Executive Spotlight - AeroTime

How the A350 and a new Cairo terminal will transform EgyptAir: CEO interview

Miquel Ros — Fri, 23 Jan 2026 04:00:00 +0000

Founded in 1932, EgyptAir holds the distinction of being Africa’s oldest airline. But Egypt’s flag carrier is not just one of the world’s oldest, it also plays a major role in underpinning the Egyptian tourism industry, one of the pillars of the country’s economy.

EgyptAir is much more than a conduit for tourists interested in ancient civilizations and Nile cruises. It also serves as the primary gateway to a country of more than 100 million people, with a geographical position that places it at the crossroads of Africa, Europe and the Middle East, giving it the significant potential to act as a nexus between continents.

As we progress into 2026, and despite a complicated geopolitical environment with several conflicts raging in its vicinity, EgyptAir aims to capitalize on continued tourism flows, the growth of air travel in the Middle East and the still largely untapped potential of African connectivity.

AeroTime sat down with EgyptAir’s CEO, Captain Ahmed Adel for an exclusive interview in which we talked about all these matters and discussed the airline’s roadmap for the years ahead.

Captain Adel began by giving a general outline of EgyptAir’s position in the market.

“In aviation, you can draw a line between the pre-COVID and post-COVID eras. I will talk about the post-COVID era,” he stated. “All over the world the demand has come back because of so-called ‘revenge tourism,’ which is great for tourism and the aviation industry.”

“We are seeing very good demand,” he continued. “We’re trying to catch up!”

Figures are certainly on the rise. In 2024 EgyptAir passed the 10 million passenger mark, with traffic up nearly 5% over the preceding year. While the figures for 2025 were not available at the time of interview, it is likely that they will confirm this upward trend.

Driving Egypt’s tourist boom

Tourist arrivals are surging in Egypt on the back of massive projects such as the new Grand Egyptian Museum or the greenfield resort developments at El Alamein, located on the Mediterranean coast near the site of the epic World War 2 battle.

According to Egypt’s Ministry of Tourism and Antiquities, the country welcomed 19 million tourists in 2025 (an increase of 21% over the preceding year), something in which EgyptAir, as the country’s flag carrier and largest air operator, has played a significant role.

“Whenever there’s a boom in tourism, we benefit from it,” said Captain Adel. “Our traffic is not necessarily all tourism, but we benefit from it. The government has very big plans and aspirations for tourism and it affects us positively.”

Captain Adel appeared undeterred by geopolitical instability in the region, despite feeling the effects of the conflict in Gaza as well as military operations in Syria and further afield in the region.

“Of course, this affects the demand, and it disrupts operations,” he said. “When there was the incident in Doha [the Israeli air strike on September 9, 2025 – ed. note] and when there have been incidents in Iran it has affected our operations. And you don’t adjust your operations in 24 hours. There’s an overflow of repercussions that can last for 72 hours, and that’s very costly for airlines.

“When it comes to Gaza, we’re proud of the role that Egypt has played in settling this dispute. On the aviation front, we are happy that things are now more stable and there’s no destruction.”

Captain Adel also shared another interesting fact about EgyptAir’s traffic: around 30% of the airline’s customers connect through Cairo. He mentioned specifically Europe to Africa and North America to the Middle East and Africa as some of the main passenger flows when it comes to connecting traffic.

“We are lucky. We have a very strategic location when it comes to our hub,” he explained. “We have connectivity to everywhere. The through-traffic is also very important for us because our model is also about the connectivity provided through Cairo Airport.”

Captain Adel said he expects to see faster transit passenger growth as soon as Cairo’s new Terminal 4, which will double the capacity of the current airport, becomes operational.

The new facility is also expected to enhance passenger experience. This will also make it easier for EgyptAir to offer new services to its passengers, including the potential for stopover products such as those offered by other hub-and-spoke airlines.

“Right now, it is challenging to do this,” Captain Adel explained. “Cairo Airport is over its maximum capacity. So, this definitely affects the experience.”

“As a passenger, one of the most important things, of course, is the experience, the product, the options,” he continued. “If you plan something, and you want to change it, the change must be seamless. For example, if you came to Egypt and you liked it, and wanted to stay for an extra day.

“So, we will realize this vision with the completion of our fleet, and also with what the government is doing, focusing on tourism. We will benefit from having big capacity in Cairo and we are adjusting our fleet plans accordingly.”

On fleet strategy

In this regard, and in line with the expectation of continued growth, during the 2025 Paris Airshow EgyptAir confirmed it had increased its A350-900 order from 10 to 16 aircraft. The airline also has 18 Boeing 737 MAX aircraft on order and is refurbishing 19 B737NGs and two A330-200s. The latter, Captain Adel explained, will be fitted with the same cabin as the A350s.

Besides the fleet additions, EgyptAir recently disposed of its relatively new A220 fleet. This, however, is a matter on which Captain Adel did not want to comment.

“It’s an old chapter,” he said.

The airline is fulfilling the first stage of a growth plan with a timeframe of 2031, Captain Adel said.

“We’re going from 67 to 97 aircraft by 2031,” he said. “We consider this the first phase and we’re now prepping ourselves for our plan beyond that.”

But what’s in the pipeline beyond that? Without disclosing too much, Captain Adel hinted that more orders could be coming.

“We are working behind the scenes, having discussions with the big manufacturers,” he said. “We’re having discussions with all the major industry players, and we will have a clear plan by the second half of 2026 or the beginning of 2027.”

On product and network strategy

When it comes to the onboard product, EgyptAir is clearly committed to its position as a full-service airline.

“For the A350-900s, the B737 MAX and the rest of our fleet that’s being refurbished, we have a two-class cabin: a business class and an economy class. We also have some old products that we’re phasing out once we start receiving the new aircraft,” Captain Adel explained. “So, by the end of 2027 we will have two types of cabin: one for the widebody aircraft and a another for narrowbody aircraft, always two classes of service: business and economy.”

EgyptAir is also investing in the “soft” elements of the passenger experience.

“One of the main things that we’re looking into is to enhance customer experience through digitalization, through integration of AI,” Captain Abel said, emphasizing the importance of providing a seamless experience when it comes to passengers booking online. “AI is a fact of life now, so we need to be front and center when it comes to these developments.”

Egypt, however, has also seen growth in the low-cost airline segment. EgyptAir holds a 60% stake in Air Cairo, one of the major players in this segment in the country.

While Air Cairo and EgyptAir operate as entirely separate businesses, Captain Adel explained that he is looking at ways to enhance the cooperation between the two carriers. In an arrangement not unlike that existing between Emirates and flydubai, EgyptAir and Air Cairo are looking for network complementarities.

“We have issued a request for proposal (RFP) to have one of the big network planners onboard to look at our network from the point of view of the expansion of the fleet, and also from Air Cairo’s point of view, to look at our respective networks complementary,” he said. “So that the network of EgyptAir and Air Cairo don’t compete but complement each other.”

The conversation soon turned towards network strategy.

“We have two or three actions that we’re going to take when we get the new fleet. First of all, we are increasing our capacity and frequency on high-yield routes,” Captain Adel explained. “Next, we are opening new routes that we couldn’t reach or were not economically viable with our old fleet.”

He continued: “When we receive the A350-900s, we will have an aircraft that can do the same missions as the older fleet, but with fewer emissions and better economics. It is 45 tons lighter than its predecessor in the fleet that is now being phased out. For us, this opens up long-haul routes like Los Angeles (LAX) and Chicago (ORD).”

With such a large investment in the A350s, long-haul routes will inevitably be a significant vector of expansion for the airline.

“North America is one of the directions we are going to; the Far East is another one. We are looking at having higher frequency into China and Japan and opening new routes there,” Captain Adel said. “We’ll announce them once we receive the number of aircraft that we like.”

However, this does not mean overlooking other markets closer to home.

“Europe will see increased frequency and a better product,” Captain Adel said. “Once the A350 arrives, we’re going to operate it on the Paris route, together with the B787-9. When we receive the third aircraft, we’re going to put it on the London route. It’s going to be integrated, plug and play, like they say.”

Africa, the Middle East, and, of course, the domestic market, are other important pieces of the network.

“We also fly to almost 26 points in Africa. We have high connectivity from Europe to Africa. So, it is an important market for us, Eastern Africa in particular,” Captain Adel explained. “There’s a lot of connectivity through Cairo.”

He went on to emphasize how the international network compliments the domestic one as they both feed into one another.

“We also have a great domestic network that also serves our international one very well. Regionally, we have a lot of Egyptians living in Saudi Arabia, in the Emirates, in Jordan, in Lebanon,” he said. “We also have a lot of traffic of Saudis, Emiratis, Bahrainis, Kuwaitis, coming to visit Egypt. So, it’s a very important network for us.

“When tourism is high, we have a lot of people connecting through Cairo, going to Sharm-el-Sheikh (SSH), Hurghada (HRG), Luxor (LXR), and Aswan (ASW), visiting these leisure destinations, visiting the temples and so on. So, it’s also very important to us.”

At this point in the conversation, we stepped away from the airline’s core business to talk about other areas of activity. In tune with global market trends, the maintenance, repair and overhaul (MRO) business has received increased attention. Here, Captain Adel referenced recent agreements EgyptAir’s MRO arm has signed with the likes of CFM and Rolls-Royce.

“We do a lot of our maintenance in-house, so, the MRO is a very strong arm for us,” he proudly stated.

What’s next for EgyptAir?

“The main challenge is always going to be the relation with the OEMs and whether they are going to be able to catch up with demand,” Captain Adel explained. “Because in aviation, if you’re late you are not going to capture as much demand as you could, or, alternatively, you may receive the equipment at a time that doesn’t coincide with peak demand. So, the timely manner which you receive your products is very important.”

We concluded our conversation with Captain Adel touching upon the role EgyptAir is expected to play in the country’s ambitious tourism strategy.

“We are an arm of our government. So, when the government has ambitious plans, we need to move fast and coincide with and abide by these ambitious plans,” he said. “One way to do so, as I mentioned before, is through the expansion and refurbishment of the fleet. The other important development is the expansion of the Cairo hub, and the new terminal.

He added: “When the new terminal is open, we will have to revisit our plan, or elaborate a new plan that goes beyond 2031, because we’re going to be the biggest operator from this terminal.”

The post How the A350 and a new Cairo terminal will transform EgyptAir: CEO interview appeared first on AeroTime.

From crisis to growth: Kenya Airways’ acting CEO on its turnaround and future

Miquel Ros — Fri, 09 Jan 2026 04:00:00 +0000

Kenya Airways has emerged from one of the most challenging periods in its history with a remarkable turnaround for the company’s fortunes.

In 2024, the airline posted a net profit of 5.4 billion Kenyan Shillings (approximately US$42 million), its first profit in over a decade, marking a dramatic recovery following consecutive losses. This transformation, driven by the so-called Project Kifaru, has shifted the focus to operational excellence, diversification of revenue streams, and rigorous cost management.

With the aim of leaving the crisis years behind, Kenya Airways has embarked on a five-year fleet expansion strategy aimed at increasing its aircraft count from 34 to 59 planes by 2032. The carrier has also announced plans to raise around US$500 million to fund future growth. In December 2025, Kenya Airways also announced it had requested governmental authorization to operate a small secondary hub outside of its home country, at Kotoka International Airport in Accra (ACC), Ghana, basing there of its Embraer E190 aircraft.

In addition to its goal of becoming an airline of note in Africa, Kenya Airways also plans to diversify by developing other revenue streams, such as its in-house maintenance, repair and overhaul (MRO) and training capabilities, as well as boosting its air cargo business.

December 2025 was a period of change for Kenya Airways. CEO Allan Kilavuka stepped down after six years at the helm, during which he presided over the airline’s turnaround. George Kamal, who held the role of Chief Operating Officer since 2023, was subsequently appointed acting CEO of Kenya Airways.

Kamal is an industry veteran, who, in addition to years of experience as a commercial pilot, has held senior leadership roles at airlines such as Etihad Airways, Air Arabia, and Iraqi Airways.

A few days before the leadership change, AeroTime met with Kamal and his team in Nairobi to learn more about the new acting CEO’s vision for Kenya Airways. We also had an opportunity to take a close look at a carrier that, true to its motto of “The Pride of Africa”, aims to serve as one of the continent’s leading airlines.

Kamal began our conversation by highlighting the strong international orientation of Kenya Airways and the role it plays in connecting Africa to the rest of the world.

“Kenya Airways is one of the anchor airlines in Africa and one of the oldest in the region,” he said. “We started as a regional airline for Africa. However, we have managed to spread our wings. We’re part of SkyTeam and are currently working on more routes.”

“We currently serve more than 45 destinations in Africa, as well as Paris (CDG), London, flying daily both to Heathrow (LHR) and Gatwick (LGW), plus Amsterdam, New York (JFK). The European routes are important for cargo,” he explained. “The flower business, for example, is booming, not only towards Amsterdam, but other destinations as well.

“We also fly to the Middle East, to Dubai (DXB) and Sharjah (SHJ), the latter only for cargo. in Asia we fly to Mumbai (BOM), Guangzhou (CAN), Bangkok (BKK)[…] and we’re looking to expand further.”

Kamal underlined the importance of ease of access in cementing Kenya’s role as hub for the region and beyond.

“Our goal, our mission, and vision is to connect people and markets, and to make it viable for everyone to connect. We don’t want travel to be only for those that have lots of money,” he said. “We also want the middle or lower middle class to be able to travel, as well. You want them to be onboard our aircraft, not on the road. So, we have flights to most of countries around Africa.”

“The country [Kenya] is visa free for all Africans, and for many other nationalities it’s visa on arrival. Others have the eTA [Electronic Travel Authorization – ed. note], you just go online and book it, and you get your visa within the same day, or the next, and you can come in. This opened up a number of possibilities. Last year [2024] we carried 5.2 million passengers. It was a record year for us.”

Leaving the crisis behind

Network expansion is just one aspect of a more comprehensive transformation project called Kifaru, which was launched in 2020 and is now in its second iteration.

Referring to the airline’s recent downsizing, Kamal said: “Project Kifaru is based on growth. We are now moving forward aggressively in the market. We had to shrink first to be able to grow.”

2024 was also a pivotal year for Kenya Airways, as it managed to return a profit (5.4 billion Kenyan Shillings, approximately US$42 million) for the first time in a decade.

Kamal also talked proudly about how the airline had posted a positive EBITDAR of 14.5 billion Kenyan Shillings (approximately US$112.5 million) for 2024, the carrier’s best results since 2012.

“The good thing about EBITDAR, with an R for ‘rental,’ is that it gives a measure of the resilience of the company, of the health of its operational business,” he said. “So, we’ve done a good job!”

The positive results of 2024, however, were somehow countered by a loss of 12.2 billion Kenyan Shillings (US$94.6 million) in the first half of 2025.

Kamal attributed the drop to to the temporary grounding of three of its nine B787s, which resulted in a 14% drop in passenger numbers compared to the same period the year before. The grounding is related to the GEnx-1B engine issues, which have impacted Dreamliner operators globally.

“Our [B787] aircraft are all the same vintage so, they’re almost at the same number of cycles, and they all needed to go to the shop more or less at the same time,” he explained. “The major issue was turnaround time. Due to the unavailability of spares the engines stayed up to 120 days on the ground, instead of the usual 60 to 70 days. Add to this, a single engine costs US$14 million. It’s a cash drain, as well. You have your assets on the ground, while you are incurring a fixed cost, like rentals, which don’t stop running.”

At the time of our conversation, Kenya Airways had managed to reactivate one of the three affected Dreamliners, with Kamal expecting the other two to follow suit as soon as spare engines could be secured.

Further fleet plans

Interestingly, the airline is also seeking to retrieve a Boeing 777 currently on lease to Turkish Airlines.

“We want it back to support the network,” he explained. “To have more capacity, for example, when a flight is cancelled and we need a spare aircraft.”

Kamal, who added that, given that the airline will add a new aircraft type, it may as well get a second B777.

“It does add a bit of complexity, that’s why we’re looking to lease another B777. It depends on market availability,” he added, before going on to reveal that the airline may use these larger aircraft to add capacity on its London route. “We are also looking at a number of routes for the 777. We’re looking at a few routes. London, for example, because the demand for business class is stronger, and [the aircraft] it’s got flatbeds, and it can take more passengers.”

One might be used for Heathrow, he said. But this is yet to be confirmed.

Kamal shared that Kenya Airways is also looking at expanding its long-haul network as soon as all the Dreamliners and the B777 become available. A second destination in Asia and a potential new US destination are also currently being considered, although the bulk of the expansion will take place in Africa.

Kenya Airways also plans to readjust its narrowbody fleet by disposing of most of its Embraers and upgauging by adding Boeing 737s. Shortly after this interview was conducted, Kenya Airways also confirmed it was considering using three of its E190s to set up a secondary hub in Accra, Ghana, for operations in West Africa.

“We sold four Embraers last year, and we managed to get one B737-800,” he said. “Now, for next year [2026], we are looking to add two leased B737-800s and three B737 MAX 8 aircraft.”

“What we want to do, slowly throughout the years, is start phasing out the Embraers and replace them with a bigger aircraft,” he continued. “Don’t get me wrong, Embraers are not bad, they are very good aircraft, they are very good as route openers.”

Kamal then revealed the surprising reason behind the decision to switch to larger aircraft.

“In Africa, people fly with a lot of luggage so when you come into Nairobi, if you want to connect to any of our short-haul destinations served by Embraers, what happens is the following: I can take either 55 passengers with all their luggage or 98 passengers, but with only one piece of luggage plus hand luggage. So, it leaves a lot of packages and baggage behind, and it significantly impacts our customers, which then start complaining.”

At this point in the conversation, after AeroTime mentioned the piles of luggage we had seen ready for check-in at the Kenya Airways counter at Dubai International Airport (DXB) when boarding for Nairobi. Kamal explained that, depending on the fare or the loyalty program status, Kenya Airways allows travelers to carry up to three bags.

“It’s good for the passengers, but this becomes an issue if you need to connect to a shorter haul flight operated by the Embraer aircraft,” he said, explaining that this can lead to situations in which not all bags can be loaded onto the aircraft.

“Even if the bag doesn’t get lost, it’s a pain,” he continued. “You can’t just book a ticket knowing your bag is not going to be there when you land. So, we decided to go bigger. That’s why we’re looking for 737s, to cover routes now flown by Embraers, to use them on those routes that are now mature.

“But we will keep four Embraers, which are on lease now,” he added, “to be route openers and use them on thin routes.”

Over the long-term, Kenya Airways is looking to expand its fleet even further. The number of aircraft inducted into the fleet may actually be larger than the difference, since the airline is also looking to replace the Embraers and some of its older B737s.

“But this depends on the market, which is very volatile,” Kamal explained. “When you look for aircraft today, it’s very difficult. We must be careful. So, the fleet plan evolves with the market. As a company, we have to be very agile and update our plans based on market availability.

“We have to move fast to try to get as many aircraft as we can. That’s what we were doing today.”

Strategic partnerships

Kenya Airways also aims to expand its international footprint through partnerships with other carriers.

