for Europe’s second biggest low-cost carrier was – Brexit – as the UK’s gets set to exit the European Union in March next year.

“The uncertainty about Brexit is a challenge. We have done more than others for setting scenarios up (getting AOCs in different countries) but we would like certainty and clarity about the outcome,” he said.

“We are making sure we can cope with any scenario that is there. We find it would be inconceivable that there would be no flying. We believe the flying will be there. Were just waiting for the specifics of the deal. We think we can cope with any scenario that comes out.”

Johnson asked Lundgren about consolidation of the airline industry. Currently the four biggest airlines in Europe account for about 50 per cent of the market, compared with the four biggest in the US making up 80 per cent.

Lundgren said: “It is going to be interesting to see especially with an increase in costs from fuel prices (affecting many airlines). I think consolidation will continue and we are ready to be part of it.”

easyJet itself has been linked with consolidation deals across Europe, but Lundgren doesn’t see it happening in Europe generally to the extent it has taken place in the US market. “In general the big and strong will continue to get bigger and stronger and the weak will disappear,” he added.

He said the carrier’s three main priorities are increasing holiday bookings, increasing business bookings as the carrier had room to growth in this segment and a data-based FF program growth.

Lundgren also shared with delegates details of a 3-day data analysis project the airline has carried out on fresh food catering sales, which has helped reduce volumes by 800,000 units a year.

He said previously the carrier used to throw the 800,000 items away that were not purchased on-board and it has saved million of pounds and significantly cut waste.

easyJet is working to increase the number of female pilots it has and Lundgren said the lack of diversity in the aviation industry is still something to be worked on, but he feels the airline should represent society so 50-50 in terms of its workforce, including pilots. Female and male pilots are paid the same, delegates also heard.

JetBlue CEO, Robin Hayes was then interviewed by Johnson and he talked of consolidation in the US market, which he said  a certain amount was necessary, but he said there is concerns about the amount that has taken place in the US.

Hayes believes there is a balance between consolidation that allows the industry to be profitable and healthy but said if there is too much and a lack of competition it results in high fares.

The US  market is dominated by the big four legacy carriers in American Airlines, United Airlines, Delta Air Lines and Southwest Airlines and Hayes said JetBlue has difficulties in gaining access to slots in some market as the big four hold so many.

As for JetBlue’s failed bid for Virgin America which was acquired by Alaska Airlines, he said: “I believe we had a better synergy with Virgin than Alaska have.” However, he acknowledged JetBlue has a lack of presence on the US west coast and is its hubs are Boston and New York.

JetBlue has often talked about the potential to add a first route to Europe and Hayes said it is still on the radar and it has aircraft on order with Airbus which it could change to suit long-haul operations.

He said London is the number one market JetBlue doesn’t serve today and sees the opportunity in business class services rather than leisure and to offer its successful ‘Mint’ business class product.

Hayes also believes that some airline business class fares are not sustainable and that competition and new business models are good for the industry.

He also praised and “admires” Norwegian and what they have done on the low-cost long-haul transatlantic routes, as years ago many deeemed it not possible but it had created more competition for fares on routes from the US to Europe.

The last CEO interviewed by Johnson was WOW air CEO, Skuli Mogensen who talked of the carrier’s exciting expansion into Asia as it will soon start a new route to Delhi, India, linking the US with India, where much of it route network is focused on. He said WOW’s focus for route development in future will be the Asian market.

WOW has seen strong growth and the Iceland-based LCC is one of the globe’s new-age digital focused airlines but when asked who they are learning from, Mogensen said no-one particularly but “we are confidently and unashamedly always looking for best practices.”

The Aviation Festival takes place until tomorrow.