In addition to its well-established SkyTeam membership (KLM is actually one of the airline’s long-standing shareholders with 7% of its capital), Kenya Airways signed a codeshare agreement with Qatar Airways in 2025 on routes between the two respective countries. The two airlines also agreed to exchange expertise and cooperate in areas such as training and ground handling.

As a result of this deal, Qatar Airways operates three daily codeshare flights between Doha (DOH) and Nairobi and Kenya Airways does the same on its flight between Mombasa (MBA) and the Qatari capital.

Remarkably, both carriers are part of rival alliances. Kenya Airways is a SkyTeam member while Qatar Airways is part of oneworld. Kamal explained that Kenya Airways sought and obtained approval from SkyTeam for this partnership.

“My passengers used to be able to fly to 45 destinations. Today with Qatar Airways, we are much more open, particularly when it comes to flying eastwards to China and Asia on routes we could not support on our own.”

“This is a major problem in Africa,” he continued. “If every airline goes alone, how much can you grow your fleet? Where can you go? To every country in the world? You cannot. So, our goal is to get our passengers from Nairobi to everywhere in the world with the minimum cost for both them and us.”

He added: “We think Qatar Airways is a good carrier and we had the opportunity to work with them. We’re open to everyone.”

Qatar Airways also has close links to another East African airline, RwandAir. However, Kamal does not see any issues with this.

“We actually see them as partners,” he said. “For example, we do maintenance for RwandAir. We are competing, but it’s actually more about complementing each other.”

Developments in air cargo

During our conversation with Kamal, we also touched upon another important component of Kenya Airways’ business: air cargo.

The airline operates its own dedicated cargo center at Jomo Kenyatta International Airport, which handles freight carried on its own aircraft but also for third party operators and other logistics firms.

The center has two separate facilities. One handles general cargo, ranging from electronics and spare parts to minerals, such as gemstones. Within this facility there is a specific IATA-certified temperature-controlled section which can handle up to 340 tons of pharmaceuticals per week.

The other is a dedicated building that handles perishables, a major currency-earner for the Kenyan economy. This facility, which AeroTime also visited, is always kept at temperatures of between 8 and 2 C and handles some 420 tons of fresh produce per day. Every evening lines of trucks deliver fresh produce to be loaded onto waiting aircraft, which then depart mostly for Europe and the Middle East throughout the night and early morning. Some Amsterdam-bound passenger flights, for example, may carry some 15 tons of cut flowers in their bellies.

Kamal explained that another reason for Kenya Airways’ desire to obtain B777s is the additional belly cargo capacity they would bring.

“Cargo is extremely important for us. Today, we only have about 11% of market share at our own hub; that is, of the cargo that goes in and out of Nairobi. This is with four dedicated cargo aircraft, two B737-800SF and two B737-300 Classics, plus the belly capacity in the rest of the fleet. So, what are we looking for? The long range, that’s coming up in 2026. We are aiming to reach up to 30% of market share.”

MRO excellence

Kenya Airways has also been developing a diversified portfolio of ground-based businesses centered around its base at Jomo Kenyatta International Airport in Nairobi. These ventures not only support the airline’s own operations but also generate revenue by serving third-party customers across the African continent and beyond.

One of the crown jewels of this ecosystem, which extends far beyond traditional airline operations, is the MRO operations center, which has established the airline as a continental leader in this field.

The carrier takes particular pride in its MRO center having become not only a carrier of note in Africa, but also in having achieved some world-class performance metrics that rival the best facilities.

Kamal shared that the airline has achieved remarkably high schedule reliability rates, some of the highest in the world for aircraft types like the B737 and the E190 and maintains one of the highest aircraft utilization rates worldwide.

Kenya Airways’ EASA Part 145 certified MRO facility is capable of performing comprehensive maintenance for the entire Kenya Airways fleet, including Boeing 737s, 787 Dreamliners, and Embraer E190s, performing all procedures up to C-check level. What’s more, its capabilities extend beyond its own operations, with the facility serving as the only approved service center for E-Jets in Africa. According to Kenya Airways’ MRO managers, this strategic capability is one the airline intends to maintain even as it reduces its own Embraer fleet.

Looking ahead, Kenya Airways plans to expand its MRO operations with the construction of a new, much larger greenfield facility. This will also improve integration with regular airport operations, further cementing the airline’s position as Africa’s premier aviation maintenance provider.

Diversifying revenue streams

During our visit to Kenya Airways’ facilities in Nairobi, Kamal also guided AeroTime through the diverse ecosystem of businesses the airline is building on the ground. These encompass ground handling services at Nairobi Airport, which the airline provides for both its own operations and third-party carriers, to more unusual ventures in areas such as advanced air mobility (AAM), education, hospitality, and medical services and even bottled water.

Plans include developing a full-scale hospital for medical tourism, based on the airline’s existing aviation medical center, as well as the construction of a 300-room hotel with both airside and landside access, for which Kenya Airways is currently looking for investors.

The airline is no stranger to the hospitality industry. The five lounges it manages throughout the airport (three of which are based in the international terminal), are already revenue centers contributing to profitability. Recognizing this potential, Kamal explained that Kenya Airways is exploring opportunities to add even more lounges at strategic locations within the airport.

The airline has even ventured into the beverage industry with its own water brand KQuench, which is bottled within its premises and is onboard its flights and lounges as well to other airlines and retail supermarkets. Interestingly, Kenya Airways is also investing in a recycling plant to turn the discarded plastic bottles into fuel to power its ground support vehicles.

Another of Kenya Airways’ fully owned ventures, albeit of an entirely different sort, is Fahari Aviation, a subsidiary focused on drone operations and AAM.

Fahari Aviation is already bringing in revenue through its work in filming, aerial mapping, and agriculture, with its drone performing missions such as aerial seeding or crop spraying. Fahari is also the platform through which Kenya Airways is preparing for the electric vertical takeoff and landing (eVTOL) revolution that promises to transform urban transportation across traffic-clogged African cities.

Training excellence at the Pride Center

Kenya Airways is also taking the training of its staff, whether pilots, crews, or technicians, into its own hands.

Its training activities are concentrated in the Pride Center, a modern campus located near the airport. This facility trains the airline’s crews and pilots while offering broader educational programs to the aviation community. As an Approved Training Organization (ATO), the center operates simulators for the Boeing 737NG and Dash 8 Q400, with plans to add Boeing 737 MAX simulators in the future.

Keny Airways’ vision, as explained by Kamal, is to broaden the scope of the Pride Center to be able to offer a wider range of courses. With this aim, Kenya Airways signed a deal with London Metropolitan University to establish the university’s first international campus in Kenya.

Through this partnership Kenya Airways will offer undergraduate and graduate degrees in aviation management, engineering, as well as courses on artificial intelligence (AI) applications. Three cohorts of Kenya Airways staff are already enrolled, and plans are in place to expand these programs to external students.

“We have left the crisis behind, and we are now moving forward,” Kamal reiterated, underlining the optimistic outlook with which Kenya Airways is now facing its future.

The post From crisis to growth: Kenya Airways’ acting CEO on its turnaround and future appeared first on AeroTime.

‘The opportunity is gigantic.’ LATAM’s CEO on leading South America’s skies

Miquel Ros — Fri, 19 Dec 2025 04:00:00 +0000

As Latin America’s largest airline group, LATAM is a remarkable example of cross-border integration. Born from the 2012 merger between Chile’s LAN and Brazil’s TAM, the airline brought together two national champions to create a genuinely pan-South American carrier. A remarkable achievement on a continent where economic instability, geographic barriers, and regulatory complexities have prevented airlines from achieving their full potential.

Nevertheless, and despite the bump in the road in the form of a COVID-related Chapter 11 filing in 2020, LATAM has managed to consolidate its position as one of the world’s largest airline groups. In 2024, LATAM carried around 82 million passengers and operated more than 340 aircraft. Its destination network spans 24 countries, which it serves from its three main hubs in Santiago de Chile (SCL), Sao Paulo (GRU), and Lima (LIM).

What’s more, under the leadership of CEO Roberto Alvo, LATAM has not only managed to leave Chapter 11 behind but has also embarked on several ambitious projects to strengthen the pivotal role the carrier plays in its region.

The last few months have seen a stream of announcements, from the launch of revamped premium cabins and services to new long-long haul aircraft orders, to a significant investment in a new regional aircraft fleet that aims to strengthen intra-regional connectivity. All of this, while also trying to lead sustainability

AeroTime was recently given the opportunity to have a thorough conversation with Alvo and review the main challenges and opportunities facing LATAM.

Alvo began his tenure in 2020, just as the airline was going through one of its most financially complex moments.

“When the pandemic started, we obviously tried to get support from governments, but they decided not to support us, unlike what happened in the northern hemisphere,” he said “At the end of the day, we realized we had to enter Chapter 11. It was the only way to imagine a LATAM that could come out strong after that crisis.

“We were a little over two years in Chapter 11,” he continued. “We emerged on November 3, 2022, and today LATAM is fully recovered. This year, as we’ve told the market in guidance, we’re probably going to be 15% larger than we were in 2019. During the pandemic period, we closed our domestic operation in Argentina. Apart from that, LATAM’s footprint is very similar.”

As of December 2025, LATAM has five home markets: Chile, Peru, Ecuador, Colombia, and Brazil. The airline also has a subsidiary in Paraguay, although its activity there is pretty much limited to linking its capital, Asunción (ASU), to its main hubs in Santiago (SCL), Lima (LIM), and São Paulo (GRU).

Additionally, LATAM is active in the cargo market through its subsidiaries in Brazil (APSA LATAM Cargo) and Colombia (LANCO). According to Alvo, cargo operations complement the core passenger transportation business, which represents around 90% of the group’s revenue.

While Alvo and most of his team are based in the Chilean capital, Santiago, Brazil is the group’s single largest market, representing around 45% of LATAM’s revenue. Chile is the next largest market with around 20%, and Peru is third at 15%.

“To give you an idea, South America has around 450 million people and some 220 of them are in Brazil. The Brazilian market, domestic and international together, is probably a little less than 50% of South America’s industry. It is also half of the continent’s surface area,” Alvo explained. “In fact, in almost any dimension you take, Brazil is half of South America. We have a 41% share in the Brazilian domestic market, which is the highest share we’ve had since 2003.”

LATAM is also a leading player in its other core markets.

“In Peru we have approximately 60% of the domestic market and 40-50% of the international one. In Ecuador we’re a little less than 50% of the domestic market and about 25% of the international one,” Alvo said. “In Colombia we’re smaller – 26% of the domestic and about 8% of the international market. While we don’t have domestic operations in Argentina, it is an important market for LATAM. We are the largest operator in terms of international passengers transported to and from Argentina, even if we don’t have a subsidiary there. We operate almost 35 international flights per day in Argentina.”

Building a cross-country operation across a region, which, unlike Europe or the United States, does not yet have a unified legal framework is not without its challenges.

“There are many open skies agreements between countries, but here you must get a certificate in every country, and you can’t necessarily operate from third countries to other places,” Alvo explained. “Unlike European conglomerates [Alvo was referring to IAG, Lufthansa Group and Air France-KLM – ed. note] LATAM decided to have a group of airlines all under the same brand and I think it’s one of the great decisions we made because it allows us to offer our passengers a single product, network and standard of service.

“It doesn’t matter if you fly between Quito and Guayaquil or between Rio and São Paulo or between Lima and Cusco,” he continued. “You’re always on something called LATAM, which is the same everywhere except, perhaps, for the accents spoken onboard.”

Alvo added that this allows LATAM to function “as one network” as well as simplifying operations “because we have centralized a large part of our functions.”

“So, in practice, while we have several air operator certificates (AOC) and subsidiaries, we operate as if it were just one,” he said.

“At LATAM we’ve learned to coexist with South America’s diversity, and I think one of the things that has helped us is having everything under one brand. LATAM is LATAM wherever we are,” he continued, before adding, jokingly, that the internal language of communication is what he referred to as “Portuñol,” a mix of Spanish and Portuguese, once again reflecting the cross-border composition of the business.

“I have meetings in Spanish. I have meetings in Portuñol. I have meetings in Portuguese throughout the day,” he said. “We don’t make a big deal about it.”

What is LATAM’s market position?

According to Alvo, the model used by low-cost carriers is no different to the model seen in Europe or in the United States.

“It’s a very simple model with practically no amenities in which they try to sell you all the add-ons. It’s a textbook case. I think low-cost carriers have space in South America, but at LATAM, we are neither low-cost nor ultra-low-cost,” he said. “LATAM’s objective at the end of the day is to try to deliver a product and give our customers options.”

Alvo highlighted just what it is that sets LATAM apart from its low-cost competitors.

“One of the things I think we’ve learned to do well in countries like Chile and Peru, for example, where we are the only non-low-cost carrier, is to define what the non-low-cost product is. We don’t necessarily need to over-invest in that product. For example, we don’t have screens in airplane seats. We try to optimize the product for the segment of people who want to fly with a different experience,” he said. “In that sense, for example, we deliver Premium Economy, which is like European business with a blocked seat, but we don’t have those first class seats like US carriers. And we have in that Premium Economy a curtain that allows us to define the size of the class based on where we want to go and everything else.”

“So, we invest quite a bit in the product, but we make sure that investment is what the market is willing to pay without having to define a product that’s too luxurious for a customer profile in a region of the world that’s a bit poorer than other regions. We have bundles that have different characteristics. The basic is just the ticket, but you can add flexibility, seat selection, baggage, etc. You can build your product à-la-carte and from the bottom up. So, when I talk about optionality, that’s it.”

Alvo highlighted that LATAM is also focused on soft service elements.

“I really like the word ‘dependability,’ which means being reliable operationally and every time you face a situation, we can answer and respond to you. We leave on time. And if something happens, that’s beyond our control – cancellations, storms, whatever – we know how to maintain and care for the dignity of the people who fly with LATAM, so that they feel we’re doing everything possible to take care of them.

“So, at the end of the day, it’s the network, the product, the people, the focus on the customer, our frequent flyer program,” he said. “We have the seventh [largest] program with the most members in the world, with 53 million members.”

LATAM recently unveiled a revamped Premium Business class as well as a new Premium Economy product, the first in Latin America and has also invested US$360 million to retrofit its B787 fleet with new business class cabins.

“We’re finishing the [B787] -8s and -9s. We went for a 1-2-1 configuration, with lie-flat seats. Before we had a 2-2-2 configuration,” Alvo said. “By the end of next year, we’re going to have all our 787-8s and 787-9s retrofitted. We have already retrofitted the 767s that fly in Peru and the 777s that fly in Brazil.”

The entire long-haul fleet will feature the new business standard, with premium cabins, Alvo said, and will soon be installed with Wi-Fi.

Making sense of LATAM’s fleet plans

Earlier in 2025, LATAM announced a major order for up to 74 Embraer E195 aircraft (24 firm orders and 50 options). The rationale for this order, which will add a new aircraft type to LATAM’s fleet, appears to be the need to increase connectivity in regional markets.

“The first planes will go to Brazil, but some of the options may go to other countries in the region. South America has 200 cities of between 200,000 and 500,000 inhabitants. Half of those are in Brazil. And if you look at those cities, at the number of trips per inhabitant, South America is quite an immature market. In Europe you have about three trips per inhabitant on average per year, here it’s more like 0.6. In Chile is a bit higher, with a bit more than one trip per inhabitant. Other countries have less. But when you break that down by cities, you realize that the large capitals are quite well connected and have one or one and a half trips per inhabitant. The small cities have 0.1 to 0.2. So, in general, those medium cities have been very under-connected!”

Even when accounting for the realities of South America’s travel demand, Alvo sees plenty of upside in second and third-tier markets across the region.

“It’s true that our region, unlike Europe, is much more centralized. Santiago is Chile’s capital and a third of its people. Lima is the same in Peru. But that doesn’t mean there isn’t a lot of potential in the regions,” he said “So, the regional aircraft allows us to extend and consolidate the reach of our network. We think we can add 35 more cities to our network with those regional aircraft and [that] will allow us to strengthen our hubs.”

So, what does the hub map look like?

“We have Guarulhos (GRU) and Congonhas (CGH) as important hubs in Brazil, as well as Lima (LIM) in Peru and Santiago (SCL) in Chile. In Brazil we also have Brasilia (BSB) and Fortaleza (FOR) as additional hubs, and we see the ability to connect much better mid-sized cities within each country or even regionally as there is sometimes international traffic within the region,” Alvo explained “For us, regional doesn’t mean smaller, it means international within the region.”

The E195s that LATAM will receive have roughly the same capacity as the A319s it currently operates. However, Alvo noted that the operational parameters are quite different.

“It’s basically a plane of the same size. The difference is that the E195 has much newer technology. Being a lighter aircraft, it has higher operational efficiency. So, it’s not that we don’t have the right size aircraft for many of these markets. What happens is that we need more efficient aircraft to be able to justify entering them,” he said. “That’s what the E195 gives us. So, the added fleet complexity is quite a minor issue because we’re not entering a different fleet size segment than what we already operate. We have 40 A319s today and we’re adding 24 E195s. We know how to operate them and have many routes for this size of aircraft.”

Another aircraft that will considerably expand LATAM’s envelope of possibilities is the Airbus A321XLR, of which the Latin American group has five on order. But how does LATAM plan to deploy them?

“The XLR works well from several places in the region – from Lima or Brasilia, for example, to the United States. It also allows you to fly to practically any city in the United States from Fortaleza. It could be an aircraft that enhances our connectivity to the United States and the Iberian Peninsula a little further. We’re still evaluating what will be the best application for the first A321XLRs, but we haven’t announced this yet. We expect them in 2027.”

AeroTime was also given the opportunity to discuss LATAM’s long-haul fleet renewal and the order, announced in October 2024, for 10 B787s (plus five options).

“We took advantage of Chapter 11 to simplify our fleet a bit. The truth is that we have more widebody aircraft in South America than the sum of all other widebody operators in the region. It’s quite a large fleet for the region, but it’s relatively small compared to the world’s largest companies,” Alvo explained. “We’re talking about 65 widebodies, and the truth is that having four models in a fleet of that size seemed like an unnecessary complexity to us.”

Alvo said the carrier spent some time analyzing whether to go with the 787s or the A350s, before deciding to keep the former.

“Both are very good,” he said. “But for LATAM’s footprint, we concluded that the 787 was the right aircraft.”

LATAM also keeps a number of older B767s. How do they fit into this fleet strategy?

“Today they only operate from Lima, which is closer to the United States. Even if they’re long-range aircraft, they operate routes averaging six hours,” Alvo said “We expect to continue operating them until the end of the decade, and then most likely they will be replaced by 787s, or we’ll see if there’s any other alternative. But today we have nine of these aircraft flying.”

Interestingly, LATAM is a rather unique case of an airline having left one of the three major alliances to go it alone. The Latin American airline was once a member of oneworld . However, when Delta Air Lines became one of its major shareholders in 2019, LATAM left without joining SkyTeam, an alliance in which Delta is a prominent member.

“We left oneworld in 2019 following Delta’s investment and the set-up of our JV [joint venture]. The relationship is extraordinarily good. The truth is I’m very happy, very grateful to have a partner like Delta, which is a great partner not only because of the company and its characteristics but also because of how we work together,” Alvo said. “It’s truly a pleasure, and in that sense we’re very happy.”

But would LATAM consider joining SkyTeam?

“We always retain the option to participate in an alliance, but it’s not our priority and, therefore, it’s not in our short-term plans,” Alvo explained “What we have is a network of bilateral agreements with companies that are relevant to our markets.

“We have historical cooperation with IAG, particularly with Iberia. We exited oneworld, but we maintain relationships with almost all its partners. We still have codeshares with Qantas, for example, and with Japan Airlines. And we have a commercial agreement with Lufthansa, which date back to the time when TAM was a member of Star Alliance before it merged to form LATAM.”

Alvo also referred to the close relationship LATAM has with Qatar Airways.

“Qatar, like Delta, has 10% of the company, but we don’t have a JV. We have a commercial agreement; we have codeshares and an intense level of cooperation. We even have agreements in the frequent flyer program, and we are Qatar’s distributor for the region. They fly to São Paulo and use LATAM’s network from São Paulo, from Guarulhos, to distribute within South America.

“The relationship is also very good, but South America is just at the other extreme of the world and, in general, the size of the market is much smaller than flying to the United States or to Europe. In that sense the cooperation is more limited, simply because of the size of the market.”

Switching back to the Delta investment and partnership, we talked about what the Joint Venture with Delta has represented for LATAM.

“Firstly, LATAM’s network and Delta’s are complementary. Delta had a relatively small operation to our region, and we didn’t operate to Atlanta. And if you look at a map of the United States, two-thirds of South America-United States traffic is east of the Mississippi, and Atlanta is the best location to connect for those two-thirds of traffic. So, the beauty of the Delta-LATAM JV is that we’re basically connecting our 130 destinations throughout the region with the 200-something destinations Delta has in North America, combining the best entry points in São Paulo, Santiago, and Lima with Atlanta.

“We also fly to Los Angeles, Boston, and New York obviously. So, first, the JV gives passengers the ability to decide basically how to connect from any point in North America to any point in South America. We also have mutual recognition when it comes to the frequent flyer program. If you’re Delta Medallion Diamond, for example, we recognize you as Black Signature which is our top tier here, and vice versa. You have all the frequent flyer accumulation and redemption.”

So, what are the future growth vectors for LATAM?

“Look, first of all as I already said a while ago, this region is still immature. Just to give you an idea, we have the number of trips per passenger that existed in Europe or the US in the 1980s. So, we still see a lot of growth potential within South America, both to connect South America with itself and to connect South America with the world. And if you look at Airbus and Boeing reports, in general Latin America is always the market with the highest growth potential after Asia,” he said, before reiterating his belief in the size of the opportunity ahead.

“Over the coming decades, the possibility to continue developing the industry here is gigantic. LATAM’s home is South America, and that’s where we are concentrating our operations, and we’ll continue to do so. We have hubs that are well positioned geographically to allow us to connect flows within the region and to the world,” he added.

“I’ll give you a fact that every time I think about it surprises me. Chile is the most developed domestic market in South America, more than one passenger per inhabitant, but the route in Chile that carries the most passengers is Santiago-São Paulo, more than any domestic route within Chile. And those are two of our most important hubs. So, with regional aircraft, with the XLR, with the fleet plan we have, we see still a very important growth potential to connect the region with itself and with the world.”

Again, the new fleet acquisitions are expected to play a central role in realizing these opportunities.

“We have the widebodies to be able to expand our networks. We have the XLR that allows us to enter smaller markets in Europe and the United States that can’t necessarily be justified with a widebody. We have regional aircraft that allow us to generate polarity in the network. So those are the three major growth avenues plus the order we have with Airbus,” Alvo explained “We still have almost 100 aircraft due to arrive between now and the end of the decade.”

He continued: “Our three hubs fulfill different functions. Guarulhos connects South America with Europe and with the eastern United States. Lima connects South America with the Caribbean, with the western United States, and with Asia mainly through Los Angeles. Santiago has the best geography to connect South America with the South Pacific.”

On sustainability

Sustainability is an area of particular interest for Alvo. The airline recently stated that it has managed a 10% reduction in carbon intensity expressed in grams of CO2 equivalent per revenue passenger kilometer (gCO2e/RPK). LATAM is also taking an active interest in the development of Sustainable Aviation Fuel (SAF) in South America, a region which so far has lagged other areas of the world in this space.

“Unlike Europe and the United States, the region unfortunately does not yet have public policies associated with SAF consumption,” he explained. “Having said that, I think the European model of mandates is the wrong model for the region. We are a relatively poor region that doesn’t have the capacity to absorb the costs associated with having to load SAF mandatorily. So, I think the great dilemma that societies in our part of the world have is how to balance caring for the environment and reducing emissions with economic progress.

“What we don’t have in this region is a public policy that tries to balance these two things and that allows the industry to develop in the medium and long term while at the same time reducing its emissions.”

Alvo highlighted that, despite these obstacles, LATAM has laid out a sustainability strategy and is starting to act on it.

“In 2021 we announced that we would seek to use 5% SAF by the end of the decade. We didn’t do it as a commitment, but to signal our intention, because at that moment not a drop was being produced. And we said that we were going to privilege SAF produced in the region to also try to generate an industry here. Guess what? Still not a single drop is produced.”

Alvo also explained that LATAM has other projects in the field of sustainability.

“I don’t like the idea of buying carbon offsets because I feel that if you go out and buy carbon offsets on the market and say you reduced your emissions, did you really reduce them? No. But we want to get involved,” he said. “So, we have a project in Colombia. We set it up ourselves, together with 700 families, to preserve an area of the eastern plains of northeast Colombia, which is a floodable zone threatened by monocultures, mainly rice and corn.

“There are 250,000 hectares today that are owned by these families, who have committed to not switching to monocultures, and to care for the species. All of this is obviously certified, and we buy the offsets from this project. So, in this way we get involved in a place where we can believe that the projects have additionality – if not, we don’t do it in any way. And while it’s not the cornerstone of our long-term strategy, it’s the way in which we can advance.”

“We set ourselves two other goals. One, eliminate the use of single-use plastics in all our operations. We made a mistake because we said 100% and we realized that 100% doesn’t exist, but there are still solutions,” Alvo explained. “I’m sure we’ve done our best here. And we are also committed to reducing our waste to landfill by 75% by 2027. This is the other way in which we’re trying to contribute to environmental care while we try to find a way to be able to start buying SAF at a cost that allows us to remain competitive without passing on the full cost to our customers.”

The US is a major market for LATAM. Has the airline noticed any effect from the tightening of border policies?

“We operate from the Southern Cone mainly. Migratorily it’s much less exposed to the United States than Central America or Mexico. Therefore, the impact of the American government’s policies has probably been felt less because we have fewer migratory flows,” Alvo explained. “What we have seen is a drop in demand from Chile, mainly to the United States. Chile is the only country that has a visa waiver with the United States, and there have been concerns at some point that Chile could lose this. But as of today, it hasn’t lost it.

“The signals from the American government are even positive, but it’s the only place where we’ve seen a relatively limited impact on flight demand. Otherwise, the truth is, all these things haven’t had a viable effect on our operation.”

LATAM is also quite a large cargo operator, not only in its region, but by global standards.

What are the drivers of this business?

“South America has about 6% of world cargo traffic. The cargo business is a bit different. The big importing countries are normally on the Atlantic, Brazil and Argentina when it’s doing well, while the big exporting countries are those of the Pacific, Chile, Peru, Colombia, and Ecuador. They import goods – spare parts, phones, manufactured goods, and they export raw materials, such as salmon, flowers, asparagus, that kind of thing, so to understand cargo you have to think that you have to go down through the Atlantic and up through the Pacific – that’s the flow. It’s a market where we have close to 50% market share to the United States and about 30% to Europe.”

Once again, the looming threat of tariffs and border closures came up in the conversation.

“Except Brazil, which has a 50% tariff that Trump put on a while ago because of the Bolsonaro issue, the other countries in South America basically maintain a 10% tariff agreement with the United States, which hasn’t impacted exports from the region today,” he said. “And Brazil, while it has very high tariffs, is importing more than exporting, therefore, it doesn’t affect much.

“The big emerging market we’ve had in cargo is cross-border e-commerce. There are many e-commerce companies coming from China today, like Shein and others. Today it is the fastest-growing segment but continues to be relatively small. It’s approximately 15% of total volume.”

Alvo didn’t appear to be too concerned about the potential disruption that a trade war between the US and China could bring to the global cargo market.

“The big world cargo market is Transpacific, which is from China mainly to the United States, and must be about 35% of world traffic. But we’re isolated from this China-United States dynamic because the products that come to the region at most transit through the United States. They come mostly through Europe. This is the thing from Asia to South America; it doesn’t matter if you come from the left or from the right, it’s more or less the same distance, which makes it a bit easier to move flows. If there are any customs problem in the United States, they come through Europe.”

Looking ahead

To conclude the conversation, AeroTime asked Alvo to share his view on the future of LATAM over the next decade.

“I see high growth potential. I think the industry can grow 5-6% per year in terms of traffic in the next three to five years,” he said “The regulatory issue always exists, but this is a region that for many decades was very closed. Today it’s totally open. So that stopped being an issue.”

“For me, the most important challenge we have is how to continue developing the business while, at the same time, advancing in an emissions reduction agenda. South America is gigantic; between Santiago and Bogotá there’s a six-hour trip. The whole length of Chile is the same as Lisbon to Moscow. There are mountain ranges, deserts, and jungles – so the big challenge for the coming years is, how do we balance this equation? How do we make the industry reduce its emissions but at the same time do so without affecting connectivity in many societies?

“Many communities here depend on-air transport,” he added “Take Manaus, a city of two million inhabitants stuck in the middle of the Amazon. Without air connectivity, Manaus wouldn’t exist. So, this is the most important challenge for me. I feel that at LATAM, as the most important airline group in South America, we have a responsibility to lead on this path. That’s why we’ve made the commitment to try to develop while caring for the environment.”

The post ‘The opportunity is gigantic.’ LATAM’s CEO on leading South America’s skies appeared first on AeroTime.

oneworld CEO on the alliance’s premium focus and strategic vision

Miquel Ros — Fri, 31 Oct 2025 04:00:00 +0000

There are three major airline alliances in the world – Star Alliance, SkyTeam and oneworld – which together account for nearly half of all global air traffic.

In previous Executive Spotlight articles, AeroTime has explored the strategies of Star Alliance and SkyTeam. This year’s World Aviation Festival in Lisbon, Portugal, which took place from October 7 to 9, 2025, provided the perfect opportunity to complete our trilogy by sitting down for an in-depth conversation with the CEO of oneworld , Nathaniel Pieper.

Pieper is an industry veteran who previously held senior roles at Northwest Airlines, Virgin Atlantic, Delta Air Lines and Alaska Airlines before taking up the top post at oneworld.

However, his tenure at the helm of the alliance will have been relatively short as a few days after we conducted this interview, American Airlines (one of oneworld’s founding members) announced that Pieper had been selected to take on the role of its Chief Commercial Officer, effective November 3, 2025.

Before Pieper transitions to this new responsibility, AeroTime had the chance to discuss oneworld’s strategic positioning, explore what sets oneworld apart from its competitors, and the role of airline alliances should be in the highly competitive air travel market.

oneworld, which Pieper has steered since April 2024, was founded in 1999 by American Airlines, British Airways, Cathay Pacific, Qantas, and Canadian Airlines (the assets of which were later acquired by Air Canada).

The alliance has since steadily expanded its membership to reach 15 member airlines. This makes oneworld the smallest, by membership and passenger numbers, of the big three.

Sheer quantity, however, may not be the most relevant metric when it comes to airlines.

So, what is it that sets oneworld apart from its larger peers?

oneworld’s premium focus

“If you think about why alliances started, it was network coverage,” Pieper explained. “Our guests want to fly places that we can’t get to. Loyalty is the second thing. It’s why they exist. All of us [the three major alliances] cover 95-96% of global demand. So, network coverage is pretty similar.”

“From a oneworld perspective, our focus is on the premium market,” Pieper said, explaining oneworld’s unique positioning. “If you look at the roster, we have the fewest number of airlines, but I wouldn’t trade our roster of airlines with either of the other two alliances. With Qantas in Oceania, Qatar Airways in the Middle East, Cathay and JAL [Japan Airlines – ed. note] in the Pacific, British Airways and IAG in Europe and being the only alliance that has two members in the United States, Alaska and American, I think our suite is quite strong, and we have some industry-leading brands in there.”

Pieper further elaborated on oneworld’s premium focus by referring to the alliance’s three loyalty tiers (Emerald, Sapphire, and Ruby) and how they compare to those offered by its peers. The executive highlighted the fact that oneworld Emerald is the only premium tier to provide first class lounge access to any Emerald traveler across the alliance’s entire network, even those not flying on a first class ticket.

“That’s a unique benefit and one that we know resonates strongly with our top-tier guests,” he said. “So, I feel really good about where we’re positioned in that premium space.”

But has oneworld deliberately chosen to remain smaller than its counterparts? And what criteria are used to determine membership?

“When adding new members, one of the things we are focused on is how much a prospective new member would overlap with our existing ones,” Pieper said. “I look at the other two alliances, and there’s a lot more network overlap than we have. I think we make a conscious effort.”

“The idea is to be stronger together and to be able to cover more of the world, provide better guest access and so on,” he continued. “The other tenet is that we want oneworld partners to prioritize cooperating with each other, and the more overlap you have, the more competitive it becomes, and you end up butting heads against each other. It’s really hard to then foster a sense of camaraderie.”

Adding new members and regions

However, Pieper also emphasized that being restrictive does not mean implementing a numerus clausus policy. In fact, oneworld has welcomed two new members in 2025: Fiji Airways and Oman Air. What do each of them bring to oneworld?

“It’s been a big year for us,” Pieper said. “Let’s start with Fiji. They joined at the end of March. They have great brand loyalty in their section of the world, the South Pacific. So, it gives us good synergies there. Also, Fiji is the epitome of the dream holiday. We all aspire to it. And we now have the chance to use “loyalty currency” there. Let’s say, if I’m flying all over the world. I’m going to have a credit card to generate all those [loyalty] points and then be able to take that dream vacation. And I think Fiji is one of those places, together with Bora Bora, which seem to be what’s on the credit card advertisements.”

Pieper also noted that Fiji Airways has already been using American Airlines’ AAdvantage as its own loyalty program.

“And then we have Oman Air, which joined at the end of June, a terrific airline from a country with great aspirations in terms of growing awareness as a destination,” he added. “From a strategic perspective, it gives us three key players in the Middle East: Qatar Airways, Royal Jordanian and now Oman Air. There is amazing growth in that region. So, it really gives us a stronghold, and an exciting one for us.”

Pieper also highlighted how these two new members have little overlap with previously existing members.

“This kind of reinforces my earlier point,” he said “What is the amount of overlap with those two? Not much at all. And that’s part of our calculus, and maybe that’s what has driven in having fewer members.”

Are there any regions in which Pieper thinks oneworld has scope to grow?

“There are a couple of markets where we don’t have a home member today. The first one is India. As you know, IATA’s Annual General Meeting (AGM) [the main annual gathering of the International Air Transport Association – ed. note] was in India in June [2025], and we would love to have a carrier in India join oneworld, and maybe that happens someday,” he said. “We have now 10 members that serve different spots in India. Some actually serve more, like Qatar Airways, whose network in India is amazing, but with 10 airlines flying there, there are a lot of things you can do together as a group. Maybe it’s airport handling, maybe it’s co-location.”

“One of the things we’re focusing a lot of time on is lounges. Can we open oneworld lounges in India? The Indian airport situation with lounge space is tricky,” Pieper explained. “They currently just have one big lounge for every airline. So, we’re trying to work with local authorities so that they give us a oneworld space, because it’s an easy way for one world carriers to work together and offer our premium product to our guests and really raise awareness in a market where we don’t have a home carrier.”

Latin America is the other market that oneworld has set its sights on. The alliance used to have a member in that region, LATAM, but the carrier left oneworld in 2020 after SkyTeam member Delta Air Lines acquired a 20% equity stake in the airline.

“It’s a region of the world where we have a lot of members flying. It’s very important that American Airlines and Iberia have an extensive network in Latin America as well,” Pieper said. “So, again, if a home carrier in that market wanted to join oneworld, and we thought it made economic sense, and that it would be beneficial and really constructive for us, we would be open to that. And we’re always studying and looking at that. But then in the meantime, similar to India, are there ways we can work together to really coordinate with two, three, four or five of our members that serve Latin America to be more effective and really raise oneworld’s profile there?”

Opening oneworld-branded lounges

Pieper also mentioned how, much like in the case of India, shared lounges are one of the service elements that an alliance can use to deliver value to its member airlines and, ultimately, to passengers.

“We opened two of them last year, Amsterdam (AMS) and Seoul (ICN). Not surprisingly, neither of those two airports are hubs for oneworld member airlines. They’ve been open for 18 months, maybe a little more, and the net promoter scores and the customer feedback we’re getting have been amazing,” he said. “We’ve got some very exciting news about one of those lounges coming soon, and it’s a good piece of feedback for us that we are on the right track.”

“Guests really appreciate it, and our members love it because, from a cost perspective, it’s just so much more efficient to have a joint facility than for one of them to be a leaseholder,” he continued. “oneworld takes care of the administrative stuff and makes it accessible for anyone travelling on a on a oneworld airline, whether on a business class ticket or because of the loyalty tiers in case of people that have certain status.”

The experience has been so successful that Pieper is already thinking about scaling up.

“I would love to open another three, five, seven or 10 lounges in the next five years. It’s such an easy, logical way in a non-home market to be able to really put your forces together,” he said. “It raises oneworld’s profile, there’s good cost efficiency and most importantly, amazing guest efficiency in what we can deliver.”

Aiming to deliver a seamless experience

What other areas of the passenger experience can benefit from the economies of scale offered by a major alliance?

Pieper said one of the main challenges for an alliance is seamlessness of service, so that passengers can utilize the advantages of the network, while at the same time making it feel as though they are being served by a single airline.

Technology obviously plays a major role in this quest towards seamlessness.

“I want the technology framework so that whatever oneworld carrier app I want to use, I can use it even if I’m not flying that airline. Maybe I just like that app the best? Every step of the way, from the time you actually need to go somewhere. How do I do that? Where can I buy my ticket? How do I book it? Do I get lounge access? How do I check my bag? All the way through the connecting experience. Did my bag show up? Is there a bag tracking on the app? Did my miles get credited efficiently? What we want to deliver is that experience as if it’s all offered by one, even if you flew on two or three carriers.”

In this regard, Pieper explained that oneworld is in the latter stages of establishing a common digital platform where all 15 members will collaborate to store guest information about the journey and experience in a central location.

“The first step of that will be with everybody issuing connecting boarding passes across any member airline for connecting travelers. And eventually, once the common platform is offered, we’re going to evolve it into bag tracking and other things that you would expect. This is in the early stages. I’d say it will be 80% complete by the end of the year, maybe spilling into the first part of next year. We’ll have every member linked.”

Pieper offered a personal example to illustrate his vision about what an alliance like oneworld should be doing on the technological front.

“I think about my dad, who is 84, and also about my 24-year-old daughter, and the way I explain it to our folks and to other people, is the travel experiences of my 84 -year-old father and my 24-year-old daughter could not be more different.

“My father wants to check in at the airport three hours in advance. He wants to wait in line, talk to a human, have a boarding pass, print it, and put it in his hand. He wants to see that bag get checked and tagged and off it goes. And he wants the personal touch.

“My daughter doesn’t want to talk to a human at all,” he continued. “All she wants to do is look at her phone and be like, ‘great! I checked in 24 hours in advance. Here’s all the information I need. I don’t want to talk to anybody’.”

“Those are two really different experiences. But the thing is, for us to be successful, we’ve got to be able to deliver both of them,” he added. “And technology is the key, because unfortunately, my 84-year-old father’s experience probably is going to age out, and my 24-year-old daughter’s experience is going to become even more commonplace. That’s why technology over cellphone becomes really critical.”

So, what other common products and services does oneworld offer?

“We have a Round-the-World program as well, and a specific initiative that focuses on the Pacific region,” Pieper explained, alluding to a product that makes it possible to purchase a journey around the planet by combining segments flown by the different airline members. This is also a product that oneworld’s competitor, Star Alliance, has offered for a number of years.

“Our focus on these projects took a step backwards during the pandemic, and frankly, we’re working to figure out the best way to deliver this,” he added. “There’s a good amount of demand for Round the World activities and Round the World tickets.

Pieper went on to underline the importance of having the right distribution channels for this type of iconic product.

“Historically, these have been distributed on the oneworld website, which certainly has nowhere near the commercial power that our member airlines have on their own sites,” he explained. “So, we’re trying to figure out what’s the best way to distribute that product and that’s actually on our initiative list for 2026: to find an effective way to sell it.

“So, we want to make sure that all of those things are lined up because, right now, on the oneworld side, it’s possible to plan and book flights which are ticketed through our member airlines.”

Governance and the internal dynamics of the alliance

How does oneworld work internally? Pieper referred again to oneworld’s relatively small size as an advantage.

“We try to run the alliance as best we can, to achieve consensus on major things. We’ve never had a vote, for example, at CEO level about a contentious issue. We’ve been able to reach consensus,” he explained. “And I think that’s something that’s important for harmony, for collaboration. We want you to prioritize working with each other first. It’s important to have that sense of harmony.”

Pieper also outlined how governance is structured at oneworld.

“Let’s start just kind of at the top. In our governance structure, I have 15 bosses, which are the CEOs of each of the member airlines, and there is a chairman of the governing board, Robert Isom, the CEO of American Airlines. That rotates. It’s a two-year term. We meet with that group twice a year, once at IATA [AGM] and a second time, which is always in December.”

“Below that we have what’s called an alliance management board, which, in translation, is the alliance leaders at each of our 15 member airlines. And that group meets quarterly, and that group along with us, is responsible, really, for setting the strategy of the Alliance key priorities. And I’d say the third piece of this system is my organization, which we call OMC, the oneworld Management Company.”

At this point, Pieper provided some interesting insights into how the relationship between an alliance as a whole and its individual members can be fraught with challenges.

“When I came to the alliance, the oneworld management team wasn’t as strong as we wanted it to be,” he revealed “We needed to make oneworld’s management team strong enough so that they could work on an even level with the member airlines, jointly figure out priorities, and who’s responsible for what and why that’s important.

“We needed the oneworld team to be an equal partner and to have top-notch people so that we could have parity and really good strategic discussions.”

Pieper also highlighted how the core function of the alliance is to deliver value to its member airlines.

“My 15 bosses look to me and say, ‘Okay, you have a unique perspective, you can see across all 15 airlines’,” he added.

Pieper spends a considerable amount of his time on the road (or, more accurately, in the air) not only meeting CEOs in person (his “15 bosses” as he likes to refer to them), but also top strategic leaders and other key people in each of the airlines. This way the alliance can act as a conduit for ideas and best practices across its members.

“That’s how we can go deliver value, and then work hand in hand with the alliance leaders to say, ‘Do you agree? Yes, no?’ and focus it that way. That way we end up with a really good, strong, endorsed strategy for the alliance. This is how we can deliver the most amount of value.”

The result is an annual strategic plan which is presented to the member airline CEOs at the annual December meeting. This is when budgeting and priorities are decided.

When it comes to governance, a particularly hot topic in the world of alliances is how to handle out-of-alliance partnerships.

“Let’s start at the beginning: what makes me happiest is to see our 15 members financially healthy and successful. We want them to be the best operators and the best airlines that they can be, and I think they would too. Being part of oneworld and working together amongst the 15 airlines is a huge component of that,” he said before outlining oneworld’s policy in this regard.

“We want our 15 members to prioritize cooperation with each other first and foremost. If we’ve got a member that is in its home market, and you are a oneworld member, and that’s not your home market, but you want to fly there, we want you to work with that one world member in the home market,” he said. “However, there are areas like we talked about earlier, where oneworld doesn’t have a home market airline.

“If that’s the case, if there are strategic gaps that none of our members can provide, you need to be able to go work with someone, even if they’re outside of our alliance, even if they’re in a different alliance. If that’s what you think is what will deliver you the best amount of value, then you are free to do that.”

Pieper stated his belief that oneworld is the most permissive of the three major alliances when it comes to establishing partnerships with non-members. If one of the member airlines was to overstep on this particular front, there is a compliance mechanism within oneworld. Although Pieper noted, it has never been implemented.

“We have never had to bring anything to a vote. We’ve always been able to reach consensus agreements. When there have been challenges, we’ve always been able to work something out at the consensus level,” he said “We have rules, just like each of the other global alliances do, but we’ve never had to say, ‘Okay, we’re going to have a very contentious vote on the process’. We’ve always been able to work it out.”

Where does oneworld stand when it comes to sustainability?

Just a few days prior to this interview oneworld announced a partnership with Breakthrough Energy Ventures, a venture capital firm specializing in clean energy and backed by Bill Gates, to launch a US$150 million fund to accelerate Sustainable Aviation Fuel (SAF) projects. Five oneworld members (Alaska Airlines, American Airlines, IAG, Cathay Pacific and Japan Airlines) are direct investors in the fund, which, interestingly also counts the participation of Star Alliance member, Singapore Airlines.

Pieper explained how this initiative was the result of member airlines all having a common problem in the scarcity of SAF supply.

“One of the reasons that alliance airlines join alliances is to be able to aggressively attack what I like to think of as initiatives of scale: things that you can do much more efficiently and successfully with your friends than you can on your own, and sustainability is the perfect example of that.”

“Our sustainability experts said, ‘We all have this common problem. None of us have the bandwidth to be able to go research emerging technologies in the SAF space all over the world. Can we find a partner that we can go work with?’ So, we identified Breakthrough Energy Ventures as an ideal partner for this and then facilitated the discussions with the leaders of each of the member airlines,” he added. “It was too good an opportunity. So, we negotiated, obviously, and finally, got that across the line. We are very excited about it.”

Pieper thinks that not only will more oneworld airlines join this initiative in the near future, but other players across the value chain, such as aircraft and engine manufacturers, might do so, even if they are not alliance members.

“I think each of our member airlines share concerns that there are not going to be available quantities of SAF produced at economic prices that make sense to achieve net zero targets,” he explained. “Sitting and waiting and hoping that that happens is not a strategy that our CEOs were comfortable with, and neither was the oneworld team. That’s what spawned creative ideas like this Breakthrough Energy Ventures approach and knowing that we may need to be more creative, more proactive, and really try to ignite some of the developments, some of the investments, some of the creativity that is going to be required to do that.”

What are the next big milestones for oneworld?

“I think the one thing I’d like to highlight again is that our job as oneworld is to deliver as much value to our member airlines as we can,” Pieper said. “For 26 years, oneworld has been doing this. It started as a network and a loyalty business, and that was really where all the value could be delivered at that time, and it has evolved, because we all kind of have global coverage now. So, now it’s about the customer experience, and also other areas that require creativity, like sustainability.”

In this regard, Pieper referred to an innovation summit hosted by oneworld in Lisbon the day before the opening of the 2025 World Aviation Festival.

“That came from us thinking about much of the innovation that’s out there, whether it’s SAF, or whether it’s aircraft technology,” he said. “Tom O’Leary of JetZero [a US startup developing a blended wing body airliner – ed. note] was there, Azeem [Barodawala] of Volantio [a startup that helps airlines optimize revenue by repurchasing and then reselling tickets in response to supply and demand signals – ed. note], was presenting as well. We even had a presentation on Seagliders [ground-in-wing vehicles capable of flying at high speeds just a few meters over the surface of the sea – ed. note]. That was fascinating!”

Pieper further elaborated on the genesis of this project and its rationale within the oneworld strategic context.

“What we started thinking about was that there are six, seven or eight amazing innovative technology venture capital arms within our member airlines that are doing pretty neat things. Alaska is at the forefront with its venture arm. IAG has had one; Cathay Pacific was the first airline to invest in an SAF provider. Japan Airlines has made amazing investments in a bunch of things.

“The point is that we looked at all of this, and we thought, ‘we should actually get this group together because each of them has set their venture arms a little bit differently’. All have creative ideas, but the motivation is kind of the same at the base.”

“I was incredibly skeptical from the beginning,” admitted Pieper. “I remember when Matt Ridley, our director of sustainability and innovation, pitched this to me six months ago, I thought, ‘Okay, six people are going to show up for this thing. Are you sure?’ And it was like, ‘No, we should do it the day before the world aviation festival. Everybody will be there. It’ll work’. So, it came to fruition. We had 80 or 90 people there, incredible leaders. I left with so many more questions than answers.”

Pieper explained that he sees projects like the innovation summit as a way of adding value to oneworld member airlines in a completely new and creative way. He stated that while it may still be premature to make it an annual event, he would not rule it out, given all the positive feedback that came from it.

Pieper concluded our chat by pointing at the future of oneworld and reiterating the alliance’s commitment to delivering value rather than just continuing to add members.

“I can’t see oneworld ever having 30 members,” he said. “We clearly need to continue to evolve and find a way to add value to our members, and this is a great way to do it.”

The post oneworld CEO on the alliance’s premium focus and strategic vision appeared first on AeroTime.

Inside SITA’s human-centered innovation strategy with Sumesh Patel

Jean Carmela Lim — Thu, 30 Oct 2025 09:17:39 +0000

Anyone who has flown internationally over the last few years has probably noticed that airports look a bit more futuristic.

While self-service check-in kiosks, facial recognition scanners, and digital passport gates are becoming the norm, they’re just the beginning of a much bigger digital shift happening across the industry.

Behind many of these changes is SITA, a travel technology and solutions provider that’s been quietly shaping how we move through airports for more than seven decades.

SITA doesn’t just dream up new concepts. The company implements solutions at airports and airlines around the world, turning ideas that may have once seemed like science fiction into reality.

AeroTime recently had the opportunity to visit SITA’s facility in Singapore, and sit down with Sumesh Patel, SITA Asia Pacific President, for an Executive Spotlight interview.

Patel, who has been with SITA for almost 20 years, discussed his observations on rising trends in airport technology, SITA’s progress in global baggage handling, the future of passport-less travel, and much more.

From imagination to implementation

Patel observed that we are now at the stage where technologies are shifting from conceptualization as test projects to implementation across airlines, airports, and government agencies throughout the region and globally.

“The most exciting thing is that we’re moving from pilot projects and proof-led implementation to seeing these technologies in real life,” Patel told AeroTime. “They are being implemented, and we can see the real benefits to the industry.”

This transformation was evident at SITA’s official reopening of its Customer Experience Centre in October 2025, where advancements in baggage technology, artificial intelligence (AI) in air traffic management, and biometric systems demonstrated that these innovations are no longer future plans but present-day realities.

Technology serving not replacing people

Despite the rapid technological advancement, Patel emphasized a principle that he said is fundamental in SITA – technology is a means, not an end. According to Patel, the ultimate measure of success lies in how well these innovations serve the people who use them: passengers, airport and airline staff, and regulators alike.

“At the end of the day, it’s still about people,” he noted. “They should be confident that they find this technology and technological advancement helpful. If technology can make their life easier, if staff are able to do their job better, that’s what technology really means.”

SITA’s human-centered approach ensures that digital solutions enhance, rather than complicate the travel experience, with user confidence and practical benefits as the primary metrics of success.

Baggage handling reaches historic efficiency levels

SITA’s 2025 Baggage IT Insights report revealed remarkable progress in baggage handling: an 8.7% reduction in mishandling despite an 8.2% increase in passenger air traffic.

The long-term improvement is even more striking with baggage mishandling rates dropping 67% since 2007.

However, challenges remain. Current rates still show approximately 6.3 lost bags per 1,000 passengers, costing the industry nearly $5 billion annually.

Modern passengers expect complete visibility of their baggage journey from check-in to arrival, and, when issues occur, they want to know exactly where their bags are and when they’ll be reunited with them.

SITA has developed several technologies to address these expectations. A recent partnership with Apple now allows passengers to share their AirTag data directly with ground handlers and airlines, enabling faster bag location and retrieval.

Previously, passengers could track their bags but frustratingly, had no way to expedite its recovery.

Another solution, developed with Lufthansa, automatically re-routes missed bags and immediately notifies passengers. Rather than travelers discovering their baggage did not make the connection, the system automatically re-books the bag on the next available flight and informs passengers of the expected arrival time and location.

Looking ahead, SITA is working on intermodal baggage solutions that would provide end-to-end tracking across multiple transportation modes, including trains and cruises, eliminating the need for passengers to repeatedly collect and recheck their luggage throughout their journey.

Mega trends shaping aviation’s future

According to an IATA forecast, Asia Pacific air traffic is set to grow 5.1% annually and double by 2043. In light of this growth, several transformative trends are emerging that will reshape the industry over the next two to three years.

Artificial intelligence stands at the forefront, changing how airlines serve passengers and enabling faster, better-informed decision-making. AI is being integrated into virtually every technology SITA develops, from operational systems to passenger services.

Digital Travel Credentials (DTC) represent another significant shift toward passport-free travel, which Patel foresees will be implemented soon.

According to Patel, within the next decade, physical passports may become merely backup documents, with travelers’ complete digital identities including passports, visas, and other documentation stored securely on smartphones.

Passengers would control which information to share and when, creating a seamless, paper-free travel experience.

“In many countries, passports are no longer stamped,” Patel observed. “In the future, you won’t even need a passport, your identity will be your digital identity.”

This was demonstrated by SITA’s Senior Business Development Manager for Border Management Kelvin Ng, who showed AeroTime what passport-less travel will actually look like in the future.

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Human element still prevails

Despite AI’s expanding role in aviation, Patel believes certain human capabilities will never be replaced by technology, no matter how advanced it becomes.

Empathy, leadership, crisis management, and personalized customer service require human judgment and emotional intelligence that AI cannot replicate.

“The best outcome would be for AI and humans to work together as one team,” Patel said. “That combination can serve passengers better than either could alone.”

Biometric safeguards against facial reconstruction

As facial surgical enhancements and 3D reconstructive procedures become more common and seamless, questions arise about the reliability of biometric systems.

Patel said that aviation biometrics employ multi-layered authentication that extends far beyond simple facial recognition.

“When we talk about biometrics for the aviation industry, it also relies on valid documentation – your visa, identity verification, watch lists, and government databases,” he explained. “There are multi-level authentication processes. The system is more reliable because it doesn’t just rely on face-equals-identity.”

This comprehensive approach, deployed at airports and borders worldwide, ensures robust security even as cosmetic facial procedures become more sophisticated.

Sustainability beyond Sustainable Aviation Fuel (SAF)

Following SITA’s recent contract with Air India focusing on sustainability, the company is expanding its environmental initiatives beyond the widely discussed Sustainable Aviation Fuel (SAF).

SITA currently works with Air India, Singapore Airlines, and 50 other carriers on a number of sustainability solutions. One key technology, OptiClimb, recognizes that every aircraft is unique—even two Airbus A350s or Boeing 737s have different characteristics.

The system analyzes individual aircraft data and recommends optimal climb speeds and angles, reducing carbon emissions while saving fuel and creating smoother flights for passengers.

At airports, SITA has developed systems that monitor the carbon footprint of all stakeholders and not just aircraft and passengers, but also tenants, restaurants, and shops.

These platforms provide actionable recommendations for reducing environmental impact across the entire airport ecosystem.

“Sustainability is certainly key,” Patel concluded. “At every step, we ask: ‘what can we do differently?’.”

As SITA continues expanding its presence, both across the Asia Pacific region and globally, the company remains committed to balancing technological innovation with human needs, operational efficiency with environmental responsibility, and digital transformation with the irreplaceable value of human connection.

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Africa’s rising star: TAAG’s CCO on transforming Angola’s national airline

Miquel Ros — Fri, 17 Oct 2025 03:00:00 +0000

One of the most interesting airlines in Africa—and the southern hemisphere as a whole—right now is TAAG Linhas Aéreas de Angola, the national carrier of Angola.

Followers of the AeroTime YouTube channel have already gotten a glimpse of what this re-energized African airline is up to in an interview with its Chief Commercial Officer, Miguel Carneiro, during the AviaDev Conference in June 2025.

AeroTime caught up with Carneiro again during the 81st Annual General Meeting (AGM) of the International Air Transport Association (IATA) in Delhi, India, where he shared new insights into TAAG’s multi-pronged effort to become a leading provider of connectivity within Africa and between Africa and the rest of the world.

Transforming TAAG: culture, brand, and fleet

Carneiro reiterated that the airline’s 2024–2029 strategic plan centers on a comprehensive transformation, encompassing corporate culture and branding, fleet renewal, and network growth.

“Our vision stems from the strategic plan that TAAG is implementing through 2024–2029, through which we seek to position the airline as the go-to player providing intra-Africa connectivity,” explained Carneiro.

A key enabler is the new Dr. António Agostinho Neto International Airport (NBJ) in Luanda, a modern Chinese-built facility that opened in November 2024. TAAG completed the full transfer of its operations there in September 2025, setting the foundation for a more efficient hub-and-spoke model.

Building a regional hub in Luanda

“We are really trying to capitalize on our position,” Carneiro said. “TAAG aims to be a very strong player in the western part of the continent, from the Gulf of Guinea to South Africa. We can build a very efficient hub in Luanda, connecting roughly half a billion passengers within a three-hour flight radius.”

Currently, TAAG serves Johannesburg, Cape Town, Mozambique, Namibia, the Democratic Republic of Congo, Congo-Brazzaville, and Nigeria. “We have the second-biggest market share between Cape Town and Lagos, with 37%. We fly 10 times a week to Cape Town and five times to Lagos,” Carneiro added.

Expanding intercontinental reach

TAAG’s ambitions extend far beyond the African continent. “We are expanding through an intercontinental strategy as well,” Carneiro said. “We fly to Lisbon double daily, and four times per week to São Paulo Guarulhos in Brazil.”

Brazil, a Portuguese-speaking country like Angola, plays a central role in TAAG’s expansion plans. “We are positioning ourselves very aggressively in the South American market, connecting it to Africa,” he continued. The airline has begun operating its first Boeing 787 Dreamliner on the Luanda–São Paulo route.

TAAG is one of only four airlines directly linking Brazil to Sub-Saharan Africa, alongside Ethiopian Airlines, South African Airways, and LATAM. In 2024, it also joined ALTA, the Latin American and Caribbean Air Transport Association, to deepen regional partnerships with GOL and LATAM.

Looking north and east

Lisbon is currently TAAG’s only year-round European destination, but new routes are on the horizon.

“We operate double daily flights to Lisbon and seasonal flights to Porto. We’ve discussed reinstating the Madrid route and are looking closely at London and Paris,” Carneiro said. “We are also exploring opportunities in the Far East, particularly Guangzhou in China.”

These long-haul connections will feed into TAAG’s expanding African network, designed around a hub-and-spoke system centered in Luanda. “We’re prioritizing key tier-one markets, and later tier-two cities such as Lubumbashi and Goma,” he said.

A modern, efficient fleet

To power this growth, TAAG is relying on its new Airbus A220s. As of October 2025, three of the 15 ordered A220-300s are in service, configured with 137 seats across two classes.

“That’s where the A220 is strong,” said Carneiro. “It’s cost-effective, comfortable, and pilots love its performance.”

The airline is transitioning to a simplified two-type fleet: Airbus A220s for short-haul routes and Boeing 787s for long-haul operations. “We are phasing out the 777s,” Carneiro confirmed.

While the A220’s Pratt & Whitney engines have faced reliability issues elsewhere, Carneiro said TAAG remains confident: “We’ll monitor performance and decide on the best long-term option.”

Digital transformation and passenger experience

TAAG is also focusing on improving its digital and onboard experience.

“Our digital sales were in the low teens. We redesigned our website with more user-friendly features and new payment options,” Carneiro said. “The goal is to shift steadily from GDS to direct sales, which is more efficient and less costly.”

Onboard, TAAG is rethinking its cabin classes. “We used to have three classes—First, Business, and Economy—and we’ll keep three, but differently: Business, Premium Economy, and Economy,” Carneiro explained, adding that a Premium Economy option could be introduced on narrowbody aircraft too.

The airline’s refreshed brand identity, unveiled in 2023, reflects this new spirit. “It’s about keeping the historic traits of TAAG while giving it a fresher, younger look,” he said.

New routes and future ambitions

TAAG plans to launch new destinations in Africa, including Nairobi, Abidjan, Accra, and Libreville, while boosting frequencies to South Africa, Nigeria, and Mozambique.

For now, alliance membership is not on the table. “Not in the immediate short term,” Carneiro said. “We still have room to grow independently but will keep options open.”

Perhaps the most ambitious project yet is TAAG’s plan to enter the US market.

“Yeah, we are looking at it, we are discussing with our civil aviation authority for them to get approvals from the FAA and the DOT. And obviously, once that’s done, we as an airline, look forward to start flying to the US. We’re currently looking at different potential entry points, Houston, Miami, New York. We’re trying to see which one would work the best, not specifically just for Angola, but for the region overall. So that we can feed traffic from regional countries into Luanda and then connect into the US. Imagine, for example, South Africa, Namibia, Mozambique, the DRC…we could provide a great, great option for all of those passengers!” he concluded.

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ABL Aviation founder and CEO Ali Ben Lmadani on building a leasing giant

Miquel Ros — Fri, 03 Oct 2025 03:00:00 +0000

Since its foundation a little over a decade ago, ABL Aviation has emerged as one of the most dynamic players in the global aircraft management and leasing scene.

As of September 2025, this young, independent company has deployed over US$7 billion of capital in aircraft investments, a figure that includes 116 aircraft transactions of different types and sizes. The firm has also started to expand into the maintenance repair and operations (MRO) market and other asset classes. And its founder and sole owner, Ali Ben Lmadani, is just getting started.

In an exclusive interview with AeroTime, Ben Lmadani confirmed plans for significant growth at ABL Aviation in the coming years, both in terms of aircraft under management and geographical footprint.

Building ABL Aviation from scratch

Although ABL Aviation was launched in 2014, the group can trace its roots back to a ground support equipment (GSE) trading business set up by Ben Lmadani almost two decades ago. The Moroccan-American entrepreneur explained how this first venture later evolved into the diversified aircraft management business that ABL Aviation is today.

“GSE was my first business. That’s how I started,” Ben Lmadani said. “We used to buy equipment from the US and sell it to Europe and Africa, making a margin, and also leasing it. In 2014, we moved onto aircraft leasing with some Boeing 737s and then, in 2017, we did a 25-year joint venture in Japan, through which we continue to invest in aircraft.”

Japan has played a central role in the rise of ABL Aviation. To this day, the Asian nation continues to be a particularly important market for the company, since it maintains a strategic partnership with a major Japanese financial services conglomerate. This relationship allows ABL Aviation to offer its global customers a range of specific and efficient financial instruments, such as Japanese Operating Leases (JOL) and Japanese Operating Leases with Call Option (JOLCO).

However, there are other more unmaterial considerations which have led ABL Aviation to build its Japanese business up.

“During COVID, we made sure that we didn’t lose any money for Japanese investors. We protected our investors. And that was very important for them because they saw us coming to Japan all the time,” explained Ben Lmadani. “They saw us, even during COVID, opening an office in Tokyo to have a presence locally, to be able to speak with them and they appreciate that. They really appreciate our local presence.”

The pandemic wreaked havoc among airlines. But, as with its Japanese business, ABL Aviation saw it as an opportunity to strengthen bonds with its customers and stakeholders.

“During COVID we made sure to manage the situation properly with the airlines,” Ben Lmadani said. “People trusted us as a company because of our speed of execution and of the fact that we always kept our word.”

Despite the seriousness of the situation, ABL Aviation was able to see a silver lining. Because of the large number of grounded aircraft, the company was able to obtain a significant number of mid-life aircraft [aircraft that are not new and are approaching the middle of their theoretical operational life – ed. note] that had been sent to storage in Arizona. This helped ABL Aviation boost the firm’s assets under management (AUM) and develop its leasing business.

Notwithstanding its close and long-running ties with Japan, ABL Aviation is also active in many other regions of the world, fully reflecting the global nature of the aircraft leasing industry.

From its initial establishment in New York, Ben Lmadani’s company has grown a global presence with offices also in Dublin, Casablanca, Hong Kong, Tokyo and Dubai.

ABL Aviation is particularly proud of having been the first aircraft lessor to base itself in Africa. ABL Corporation, the holding company of ABL Aviation, is continuing to build this presence with the construction of an office tower in Casablanca, Morocco, part of which is going to be used by the firm’s aircraft management division to further expand operations in the continent.

“We are the first platform in Africa because of our local roots,” stated Ben Lmadani, before further elaborating on the challenges of doing business in the continent.

“Africa is the last major market where aircraft leasing is not yet fully developed, but it will be,” said Ben Lmadani. “We’ve already placed A350s with Ethiopian Airlines, which is a great example of African aviation’s potential. Of course, investors worry about defaults in some countries, but that’s part of doing business on the continent.”

“There is demand and there will be demand all over Africa,” he added “Of course, for investors, there’s a concern with payments in some African countries, a concern about the default on payments. That’s part of what we have to deal with. It’s a cost of doing business.”

Ben Lmadani also outlined other markets in which it expects ABL Aviation to grow in the near future.

“We’re developing our business in Africa, but also in Europe and in the midlife market. So, now the new strategy is to do more midlife and ground support equipment deals and to have more of what I’d like to call side businesses.”

Ground support equipment, which was once at the root of the business, is still important for ABL Aviation. Ben Lmadani highlighted, for example, that the company closed the first-ever global secured facility for a ground support equipment operator, a $270 million financing deal with Swissport, a leading global airport services operators, in 2024 This deal, structured by ABL Aviation as a multi-draw senior secured facility, will enable the electrification of a significant share of Swissport’s ground support equipment fleet.

Developing a unique value proposition in a mature industry

So, what sets ABL Aviation apart from its competitors? And what factors have allowed the company to grow at speed in a market where it can often be difficult to find a vector for differentiation?

“Our speed, compared to competitors, , our nimbleness, and our close ties with airlines make us stand out,” he said when asked about the factors that have allowed ABL Aviation to grow fast in a market in which it may often be difficult to find a vector for differentiation.

ABL Aviation also positions itself not just as financing provider but as a full-service partner for its customers.

“We don’t outsource the technical aspects of our business, all technical [work] is done in-house,” Ben Lmadani explained “It’s our own team, our CTO [Chief Technology Officer – ed. note], who do all the technical inspections, all the technical part is done in-house.”

He also highlighted the fact that ABL Aviation is capable of providing a whole range of financial instruments.

“Debt, equity, operating leases, financial leases…everything an airline needs. They know they can come to us as a one-stop shop,” he added “We are also developing midlife, end-of-life [solutions for aircraft], so they know they don’t need to go to multiple parties.

“Even if they need financing for ground support equipment, for engines, for landing gear, they can come to us directly and we will find solutions for them. They like the fact they can come to us and get the full package.”

So, what are the main trends currently driving the aircraft leasing market? And what are Ben Lmadani’s predictions for the near future?

“Well, I can tell you that due to supply chain issues and the fact that Boeing and Airbus cannot deliver enough aircraft on time for all the airlines, there will be a big shortage of aircraft in the market,” Ben Lmadani said. “Therefore, I think there’s a huge opportunity in the midlife market. Aircraft between five and 20 years old are going to be in high demand and there’ll be a need to lease all those aircraft.

“So, prices for midlife aircraft are going to go higher and higher, because of the big shortage of aircraft we’re going to see in at least the next five years. So, whoever is a lessor of those aircraft should be successful in the next five years.”

Ben Lmadani also highlighted that this scramble for aircraft is a global phenomenon.

“Demand is everywhere. In Asia, of course. The US is a big market. Some parts of Europe, since some European carriers need aircraft, especially on narrowbodies. Africa, with airlines such as Egyptair and Royal Air Maroc. There’s a big demand for aircraft.”

Ben Lmadani went on to point out that ABL Aviation does not specialize in a specific type of aircraft but covers a broad range of types instead.

“We have 777s [with Atlas Air], 787s, A350s, A320s and A321neos [with Pegasus Airlines], MAXs…the whole spectrum,” he said, adding that “the narrowbody market is always hot”.

“The A320s, A321s….there’s such a big demand for A321s that we cannot find enough of them,” he continued “In fact, we just placed some of them with Pegasus. And then there are the [B737] MAXs, of course, the [B737]-800s and even the A220. For example, we have lots of A220s with Delta and Air France. There’s a big demand for the A220 because of its very useful range.”

The road ahead for ABL Aviation

While cautious about making long-term predictions, Ben Lmadani is clear about ABL Aviation’s near-term ambitions:

“The idea is to get to 400 aircraft by 2030. Why the next five years? Because if you place an order today with Boeing or Airbus, you don’t get an aircraft before seven years. So at least we have a clear vision for the next five years,” he said. “We know what’s going on within the next seven years. That’s why we know that there’s a big shortage of aircraft. And that’s because people are paying their PDPs [Pre-Delivery Payments – ed. note] for the orders. So, we know these are real orders. Until 2031 and based on the order book of Boeing and Airbus, we know where this is going. But after seven years, I don’t know what’s going to happen.

“That’s my view about aviation,” he added. “COVID happened and, if you remember, the hardest times lasted only like four or five months. There was an opportunity that lasted those four or five months. So, whoever acted fast during COVID was able to make money, but lots of people were thinking it would last two years, and it didn’t.”

Although aviation is expected to continue to be the core business for ABL Corporation, Ben Lmadani also explained the company’s vision to extend its asset management know-how to other industries, such as maritime and real estate.

“The broad vision is to be an asset manager where we have the platform in place and it is profitable, and we keep adding more businesses as assets,” he revealed “With exactly the same model, becoming more like a private equity shop and to keep investing in aviation and hard transportation assets, hard asset classes. That’s the goal we have.”

The post ABL Aviation founder and CEO Ali Ben Lmadani on building a leasing giant appeared first on AeroTime.

JFK Terminal One CEO on how America’s largest terminal is taking shape

Miquel Ros — Fri, 15 Aug 2025 03:00:00 +0000

New York City has a number of strong claims to being the world’s premier city. However, for quite some time now its airports have lagged behind those of other global cities in terms of capacity and passenger experience.

Acknowledging the major role of air travel as an economic driver, in 2017 the Port Authority of New York and New Jersey laid out an ambitious $40 billion plan to upgrade all of the airports in the NYC area.

This broadly encompassing initiative is now starting to bear fruit. LaGuardia Airport (LGA) has seen an entirely new terminal being built, while Newark Liberty International Airport (EWR) inaugurated its new Terminal A in 2023.

The crown jewel of these airport transformation initiatives, however, is the ambitious $19 billion redevelopment of several terminals at Jonh F. Kennedy International Airport (JFK). The goal is to transform the largest of New York’s airports into a world-class gateway, not just to New York City, but also to the rest of the United States.

The airport’s terminals have undergone massive redevelopment pretty much simultaneously. Terminal 4, Delta Air Lines’ New York hub, has undergone a substantial $1.5 billion expansion. Terminal 8, home to American Airlines and its partner British Airways, saw the completion of a $400 million renovation in 2022, and a new $4.2 billion Terminal 6 is being constructed adjacent to Terminal 5.

But the flagship of JFK’s $19 billion overhaul is the New Terminal One. Once completed, this $9.5 billion, 2.6 million square foot, state-of-the-art terminal will be the largest and most internationally oriented of them all.

Interestingly, and unlike other major airports, each JFK terminal is run as a separate business. Each terminal has its own stakeholders and commercial policies, even though they all operate seamlessly as part of the same airport and under the umbrella of the Port Authority of New York and New Jersey.

The New Terminal One at JFK is a public-private partnership, with capital provided by a consortium including Spanish construction and infrastructure management firm Ferrovial, infrastructure investment and management operator JLC Infrastructure, US insurance and financial services holding Ullico and investment firm Carlyle.

What’s the current state of New Terminal One?

During the 81st Annual General Meeting (AGM) of the International Air Transport Association (IATA), which took place in Delhi, India in June 2025, AeroTime met with New Terminal One’s Chief Executive Officer (CEO) Jennifer Aument to discuss the current state of JFK’s latest terminal project.

“It’s a very exciting year where we are moving from construction to actually seeing that customer vision come together,” Aument explained, before going into further detail about the state of the works. “The actual external building is completed. We’re weathertight, and now we’re building out the interiors of the building, which is a big job, with over 60 [retail] spaces and our world class lounges.”

She added: “If you go into site right now, you will see the baggage handling system running and so it’s all working toward next summer, where we will open and welcome our first customers.”

Here, Aument also referred to the growing expectation surrounding the New Terminal One’s entry into service, which is scheduled for 2026.

“We are within striking distance of delivery, so now is the time in which we’re having those conversations with our long-term airline partners,” she said. “We’re putting schedules together, finalizing the arrangements.”

“Our role, as we see airlines across the world look to elevate their customer experience, is to match that experience on the ground and make sure that we don’t take away from the brand and the customer experience that customers have on the airline. And, in fact, we seek to enhance it through the amenities in a world class environment. So that’s that is a key part of our focus right now.”

The New Terminal One has an unmistakable international orientation, it will be the main port of entry to New York, and for many people, to the US as well.

Neutral ground for all airlines and alliances

Aument also highlighted that the terminal will be neutral ground for all airlines and alliances.

This independence is, in Aument’s opinion, one of the key assets of the New Terminal One and one of the reasons it has attracted some large global airlines.

“The feedback we get most often from airlines is that they don’t want to be tied to a large domestic player. They want convenient connectivity, but they don’t want to be second, third, fourth or fifth in line when it comes to the operations of the terminal. So, our airline partners enjoy the fact that their customers are very close to the air train, or two to six minutes away from any other terminal at JFK.”

She continued: “We have representatives from all alliances in our terminal. We have announced some of them, such as Air France, Korean and Turkish Airlines. They are coming in, and we are putting together their vision for flagship lounges. It’s exciting to see that coming together. And then, we have a partner for a fourth lounge, in Phase A [a second phase of the terminal’s development is planned for a later stage – ed. note]. We are alliance-agnostic.”

“At our terminal, they’ve got independence,” Aument added. “They have a service that has been designed specifically for international customers, and then they’ve got that convenient connectivity to any of the terminals at JFK. So, it’s really about that independence that we hear often from our partners.”

“They love that we’ve got strong domestic players at JFK, and they want that close connectivity,” Aument said, adding that when it comes to the terminal experience, airline partners have reaffirmed that it’s the “carefully curated international experience and the independent operations” that is of the most value to them.

While slots in and out of JFK are managed at airport level, once airlines have a slot into JFK, they can then choose which terminal they can fly in and out of. This is why there is fierce competition between the different terminals.

“We expect that over the next couple of years there’ll be more than 50 airlines that will be changing spots within the terminal, and that represents more than 10 million customers,” said Aument. “So, it’s a period of transition at JFK. It is a period of competition between the terminals to be the best partner for airlines, as they’re thinking about their future at JFK.”

But Aument expects the New Terminal One to do well in this competitive environment.

“We offer our partners a few things,” she said. “We’re the only terminal at JFK that has the capacity to grow and the ability to meet their growth aspirations. We’re also the only terminal that has been designed specifically for the specific needs of international customers.”

“That means a focus on getting customers through customs and border protection in 20 minutes,” she continued. “And amenities are envisioned specifically for the international customer.”

Elevating the passenger experience

Building the terminal from the ground up has also allowed New Terminal One to add some of the best global practices when it comes to air terminal design.

“It’s also an efficient operation with widebody gates that uses the latest technology to create efficiency and increase turnaround times,” Aument explained. “So, it is a competitive environment, and the onus is on us to bring a valued proposition to our airline partners.

“It is attractive and competitive, and we think offering the opportunity to grow and have a product that is specifically tailored to international carriers and international customers really gives us an edge in the JFK market.”

This clean sheet design approach also applies to the marked international orientation of the New Terminal One. In addition to the three carriers that will have dedicated lounges (Air France, Korean Air and Turkish Airlines), the list of non-US carriers planning to use the New Terminal One continues to grow, with new names being added on a regular basis, such as KLM, SAS, Air China, Etihad Airways, Gulf Air, Air New Zealand, LOT, Royal Air Maroc, China Airlines, EVA Air, Philippine Airlines, and Air Serbia, to name a few.

“We are the only terminal specifically focused on international customers. We’re the only terminal at JFK that has cash and carry duty free,” Aument explained. “You’ve seen us make a significant investment in Customs and Border Protection within the design of the building and the technology and operational strategies around serving international customers through Customs and Border Protection.

“If you have a big domestic anchor at the terminal, then you have a mix of customers from domestic to international, and that matters a lot when you’re talking about things like Customs and Border Protection, because you have a lot of pre-check TSA in there. Our terminal is completely different. There is no domestic anchor at our terminal. So that means 100% of the operation strategies, the technology, the planning around Customs and Border Protection are focused exclusively on international customers.

“And so that really gives us an advantage because we are defining the whole program around international customers,” she added.

While the New Terminal One will not be a domestic hub for the US market, connectivity has also featured prominently in the minds of its planners.

“We know [that for a] lot of international carriers which serve New York, that’s the final destination because of the popularity of a market like New York City. But for those carriers who have customers coming in and want to connect, we’ve got the air train that is in the central part of our terminal, [and] convenient to get to from all parts of the terminal.”

Air-land connections have also been optimized, Aument explained.

“Customers can come in and immediately get on the air train and be within two to six minutes of every other terminal at JFK. We expect our overall connection time for customers to be substantially shorter because of the improvements that we’ve made through the customs process that will reduce that overall time when they’re connecting to the greater New York City area.”

She continued: “The air train will connect them to the New York subway system, as well as to a brand-new ground transportation system that the New York New Jersey Port Authority is delivering over the course of the next two years.”

At a time when many international airlines are streamlining their offering to appeal to this growing segment, Aument said she also expects the new terminal to play its part in meeting service expectations.

Aument explained that it is necessary to demonstrate to airline partners that the New Terminal One will offer an “elevated experience”.

“That’s why we’ve invested a lot in designing the terminal specifically for international customers and carriers and creating a terminal where all airline partners have a seat at the table and in the operation of the terminal, as well as close connectivity to all the other terminals at JFK,” she said. “And it’s also the only terminal that has the ability to grow further.”

As far as premium passengers are concerned, a key element of the travel experience is the lounges.

“In the first phase, we’ll have six lounges,” Aument explained. “We’ll have two lounges, one airside in one land side. There will be a third-party lounge that we’re announcing imminently. And then we have four individual airline lounges: Air France, Korean Air, Turkish Airlines, and one that has yet to be announced that we’re very excited about.

“The investment that these airlines are making is just unmatched with anything that we’ve seen in the US market. So, I’m really excited to see our partners beginning construction and bringing their vision to life.”

Leading in sustainability

Another superlative element at the New Terminal One is its employment of renewable energy. The terminal’s roof is covered with approximately 13,000 solar panels, the result of a joint project between Schneider Electric, Carlyle, and a renewable energy provider and microgrid integrator called AlphaStruxure.

“We have the largest solar installation in New York. It will provide more than 50% of our power when we open. Again, this is a great advantage to our airline partners because, as we’ve seen, other airport terminals have challenges with [power supply] reliability,” Aument said. “When it comes to power, we have an opportunity to control our own destiny and to be able to have greater resilience through solar than most terminals in the US. So, it’s a big advantage for us,” she said. “And it’s interesting, we get a lot of attention around the solar installations.”

Aument also highlighted that, in addition to being environmentally friendly, the airport’s solar-powered microgrid will provide an additional layer of operational resilience.

“The way I really think about it [sustainability] is as an important part of our business strategy because it offers our airline partners predictability, resilience. They can rely on it to minimize disruptions in their operations in case there are issues that affect the overall power network.”

So, what can we expect to see over the next few months as we get closer to the grand opening of the New Terminal One?

“I think we’re in the middle of a key milestone right now, and that is the handover of spaces in the building from the prime contractor to the many retail establishments and restaurants that will be serving the terminal when we open next year,” Aument said. “Another big milestone that’s happening right now is we are turning those spaces over to our world class airline partners. Korean Air, Air France, and Turkish Airlines are starting construction of the lounges that will bring a new standard of airport lounges to JFK. And, as we move closer to the end of the year, we’ll go into system testing to prepare for the opening next summer.”

However, the New Terminal One will not be a completed project when it opens in the summer of 2026. Further development is planned.

“We have some space reserved for further growth,” Aument said, adding that the program has two stages. “The first is opening next summer with 14 gates. By that time, we will have more than 50% of the widebody capacity at JFK. Soon thereafter, we’ll commence construction of the second phase, which has another nine gates of capacity.

“So, the whole program enables an airline to come into, obviously, a very popular destination such as JFK, to have a home at our terminal, and also to have the capacity to grow with them and to meet their aspirations,” Aument explained, before going on to underline the sense of duty that comes with delivering a project of such complexity and public significance.

“The responsibility that our team feels is not just about delivering this extraordinary experience for our customers, but we also believe we will be a major proof point in the US for how public private partnerships can be a really effective way to deliver airport infrastructure.”

The airport executive concluded by also expressing her wish that the successful completion of this project be used as a blueprint for other large public-partnership projects in the US.

“The model has been used in the US far less than in other countries around the world and we believe that by having a stage as grand as New York, we are able to showcase the public-private partnership model and how it can bring the latest technology, private capital and world class experience, as well as industry-leading sustainability initiatives like our microgrid.”

“It’s about a public-private partnership, bringing the best of government and the private sector together to deliver what’s going to be a new standard,” she said. “It’s very unique.”

The post JFK Terminal One CEO on how America’s largest terminal is taking shape appeared first on AeroTime.

Man on a mission: Pieter Elbers on turning IndiGo into a world-class airline

Miquel Ros — Tue, 08 Jul 2025 03:00:00 +0000

India is perhaps the greatest growth story in commercial aviation at the moment.

Over the past two years, India’s dominant carriers, IndiGo and Air India, have stunned the industry with unprecedented aircraft orders, each running into the hundreds.

This massive fleet buildup reflects the fact that, despite years of double-digit growth, Indian airlines may still only have scratched the surface of a huge untapped market. Within the next decade, it could see hundreds of millions of Indian citizens experience air travel for the first time.

And one of those leading the charge is Pieter Elbers, the Dutch aviation veteran who took the reins at IndiGo in 2022.

After nearly three decades at KLM, where he climbed the ranks to become President and CEO, Elbers left for India with a clear mission: to position IndiGo among the world’s leading carriers, while contributing to India’s emergence as one of the epicenters of global aviation.

In the three years of his tenure so far, Elbers has not only overseen IndiGo’s relentless expansion in its domestic market but has also outlined, and started executing, a much more ambitious plan to turn IndiGo into a major international player, too.

Sure enough, IndiGo hosted the 81^st Annual General Meeting (AGM) of the International Air Transport Association (IATA) in Delhi, June 1-3, 2025.

This event gathered hundreds of airline leaders from around the world. It was also attended by Indian Prime Minister Narendra Modi, who reiterated the strategic importance his government attributes to the continued growth of the Indian commercial aviation industry.

IATA’s AGM also provided AeroTime with an unmissable opportunity to meet face to face with Pieter Elbers and ask him about some of the most current matters relating to IndiGo’s expansion.

Unsurprisingly, the conversation started with the topic of fleet growth and aircraft orders. In fact, just two days before this interview took place, IndiGo kicked off IATA’s AGM with the announcement that it was doubling up a pre-existing A350 order.

Having already ordered 30 Airbus A350-900 aircraft back in May 2024, Elbers announced during one of the opening sessions at the IATA AGM conference that IndiGo was ordering an additional 30 of the type.

Pieter Elbers at the 2025 IATA AGM. Picture: Miquel Ros / AeroTime

This future 60-strong widebody fleet, together with the soon-to-arrive long range Airbus A321XLR aircraft, is a clear declaration of intent when it comes to the international markets.

“The Indian domestic market has grown a lot, and I still think there’s a lot of opportunity to grow,” Elbers said. “But perhaps it is [the] international [market] – given the huge Indian diaspora, given the fact that the Indian aspirational traveler would like to go abroad, given the fact that India is being seen by more and more companies and countries as a relevant trade partner – which makes us very confident that the international market growth will continue to be there. When I joined the company in 2022, we highlighted internationalization as one of the cornerstones. I pretty much see it as an extension of what was done before, but perhaps now more accelerated.”

Elbers explained how he sees IndiGo’s international expansion as covering a number of concentric ‘rings’ around India.

“The first group of international routes is clearly to the Middle East, the United Arab Emirates (UAE). That, I would say, is a natural extension of our network, having an expansion of that. The second group was centered very much around Southeast Asia, clearly a new opportunity for Indigo to build on.”

Elbers pointed out that Indigo was already present in these two areas, but has nevertheless been boosting its footprint there by adding capacity as well as new routes to places, such as Ras Al Khaimah (RKT) and Fujairah (FJR) in the UAE and Krabi (KBV) in Thailand.

“The third area, which is totally new for us, and we started two years back, is made up of Central Asia, Indonesia and Africa. And if I were to put India at the center and take a kind of ring around it, that’s our next natural scope of expansion,” he continued.

Elbers referred to the fact IndiGo had already been using its current narrow body fleet to reach destinations such as Baku (GYD) and Tbilisi (TBS) in the Caucasus, Almaty (ALA) and Tashkent (TAS) in Central Asia, Nairobi (NBO) in East Africa and Denpasar (DPS) in Bali, Indonesia.

“That [region] still has opportunities, but for that, we need the [Airbus A321] XLR, to connect it with multiple cities in India. For example, to fly from Bangalore to Bali, from Delhi to Bali and so on, we need the XLR. So that’s going to be its first deployment by the end of this year. That is the next natural step,” Elbers said, referencing the upcoming arrival in the second half of 2025 of the new long range A321XLR aircraft, of which IndiGo has 69 on order.

Omid Behzadpour / Shutterstock

Next, Elbers detailed his plans for the longer-range destinations:

“A totally new area is whatever is there outside that third circle: parts of Europe, parts of Asia, more in Africa… There are in fact going to be two types of fleets operating these. One is the XLR and the other one, clearly, is what we’ve ordered the A350s for.”

IndiGo is not waiting for the A350s before it starts tapping into new markets in Europe and elsewhere, though.

Earlier in 2025, the Indian carrier announced a damp-lease agreement with Norway-based Norse Atlantic Airways in order to operate some B787-9 aircraft on routes to Western Europe.

“Today we have one [B787]. We have signed up for another three. So, a total of four before the end of this year, and we’ve got two more coming in the first quarter of next year. So, the total arrangement is six aircraft: one now, three more before the end of the year and two more early next year.”

Elbers also shared his vision for the European market:

“Looking to Europe, you’ll see the typical widebody operations. First with the bridging B787s, and in the future, with the A350s, to places like London (LHR and LGW) and Manchester (MAN), which are quite far. Then, Athens and other places in the southern part of Europe are much more realistic to operate with the XLRs. The eight-to-nine hour [of flight time] range is probably a tipping point at which you move from an XLR to a widebody – again, very generically.”

IndiGo plans to operate the A321XLRs with 195 seats – 12 in business class, and 183 in economy. In this regard, Elbers confirmed that the A321XLRs are going to be fitted with IndiGo’s new ‘Stretch’ business class, although with a little more space than the one it currently deploys on trunk domestic routes within India. The final cabin configuration of IndiGo’s A350s has yet to be revealed.

The airline’s entry into the European market – where it currently has just a small toehold through its (now questioned) partnership with Turkish Airlines – will be strengthened by a broad-encompassing alliance with SkyTeam carriers:

“We have had a collaboration with Air France-KLM and Virgin Atlantic for the past three years. They fly from Paris, Amsterdam and London into India, connecting to our domestic network. We are now flying to Europe, starting in July into Amsterdam and Manchester, and we are connecting into them.”

Is IndiGo still a low-cost carrier?

While it started implementing a rather pure low-cost carrier playbook, IndiGo’s value proposition has been evolving over time. It is not just the fleet diversification, its extensive network of partnerships with other airlines and its entry into the long-haul market. In 2024 IndiGo launched also a business class product, which it calls ‘Stretch’, starting with some of its trunk routes in India.

“I don’t think we are a classic low-cost airline. We have a low-cost basis, but we’re not a classic low-cost airline. We’re not Ryanair. We want to maintain our cost leadership. We want to remain very cost competitive,” Elbers clarified.

IndiGo plans to keep on adding some of the service elements that are typically associated with the full-service carriers:

“We have introduced our ‘Stretch’ business class on domestic flights, we have a loyalty program which has been resonating very well in the market. And the fact that we have also announced we will also have our business class for Dubai, Singapore, Phuket and Bangkok is underlining that, I would say.”

However, Elbers added a nuance: IndiGo won’t be deploying the Stretch product throughout its entire network. Instead, it will keep it limited to selective routes.

“Contrary to some other carriers, we put products on routes where we feel it makes sense and not everything everywhere per se,” he added.

IndiGo Stretch

IndiGo also differs from most European and US low-cost carriers in that it facilitates connecting traffic.

“We have a significant percentage of connecting passengers. We’re not sharing precise numbers, but it is higher than European LCCs and lower than European network carriers like KLM or Air France. We facilitate it, since we connect major metro areas to lots of smaller cities. At places like Hyderabad, we have a significant percentage of connecting passengers.”

On India’s airports and hubs

To support all of this growth, India has been investing a great deal in airports over recent years and, as its Prime Minister confirmed at the 81st IATA AGM, there are plans to continue doing so for years to come.

Elbers takes pride in IndiGo’s very comprehensive geographical reach. As of June 2025, IndiGo was operating at 91 airports in India, meaning that 90% of the Indian population lives within 100 kilometers of an IndiGo-served airport.

“When it comes to the biggest capacity shortage, that was in Delhi and Mumbai and clearly the two new airports [Navi Mumbai Airport (NMI) and Noida International Airport (DXN), both of which are expected to enter service in the second half of 2025 – Ed. Note] are really helping us lift that off.”

Elbers reiterated that India’s sheer size makes a multi-hub approach a more reasonable option.

“Unlike, for example, Dubai (DXB), we have multiple hubs. From that angle I would like to compare our network growth more to the US majors, which have different strongholds throughout the country. Looking to the geographical size and scope and potential of India, it makes a lot of sense to operate from different places.”

He added: “We have Delhi, Mumbai, Bangalore and Hyderabad as our four largest points of operation. Kolkata could be added to that as number five. And that is, of course, coinciding with the fact that these are the metros of the country, where a lot of growth takes place. It’s actually Delhi, Mumbai, Bangalore, Hyderabad, Chennai and Kolkata, in that sort of line, which is also a reflection of the GDP of these cities.”

On navigating a complex geopolitical environment

One of the unavoidable topics in our conversation with Elbers was the recent conflict between India and Pakistan, which led to airspace closures. Elbers wouldn’t quantify the exact financial impact of the cancellations and re-routings that ensued, but he did comment on the general impact of this situation:

“I won’t be able to put a number to it, but what I am able to share with you is that we have temporarily suspended two routes, Tashkent and Almaty, because they would be circumflying Pakistan airspace and that would just exceed what the capabilities are, given the geographical range. We also plan to start flights from Mumbai into that region. It may take a bit of time, but then we will have that reinstated. But these are two destinations out of a total of 41 [international destinations], which puts it into perspective,” he said.

A potentially more serious issue is the re-routing of many westward international flights, but here again, Elbers didn’t appear too concerned:

“The longer flying time is affecting another set of destinations, from Delhi to the UAE and the Middle East. Flight times are a bit longer, but for us that is all manageable in terms of distance. Istanbul, of course, it’s also longer, but that’s flying with the 777s. There’s additional cost, but in terms of payload and range we can still do that.”

He added: “This has, of course, an impact on us, but we have, by now, worked our way around. We have found a solution. From an airline perspective, it would have been better if this [situation] was not there, but it doesn’t choke our operation. We have 2,300 daily flights and I think there’s something like 30 flights being affected. I think it’s important to realize that Indigo has grown so big and has such a huge diversity of network that, if there are issues in parts of the network, we have the opportunity to either reallocate capacity or re-emphasize other parts of the network.”

Another collateral victim of the military escalation has been IndiGo’s long-standing close partnership with Turkish Airlines.

Since the Turkish government sided with Pakistan during the border crisis, the Indian authorities have moved to cut ties with Turkey. This has led to IndiGo’s codeshare agreement being put into question on national security grounds. IndiGo was also damp-leasing some of Turkish Airlines B777 aircraft, repainted in IndiGo’s livery, to operate this route.

“The permits [to operate the Turkish B777s] have been extended for another three months, and by then, we will work on alternatives for that time frame.” Elbers explained.

Another source of geopolitical uncertainty is the ongoing and constantly evolving row about US trade tariffs and their potential effects – not just on supply chains, but also on the broader international air travel demand. Elbers appeared unfazed by this, too:

“One, I think the economy of India has a lot of domestic growth, demand and consumption, and that’s driving the GDP. Two, there seems to be some progress in the in the talks between the US and India. I don’t have a clear view on what’s the latest, but clearly, some of that progress is going on. And I guess with the growth of India, not just as a services hub, but also as a manufacturing hub, it should find its place. It’s a bit disturbing, but I don’t think it materially influences our progress.”

Can we expect more aircraft orders in the near future?

“We keep all options open,” was Elbers’ response to the above question, although he quickly added, “We have the world’s largest order book, 800 aircraft. Two years back we had 300 planes on order. With 50 planes a year, that would have been a six-year time horizon. What we have done now, with the 500-strong order, is basically extend that timeframe for another 6,7, 8 years, which takes us to a total [time] horizon well into the next decade.”

Some of the new aircraft will replace older airframes, but IndiGo is gearing up to double in size within the next five years.

“A way to look at it is that, today, we have in the range of 400-ish aircraft. We have said we are going to double [in traffic] by the end of this decade, by 2030, and we will have around 600 planes in operation by then. So, you can do the math yourself. That means I expect that we’re going to double our passenger numbers from roughly 100 million to 200 million. I could be off by 20 million, but that’s the sort of projection we’re making. We haven’t done the exact same math for 2035 yet. I think it’s important for us to keep some flexibility and room to maneuver.”

Elbers also commented on the choice of the -900 version of the A350, for now ruling out the larger A350-1000.

“I don’t think I should rule out anything – you never know – but we have decided to move to the –900. The [order] double-up which we have just announced, it’s again for the –900. For now, that’s the plane we will be looking at.”

He also commented on IndiGo’s regional fleet, praising its role, while appearing noncommittal on the possibility of additional future orders.

“We have some 46-47 turboprops in operation. It has helped us a lot in places like Hyderabad, where we have a very significant number of ATR operations. The ATRs are typically either feeding the larger metros, doing some small point-to-point routes, or serving the very remote areas with smaller airports which cannot handle jets. That number has actually grown quite significantly.”

The cargo business is also expected to make a contribution, particularly on the international front, Elbers said.

“We have three narrow-body freighters. We carry a lot of cargo in the belly [of our aircraft]. But we’re also preparing for when the A350 comes, because the A350 has a lot of cargo capacity, and all the steps we’re taking today are actually preparing for that timeframe.”

And how is IndiGo funding its massive aircraft orders? Elbers also commented on this:

“Traditionally, IndiGo has had a sale and leaseback model that was at the very foundation of the company. Recently, we have started to diversify some of our financing, some of our arrangements. Under the vision of the Indian government, financial leases are increasingly being done through the GIFT City [Gujarat International Finance Tec-City – Ed. Note] in Ahmedabad, a special zone which is being created to also start working on that.”

On embracing India

Pieter Elbers at the 2025 IATA AGM. Picture: Miquel Ros / AeroTime

The conversation ended on a rather more personal note, as Elbers, who often wears Indian-style clothing, reflected on his three years in the country:

“I moved to India three years ago. Before that I had the privilege of having a wonderful career at KLM, and I could not be more grateful and pleased with that. I had also the opportunity to live in Greece, Italy and Japan and that was wonderful… But by then I was 52 and I was approached for this role…It’s a very Indian company, and I wanted to be part of this team, this society. I believe that if, at the end of the day, you open your mind and your heart for that, it gets returned, and India has been very gracious to me in returning that hospitality.”

He added: “Sometimes, if you’re engaged and you connect, you get so much energy in return! India is a country full of contrast and diversity. If you embrace that…life is also too short to make it into a professional journey only. I wanted [India] to be part of my life, not to make this only a professional journey, because this is not just for the short term – like, ‘let’s get a few aircraft and fly a few routes’. We’re on a mission to make India into a global aviation hub, and to have Indigo as part of that journey.”

“I don’t regret a single step I’ve taken along that line and wherever I’ve gone in the country, people are nice and friendly and open minded,” Elbers concluded. “I have not felt excluded at any point in time. I decided to embrace it and that’s been returned with a wonderful warm smile and an opening of hearts. It has been very rewarding for me.”

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flyadeal’s Steven Greenway on Saudi Arabia’s growth, plans to expand to SE Asia

Jean Carmela Lim — Wed, 18 Jun 2025 07:59:44 +0000

Saudi Arabian low cost-carrier flyadeal is well on its way to strengthening its international reach, which it is doing one region at a time.

The airline’s current operations consist of 80% domestic and 20% international, but flyadeal plans to turn this into an even 50% split within the next two to three years.

On May 28, 2025, flyadeal announced that it had entered into a strategic partnership with Philippine low-cost carrier Cebu Pacific (CEB). The flyadeal contingent, headed by CEO Steven Greenway, flew to Manila to sign the Memorandum of Understanding (MoU), which covers a wet lease agreement and a wide range of opportunities in commercial cooperation and support in maintenance and engineering.

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AeroTime caught up with Greenway in Manila for an exclusive Executive Spotlight interview, where he spoke about flyadeal’s partnership with CEB, Saudi Arabia’s growth, US President Trump’s visit to the Middle East, the airline’s expansion plans, and much more.

flyadeal CEO Steven Greenway with AeroTime lead journalist for Asia Pacific, Jean Carmela Lim

Expansion target: Southeast Asia

Since its launch in 2017, Jeddah-based flyadeal has operated mostly Airbus A320 family aircraft, although it has also occasionally wet-leased A330 aircraft from other carriers.

Outside the Middle East region, the low-cost subsidiary of the Saudia Group has already expanded to Africa and southeastern Europe.

On April 23, 2025, the carrier confirmed an order for 10 Airbus A330-900neo aircraft. Although this is the flyadeal’s first official widebody order, Greenway said the carrier had been wet leasing five A330s and one B777 aircraft for the last two years.

And according to the CEO, flyadeal’s latest target is Southeast Asia, predominantly because of labor and religious traffic.

According to Migration Data Portal information from January 2025, the Gulf Cooperation Council (GCC) region, primarily Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates, hosts more than 22 million migrant workers, mainly from Southeast Asian countries including the Philippines, Vietnam, and Indonesia.

The Philippines, in particular, has a large number of migrant workers in the GCC region. According to a report by the Philippine Statistics Authority (PSA) from 2023, 10% of the country’s 114.9 million population were working and/or living overseas. In the GCC region, there are approximately two million Filipino migrant workers, with less than a million estimated to be in Saudi Arabia.

“It’s a massive movement. It’s large volumes, but low yield, that’s the critical piece,” Greenway said. “And so from that perspective, we just see this continuing to grow as the Kingdom keeps on investing, building and so forth.”

“The population is growing rapidly,” he continued. “There will be more demand for Filipino workers in Saudi Arabia, and we want to be able to support that right now.”

Image: Brunohitam / Shutterstock.com

In terms of religion, Islam is the most widely practiced in Southeast Asia, with 42% of the region’s population (around 242 million) identified as practicing Muslims. While it is not an Islamic state, Indonesia is home to the largest Muslim population globally, numbering approximately 241.5 million. This number represents around 13% of the world’s Muslim population. Indonesia currently sends 220,000 pilgrims to Mecca, Saudi Arabia annually, the largest Hajj pilgrimage population from one country.

“Southeast Asia is our target,predominantly because of labor and religious traffic coming in for Umrah and Hajj,” Greenway explained before going on to reveal the routes flyadeal intends to operate with the 10 A330-900neo aircraft.

“Think Indonesia, think the Philippines, and Malaysia, subcontinent in terms of India, and then Europe.”

Greenway estimated that the carrier will be able to launch services to these destinations within two and a half years.

CEB partnership: complementing peaks and lows

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Greenway shared that flyadeal’s milestone strategic partnership with Cebu Pacific was proposed over a casual dinner with CEB CEO Michael Szucs in Manila in early 2025.

“We [flyadeal] actually made a business trip down here in February to meet with the Cebu Pacific team because we were just about to complete and announce an order for the Airbus A330, our very first widebody order,” Greenway said. “And you know, sure enough, CEB has 11 of the aircraft. And when we asked Airbus who they think we should speak to, they said Cebu Pacific.”

During that dinner with Szucs, Greenway said that they worked out that their businesses had “a lot” in common.

He said: “Number one, obviously, we’re both low-cost carriers [LCCs]. Number two, the knowledge sharing on the A330 was invaluable. But number three, there were opportunities actually to partner on a couple of things, and the wet lease in terms of their aircraft coming to the kingdom was one such example.”

“So the genesis of the relationship, the first thing really was about capacity sharing, that is what we worked out pretty quickly, that the low season in the Philippines is actually the high season in the Kingdom and things in Saudi Arabia and our low season is Cebu Pacific’s high season,” he added.

The first phase of the carriers’ MoU will see flyadeal utilize two of Cebu Pacific’s Airbus A320 aircraft on a wet lease arrangement for the upcoming summer peak flying season in Saudi Arabia. Reciprocally, CEB is also examining wet-leasing flyadeal’s A320s during the busy winter period in Southeast Asia at the end of the year.

On June 5,2025, two of CEB’s A320 (registration RP-C4262 and RP-C4263) wet-leased to flyadeal were spotted at Ninoy Aquino International Airport (MNL) in Manila. The aircraft featured a customized livery with both CEB and flyadeal colors and branding.

On June 15, 2025, Greenway posted an update to LinkedIn, marking the arrival of the two aircraft and officially welcoming them to the flyadeal fleet.

Saudi Arabia: open for visitors and the new growth engine in the GCC

The Kingdom of Saudi Arabia was founded in 1932 by King Abdulaziz. For much of its 92 years, the country’s economy has been highly reliant on its petroleum sector, which accounts for approximately 30% of its GDP.

Until 2019, international tourist access to Saudi Arabia was quite limited. Its tourism sector was largely focused on religious pilgrimages and business. But on September 27, 2019, the Kingdom issued tourist visas for the first time, opening its doors to international visitors.

This is part of Saudi Vision 2030, a reform program launched by the government to diversify its economy and reduce the country’s reliance on oil.

Australian-born Greenway, who considers Saudi Arabia his home, observed that the Middle East’s current growth is comparable to what Asia was like a decade ago.

“My observation comes from when I was at Scoot / Singapore Airlines in Singapore. I remember the days from 2005 to 2015 or thereabouts, Asia had China as a growth engine in the region,” he said. “We have Saudi Arabia now as a growth engine in the Middle East. The country is now accessible, you don’t need any special visas.”

Riyadh at night. Photo: Saud Zh / Shutterstock.com

Greenway, who was a founding member and Chief Commercial Officer of Singapore Airlines’ LCC subsidiary Scoot, also shared that Saudi Arabia’s domestic market is growing at 15% per annum, which he considers “huge”. He added that both the Kingdom and the Middle East as a region are becoming destination spots.

“You’ve got to remember that not long ago, people actually just transferred through Dubai. Now they’re getting off and staying a week or two or three, visiting friends, going on holidays,” he explained. “So the region itself is just changing dramatically. It is seen as a destination point in itself, not a transfer point. And we have Saudi Arabia as an example now opening up to the world and being able to bring in tourism and so forth.”

He added that this was something that could have never been considered five years ago.

Why flyadeal remains an Airbus customer despite US President Donald Trump’s visit

A couple of weeks before this Executive Spotlight interview took place, United States President Donald Trump conducted his first major international trip for his second term, visiting the Middle East from May 13 to 16, 2025.

Trump’s four-day trip, which included visiting Saudi Arabia, Qatar, and the United Arab Emirates, focused on securing deals for the US. One of these landmark deals was Qatar Airways’ $96 billion agreement to acquire up to 210 Boeing 787 Dreamliner and 777X aircraft powered by GE Aerospace engines.

According to the White House, this is Boeing’s largest-ever widebody order and largest-ever 787 order. It is expected to support 154,000 US jobs annually, totaling over one million jobs in the US during the course of production and delivery of the deal.

Greenway told AeroTime that despite the massive agreement, flyadeal will maintain its Airbus order.

“We’ve been an Airbus customer since day one. We’re very familiar with the aircraft and think that it is the best fit for our airline.”

He added that, “like any good LCC”, flyadeal will not be mixing fleets.

“We already have somewhat of a mixed fleet in terms of an A320 as a baseline, with 39 A320s starting to arrive from next year, and now we have the A330s,” Greenway said. “That’s enough variety for us.”

He said that ordering aircraft from different manufacturers will only bring in unnecessary complexities.

“As an example, our A320 pilots only need 10 days training to get onto an A330 aircraft. If we had a Boeing aircraft, it would probably take four months.”

However, Greenway said that Trump’s visit paved the way to something positive in terms of travel in the Middle East, particularly to Syria.

“What interestingly happened for us from President Trump’s visit was something that no one expected, [and that] was the normalization of a relationship with Syria. So sanctions were lifted and so forth,” he said. “If we had this discussion six months ago, I would have never imagined that we were going to fly to Iraq, Lebanon or Syria. And that’s what we’re doing.”

During his visit, President Trump issued an executive order to lift sanctions on Syria. Greenway said that because of this flyadeal is now set to fly there in the next couple of months.

“After a terrible 10 plus years of civil war, the market has now opened up. Relations have normalized with the United States. We now have access to this market,” he said. “So that’s an incredibly exciting piece that we didn’t see coming, and that was actually because of his [Trump’s] trip and meeting the leader of Syria only a couple of weeks ago.”

Wow Check out the Billboards all over Syrian thanking Trump for lifting Sanctions for them! What did he get for doing this! pic.twitter.com/9iMUAIma3u
— Suzie rizzio (@Suzierizzo1) June 9, 2025

The advantage of a political science degree in aviation

Most CEOs typically hold degrees in Management, Finance, or other business-related studies.

A 2019 Forbes study found that 53% of Fortune100 CEOs held Bachelor of Arts (BA) / Bachelor of Business Administration (BBA) degrees, while 47% received a Bachelor of Science (BSc) degree. 45% of those with a Bachelor of Science majored in a business field such as accounting or finance.

Greenway, who has served in numerous senior management roles (President, CCO, CEO, Board) for a number of aviation and travel companies, holds a double degree in Economics and Political Science from the University of Queensland.

“I always enjoyed the theory of economics, so going to university and studying that was a no-brainer for me. I was never going to be a doctor or anything, and I thought finance was a bit too boring, so economics was the one for me,” Greenway told AeroTime.

As for Political Science, Greenway said that he opted for the course because he planned to work for the Australian civil service.

“My view was, I was going to work for the Department of Treasury or somewhere I could leverage my economics degree, and I very much enjoyed politics, so that’s why I studied it. It only took me another year and a half to get a double degree,” he said.

According to Greenway, the economics degree proved useful in the first 10 years of his career and it was “more practical” in terms of the work he was doing.

Early roles in his career included serving as Senior eCommerce and Revenue Forecasting Analyst for Qantas, Head of Sales and Distribution Strategy for Virgin Atlantic, and Head of E-commerce of Virgin Australia (then called Virgin Blue).

As for his Political Science degree, Greenway said it played a part when he progressed to more senior management roles that required the fostering of global relations.

“Once you get to a more senior level, you’re having to deal with countries, governments, government officials, embassies. And I’ve found that my Political Science degree has sort of come to the fore in terms of what I was learning 20 years ago. It’s actually practical for what I’m doing today.”

Flexible but tough: What it takes to thrive in aviation

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Greenway believes that there are three characteristics that allow people to thrive in an aviation career, particularly in the LCC sector:

A good cultural fit

“You can have words on a wall about a [company] culture, but I think culture is very organic and in some airlines it can be quite cliquey,” Greenway said.

Greenway believes that there is no “tick box” when it comes to a person fitting into an airline’s culture, and factors such as body language and personal interaction should be areas for consideration when both hiring and applying for positions.

“An LCC by definition, particularly in its management ranks, is quite small, so if you think that a person isn’t the right cultural fit, it’s probably not going to work,” he said. “It doesn’t mean the team has to be all the same size, but you’re looking for someone who can plug and play into the organization.”

Flexibility / willingness to multi-task

Another aspect that Greenway values in people is the ability to roll up their sleeves and “get into it.”

He added: “As an LCC, particularly with flyadeal, and I don’t think Cebu Pacific is any different, [people] don’t have just one job. You’re working on multiple jobs at any one time. Here I am being interviewed by you, and tomorrow I could be doing an aircraft leasing deal.”

Greenway also believes that being a multitasker involves having the willingness to say, “I’m not an expert, but I’ll find my way through.”

Stamina

Greenway said that the third element when working for an LCC is stamina.

“You’re going to get knocked around a little bit during your career. The LCC world is not easy. It’s very tough and you’ve got to be resilient. You’ve got to get back into the game, always focused and ready to climb that hill.”

Greenway said that all three of these attributes combined is more crucial than having a PhD or a particular degree.

“What can you bring to the table? Can you integrate effectively? Have you got a lot of resilience? Because you will have some times where you’re going to get knocked down, you need to get back into the game and keep on going.”

Attracting the right talent

In January 2025, AviationCV launched a pilot roadshow for flyadeal, which resulted in more than 800 applications.

Greenway said the roadshow had been “incredibly successful” and helpful in attracting the right talent.

“To be brutally honest with you, it [Saudi Arabia] probably wasn’t at the top of everyone’s list a couple of years ago,” he said. “Now, the Kingdom has opened up. People want to get to know what Saudi Arabia is because they’re going to make a decision not just about the employer, but the country they will work in. They want to know what they’re getting themselves into.”

Greenway with flyadeal pilots

Greenway said the pilot roadshow allowed flyadeal to convey to interested pilots not just information about the company, but also the changes in Saudi Arabia and what it is like to live there.

He added: “Hopefully, most people walked away and said, ‘You know what? That’s probably now at the top of my list.’”

The post flyadeal’s Steven Greenway on Saudi Arabia’s growth, plans to expand to SE Asia appeared first on AeroTime.

SAS’ CEO Anko van der Werff on realigning one of Europe’s most iconic airlines

Miquel Ros — Fri, 16 May 2025 03:00:00 +0000

In September 2024, Scandinavian Airlines, most commonly referred to as SAS, gathered staff, members of the media and partners at a venue on the outskirts of Copenhagen to mark the successful completion of one of the most momentous shifts in its decades-long history.

The Nordic carrier had not only exited a complex and life-saving restructuring process but had done so while performing one of the most radical realignments of any major airline in recent years, switching from Star Alliance to the competing SkyTeam airline alliance.

And at the helm of SAS during this eventful period, was Anko van der Werff, the Dutch aviation executive who joined the Scandinavian carrier as President and Chief Executive Officer (CEO) in 2021.

Prior to his move to Scandinavia, Van der Werff had held senior management positions at several major carriers, including CEO at Colombian carrier Avianca, Chief Commercial Officer (CCO) at Aeromexico, and Senior Vice President of Pricing and Revenue Management at Qatar Airways as well as several regional directorships at KLM, the flag carrier of his home country.

Throughout his time at these positions, van der Werff established a reputation for strategic thinking and operational excellence in challenging aviation markets, demonstrating particular skill in airline turnarounds and commercial transformations.

As the first anniversary of SAS joining the SkyTeam alliance approaches, AeroTime spoke with Van der Werff about what this pivotal change has meant for the historical airline and what’s in store for the future.

The conversation began with the fundamental question, what is the financial situation at SAS restructuring?

“As a short answer: it is much, much better. There have clearly been lots of improvements. We have come out with a significant number of changes when it comes to who SAS used to be and who SAS is today, not least the fact that we have new owners,” van der Werff said, referring to the change in the airline’s capital structure.

The airline executive also highlighted the advantages offered by each new major investor: the business orientation of private equity firm Castlelake, the presence of the Danish state, which anchors SAS in its Scandinavian home, and finally, Air France-KLM, which now owns 19.9% of SAS. The latter is particularly strategic for SAS since it links the carrier to one of Europe’s largest airline groups at a time of growing consolidation in the industry.

Anko van der Werff. Picture: SAS

“This [change of ownership] sets up so many different things for the company,” van der Werff explained. “Different owners mean a different board. It means different views on how to run the business, what do we think is important…and this gets reflected within the company.”

Next, van der Werff went on to comment on the airline’s improved performance over the last few months.

“Load factor is at an all-time high, which is good, because I think it was low. But we’re getting to at least levels that I’m more comfortable with. That has a very positive impact on ancillary revenues, since the more passengers we have, of course, the more we drive ancillary streams. So, yeah, there’s a lot to like at the moment.”

Van der Werff also referred to the rather quick switch from Star Alliance, where it was a founding member, to SkyTeam. The swiftness of this move was praised by SkyTeam CEO Patrick Roux in a previous Executive Spotlight interview published on December 11, 2024.

“It was a massive change for us after 27 years in Star Alliance,” van der Werff said. “I just have to say that it’s going remarkably well. We had quite some system integration with Star Alliance. We and ended that literally overnight and it went flawlessly.”

“We had an hour of some boarding group issues at our hubs and that was solved within an hour and a half, which was quite amazing,” he added. “And ever since it’s been going extremely well.”

Van der Werff stated his satisfaction about how inter-partner traffic flows, the number of tickets that airlines sell on each other’s networks, are already reflecting the new relationship with Air France-KLM.

“We already see very solid numbers coming out of the Air France-KLM relationship. In fact, these have now surpassed the ones we had with Lufthansa Group. So, that is also telling! And there is still a path forward and this is the opportunity to work closer together with Delta Air Lines, Air France-KLM and Virgin Atlantic,” he said. “We have been very clear and outspoken about us wanting to be part of that joint venture at some point in the future.”

Here, van der Werff was referring to the joint venture established between these three SkyTeam airlines to manage their transatlantic traffic together.

As a region, Scandinavia is currently covered by these arrangements, but so far SAS is not part of them. So, the Nordic carrier is effectively competing with its partners in these markets.

The Dutch executive noted that customers would benefit from SAS also being party to this joint venture.

“A joint venture is really the next level of a codeshare,” he explained. “A codeshare is just literally that you’re able to sell each other’s flights but with a joint venture, you’re able to coordinate on capacity. So rather than having, for instance, two flights leaving at the same time, we can talk to our competitors and say, ‘Hey, listen, let’s move one of these flights to another time slot’, so with a better spread of the day of your flights, you can increase connectivity on both sides.”

He continued: “We can offer solutions that are far easier for our customers and do so in a much more unified way. Currently, we cannot do that because we’re competitors.”

However, the continued growth of the transatlantic market seems far from assured. Does vander Werff think traffic numbers reflect simmering political tensions between the United States and Europe and the potential unravelling of the once close relationship between the two sides of the North Atlantic?

“We’re starting to see things, not so much for spring and summer. That’s holding up, I think, because a lot of those bookings were already in [place]. For the winter season, we see weakness. That is starting to emerge as a theme,” he said. “It’s definitely impacted [the market], and [it] is not as strong as it was a few weeks and months ago.”

Despite geopolitical tensions, which not only include the transatlantic rift, but also Russia’s war in Ukraine [for example, on April 30, 2025, SAS quantified the number of seats lost to the Scandinavian airline market as a consequence of airspace closures to be 1.2 million seats– ed. note] and the ongoing conflicts in the Middle East, van der Werff remained upbeat about the opportunities brought about by the SkyTeam membership.

“We unlock a very unique part of the world. It’s very high up north and some of its destinations are truly remote, but it’s got a population that is eager to travel, with a high GDP per capita, high propensity to travel,” he said. “These are very strong economies. That is what we bring to the table, to both SkyTeam and possibly, in the future, to a joint venture.”

However, SAS is not the only player in the Scandinavian market. Over the course of the last couple of decades, and despite having faced financial issues of its own, local low-cost airline Norwegian has emerged as a formidable competitor.

However, van der Werff pointed out some key elements that set the two airlines apart.

“There are a few very big differences: we’ve got widebodies, we fly to the US, to Asia. We do cargo on widebodies and long-haul. Again, we’re the ones reintroducing business class on European flights and on long-haul we, of course, had it already. I think there’s a different composition.”

Redefining the SAS product

One of the key novelties unveiled by SAS in 2025 has been the reintroduction of a proper business class on its European flights.

Until recently, SAS had a single cabin on short haul flights and offered its customers the possibility of purchasing some extra elements of service as ancillaries. But now the airline offers a new business class in a dedicated section of the cabin.

SAS’ new Euro business class cabin will still have six seats abreast, but the middle seat will be blocked, and passengers will also be able to enjoy some differentiated service elements, such as better inflight food. For example, in April 2025, the airline unveiled its “SAS Flavours” initiative to revamp its inflight catering offering.

But van der Werff was also keen to point out that the new business class product was the result of an internal assessment of market conditions rather than, as some analysts suggested in the media, a request from the airline’s new owners.

“It is actually funny because some people think that we’ve done it just because of SkyTeam and that’s simply not true. We made our own assessment and saw there is a willingness to spend on premium products, and until now, we had not been offering one. So, it’s about segmenting the cabin differently. It’s about adding a product that we didn’t have and it’s a product that our competition has, so we want to make sure that we’re on par.”

However, van der Werff did not deny the new premium cabins will facilitate the offering of a more consistent experience to passengers connecting with one of the partner airlines.

“The whole SkyTeam move made it easier because there’s the alignment on products. So, when we connect passengers that may be flying one way with SAS over the North Atlantic and then come back via Air France-KLM or connect with Delta, we want to offer a seamless product. But it had already started well before [the move to] SkyTeam. We wanted to do it ourselves because we really believe that the additional product, the segmentation in the cabin, is beneficial to us.”

Van der Werff also delved into the role each of the different SAS sub-brands, SAS Connect and SAS Link, fulfill within the company.

While there is not much difference in terms of passenger experience between SAS and SAS Connect, the regionally focused SAS Link does have some marked particularities, not least of which is that most flights are operated by other airlines under contract.

Van der Werff said: “It’s very simple. When you look at, for instance, at the wet leases that we have with CityJet and BRA [two airlines that operate regional flights in Scandinavia on behalf of SAS – ed. note] , those all operate smaller aircraft that we would not have in our own fleet, or that we would even want to have in our own fleet.”

“We have been looking at ways to simplify our fleet,” he added.

Next, van der Werff commented on fleet strategy and did not mince his words when it came to pointing out the issues SAS is facing, including potential tariffs on engines and aircraft.

“Our regional product with SAS Link currently uses Embraer E1s and we have always been quite open about the question of whether we should go to a mid-sized solution, which could be either the Embraer E2s or the Airbus A220. The engine issues have definitely held us back from taking an important decision there,” he explained. “I think at this stage we’d also really need to have a very good look at what the tariffs could be on those aircraft because the engines for both of those aircraft are Pratt & Whitney, coming from the United States. What are the tariffs on those engines going to be?”

“We will not pay the tariffs,” he stated. “Let it be very clear that we will not be the ones absorbing that cost.”

What does seem clear is that the new Euro business class will not be offered on SAS Link aircraft, at least not for now.

“We’ve had long discussions on that. On the (mainline) A320s, we block the middle seat so that everybody has a window or an aisle, but this is already the case on SAS Link.,” explained van der Werff.

“But what about the airline’s long-haul strategy?”

Next, we touched upon long-haul strategy.

“We believe that we are under-indexed on long-haul. We do want to do more on long-haul. In the next 18 months, we are covered. We’ve got two A350s coming in right next year. So, that is already, at least until the summer of 2026. Beyond that, I think we would be looking at an additional number of aircraft, either A330s or A350s that we can deploy in 2027, 2028 or 2029. And then, at some point, not yet as a first step, we really would like to take a decision about the future,” van der Werff said. “Are we going to phase out the A330s and go all A350s? There are some options on the table, but that’s really not for today. For now, we’re really focused on building out what we have before the end of the decade, at least.”

SAS returned 12 aircraft to lessors during its crisis period. Van der Werff confirmed that these are now gone for good, although he is already thinking about the options to reconstitute the fleet over the longer term.

“I think that was part of the right sizing. We still had some Boeing 737s that were due to leave the fleet in any case. We had old A340s that left the fleet, and we feel very comfortable with where we stand today on that.”

Van der Werff referred again to the possibility of adding Embraer E2s or Airbus A220s for certain roles, although this seems to be out of the question in the short term.

“With the number of widebodies that we’re having and with the wet leases we have signed, we don’t need a quick fix. That would really be a medium-term project, not something for the next year or two, then we can really go into something else.”

But engine issues and tariffs still loom on the horizon.

“The engine has been a stumbling block for many airlines over the last years, and now there are the tariffs, So, I am only going to repeat what I said earlier: we will not be the one absorbing the cost of the tariffs.”

One aircraft that has opened up a number of new opportunities for SAS is the A321LR, here’s what van der Werff said about it:

“We have the A321LRs, and they work really well. We can use them in two different ways. Either on new markets or to build frequency from the hubs. For instance, this year, instead of having one widebody going to Newark (EWR), we’re splitting it with the A321LRs: one goes to Newark, the other to (New York) JFK. I also believe we can add a second US destination from Stockholm (ARN). That’s something that we’re looking at.”

Angel DiBilio / Shutterstock

The widebodies, van der Werff confirmed, will be based in Copenhagen (CPH), from where the airline plans to launch two destinations: Seattle (SEA) and Seoul (ICN), in May and September 2025, respectively.

“And there will be more to come. We have, of course, a list for 2026, 2027 and 2028, when those new A350s come in. North America and Asia remain, of course, the ones that we are primarily looking at. But honestly, once you start building out that hub, and once there is more of a feed, we believe, other things in the world will work.”

On SAS sustainability leadership

“Scandinavia is truly focused on nature. I’ve lived in six or seven different countries around the world, and here it is different. In the rest of the world, sustainability is more like a project, but here it is really a way of living,” said van der Werff when commenting on the airline’s multiple investments and partnerships in this space.

These include sustainable aviation fuel Sustainable Aviation Fuel (SAF), as well as hydrogen. SAS is also a partner of Airbus ZEROe program and was one of the early backers of Heart Aerospace, a Swedish startup which recently relocated to California, US, and is developing a hybrid-electric regional airliner.

“Heart Aerospace fits in[to the airline’s sustainability initiatives] because we think electrical aviation could be interesting on short sectors, domestic markets, secondary and tertiary cities, like in northern Norway, northern Sweden, even connecting the major cities in Sweden, such as Stockholm and Gothenburg, for instance. We want to be part of that development too,” explained van der Werff.

He added: “It requires a bit of a change of strategy because many of these routes are now operated by others. BRA has 75 seats, and Heart Aerospace, the first aircraft they intend to make, is a 30-seater. But when Boeing started producing airplanes, they didn’t immediately come up with the 747 or the 777. When Airbus started, they didn’t immediately have the A350, so we want to be there. We want to make sure that we can support them and actually a part of our network could use these aircraft.

“Would we rather have a 100-seater than a 50-seater? Yes, for sure. Would we rather have a 150-seater that’s fully electric and can fly right to 3,000 kilometers? Yes, for sure. But you’ve got to start somewhere.”

Heart Aerospace ES-30 in SAS livery

However, SAS is placing most of its hopes on scaling up SAF production, particularly synthetically produced e-SAF.

“It’s definitely more than a declaration of intentions. We are absolutely buying SAF already,” van der Werff said. “In fact, the data for last year [2024] was that Air France-KLM was the airline with the highest percentage of sustainable aviation fuel, and we were second, very close to Air France KLM, but they beat us, and we got in second in the world. So, we are buying it. We’re using it.

“However, if you look at the ambition levels, and if you also look at regulations, we do need to increase production of sustainable aviation fuel or e-SAF considerably or at least find different technological solutions. And that is why we’re spending time on electrical aviation, and we’re still spending time with Airbus on hydrogen aircraft. I mean, it’s three paths that we’re exploring.”

Returning to competitiveness

Being based in Scandinavia, SAS operates in a high-cost environment. This used to be a major issue for SAS when competing with airlines elsewhere with a much lower cost base, such as the budget carriers.

What is the current cost level at SAS? And is van der Werff satisfied with where this stands after the restructuring?

“I think you can never be satisfied, right? We’re following the plan, which was to be profitable this year, so we’re following that, and I think we’re even slightly ahead of it,” he said. “But there’s plenty of geopolitical tension and excitement around us. So how will that be reflected in the future? We still have to see.

“I think it’s going to be a matter of normal day-to-day cost management as an airline. I have been in this industry for 25 years and I don’t think any of us have ever been complacent or happy with whatever cost level we have. I heard someone say yesterday that this industry is a lightning rod for anything bad that happens in the geopolitical world. So, you can never be satisfied. We always have to keep on working at it.”

However, one thing van der Werff is particularly proud of is SAS’ operational performance.

“Last year we were in the top 10 in the world, ninth in the world in terms of punctuality. And this year, in March [2025], we were second in the world, only beaten by Saudia, who will never be faced with any snow or hail.”

To illustrate the challenging climate conditions in which SAS often must operate, Van der Werff pointed out that on the day the interview took place, in late April 2025, one airport was still closed in Norway due to bad weather.

“It’s been really astonishing to see how well the teams have done that,” he said. “Really. Hats off to them.”

In April 2025, just days after this interview took place, aviation data company Cirium published a report that placed SAS at the top of that month’s global airline punctuality rankings.

So, what plans are in the pipeline to ensure SAS can continue building on its current successes?

Van der Werff said: “We’ve always said that SAS Forward was a project for 2027. So, there is more to be done, and we really want to make sure that we fully get there. There are a lot of things going on for us. I hope that the world will behave as it did until a few months ago, and that we can go back to some form of normality. That would really be very useful.”

The Dutch executive continued to outline his most urgent priorities at the head of SAS.

“This year is all about continuing to build our relationships with the SkyTeam airlines. There are still a number of codeshare agreements in the pipeline that still have to come online. Then, there is the deepening of relationships with Air France, KLM, Virgin Atlantic, Delta,” he said. “I really would like to be part of European consolidation as well. It’s not a decision we can take, but I hope it’s a decision that Air France-KLM, Castlelake and the Danish state will take. I think there’s a logical outcome there.”

“We also have the business class introduction at the end of the year,” he said, adding that the carrier expects to welcome additional aircraft to the fleet, meaning greater growth and hopefully new, exciting destinations.

Van der Werff also took the opportunity to mention the future 3,700 square meter flagship lounge SAS plans to open in Copenhagen in 2027.

“So, there’s lots to like and, at same time, the SAS forward project is still running,” he said. “And we have our own decisions to make, so we’ll make sure that the organization is efficient and that we drive the necessary changes. And there’s more to come.”

Finally, what has Van der Werff’s tenure meant personally? How does it feel to steer such a prominent Nordic brand into a new strategic environment?

“It’s probably still too soon to speak about it, really,” he said. “It’s not fully digested yet because I’m so into it. So, you will probably have to ask me in a number of years.”

“What I have said all along, and I really mean it, is that I think the SAS brand and its role in society, it’s so beautiful. I honestly feel privileged to have been in this position,” he said. “It’s been extremely hard work. It has been, and still is, very challenging, but when I look at it, at this beautiful company…it’ been a fantastic ride.”

“And when I look again, I’ve said it to you earlier in the interview, but living here, amidst such stunning nature. It is so beautiful,” he added. “You feel so humble in that nature. You feel so inspired by it.”

The post SAS’ CEO Anko van der Werff on realigning one of Europe’s most iconic airlines appeared first on AeroTime.

Volotea CEO Carlos Muñoz, the man behind two successful European airlines

Miquel Ros — Fri, 04 Apr 2025 08:10:15 +0000

Few people in the airline industry can match the entrepreneurial record of Carlos Muñoz.

In just under a decade, Muñoz launched two of Europe’s most successful airlines. After the sale of his first success, Vueling, to Iberia (now part of the International Airlines Group), he launched Volotea in 2012, an innovative low-cost carrier connecting Europe’s small and mid-sized cities.

What’s more, Muñoz is a great communicator who does not shy away from expressing his views on a range of matters, from his early steps as an aviation entrepreneur to the key ingredients in the success of a low-cost airline venture.

Muñoz welcomed AeroTime at Volotea’s offices in central Barcelona for an hour-long conversation in which he revisited some of the key moments of his career, shared some valuable insights about his current venture, Volotea, and discussed some of the general trends shaping the European airline industry.

From oranges to aircraft

Remarkably for someone who has built two of Europe’s most successful airlines in such a short period of time, Muñoz was not involved in the airline industry until his thirties.

The scion of an agribusiness dynasty in southeastern Spain, Muñoz explained that from an early age he had always thought his career would ultimately gravitate towards the family business. However, a two-year stint studying for an MBA at Harvard Business School would drastically change this trajectory.

“There have been several generations of entrepreneurs in my family, so I guess I’ve got a bit of this in my DNA as well,” he said. “But it was in Boston, when I studied at Harvard in 1998, and then in California, working for McKinsey, that I started thinking about launching a business of my own. Five of my best mates at the MBA had already started their own companies and we were talking about this all the time.”

This, he said, is probably what gave him the entrepreneurial “bug”.

For some time, though, and while still pondering what sort of venture to launch, Muñoz started working at management consulting firm McKinsey. It was there while working on a consulting engagement, that Muñoz was given his first glimpse into the airline industry.

While Muñoz’s consulting work did not see him working with airlines as direct customers, “an assignment for a financial services firm involved a detailed assessment of the low-cost airline model”.

“This was the first time that I came across it and I got struck by its simplicity, its clarity and its transformational power,” he continued.

Launching Vueling

Even then, it would still take some time for the airline industry to feature in Muñoz’s plans. This would have to wait until late 2002, when a group of airline pilots came knocking on his door. By then, Muñoz was back in Spain working at a private equity firm in Madrid.

The pilots pitched him a project to launch a new carrier which would operate between Spain and the United Kingdom using Boeing 727 aircraft and, while Muñoz remained unconvinced about some aspects of the project, the idea piqued his curiosity.

After that first encounter, Muñoz said he could not stop thinking about the idea of starting a new airline, even during that year’s Christmas holiday, which he spent in California.

At the time, low-cost airlines were in their infancy in Europe. Ryanair and easyJet were already operating, and some other carriers had launched in Germany as well as several other countries, but without much to show for it at the time.

Altogether, this accounted for barely 7% of the market. What’s more, southwestern Europe (Spain, France, Portugal) was not particularly well served by this new breed of airlines. So, Muñoz spotted an opportunity.

In early January 2003, as soon as he landed back in Europe, Muñoz gathered the pilots and pressed them to invest together in the project. He even set up a firm, which he called Evia, an acronym for “European Ventures in Aviation”, the kernel of what would become Vueling. But, to his surprise, his counterparts got cold feet when the time came to make a move. He was on his own…but not for long.

Aware of the need to bring industry-specific expertise on board, Muñoz found a co-founder and investor in Lázaro Ros. Others would follow suit, such as venture fund Apax Partners, US airline JetBlue, and Planeta, a Barcelona-based media group.

The new airline finally launched in the summer of 2004, with what would soon become a household name: Vueling. The new airline soon began to gain traction, growing quickly, to the point that it was ready for an IPO less than two and a half years after its launch.

At that point, however, Spain’s flag carrier, Iberia, began to get restless and made some moves of its own. After an initial offer to acquire Vueling was rejected, Iberia launched its own Barcelona-based low-cost carrier, called Clickair. The new airline was to be a sort of “anti-Vueling”, tasked with neutralizing the new low-cost threat before it got too big.

With both airlines soon locked in a fierce price war, something had to give.

“They lost a lot of money and made us lose money as well,” Muñoz explained. “The situation ultimately led to the merger of the two companies.”

“Even if I opposed the merger at the time, the reality is that they did it pretty well. I was concerned that Vueling would just be swallowed into a larger group and disappear, but this hasn’t actually happened,” he added. “Vueling has since thrived and grown into a €3 billion a year business. What’s more, the brand has been preserved, as well as many aspects of its original culture.”

However, one consequence of Iberia’s acquisition of Vueling and its integration in the International Airlines Group (IAG) was Muñoz’s departure.

Exit Vueling, enter Volotea

But Muñoz wasn’t out of the airline business for long. As soon as he left Vueling, he began plotting his next airline venture, a project that would eventually become Volotea.

It was not all plain sailing, though. Muñoz explained how, contrary to what tends to happen with second-time founders with a successful first exit, finding investors for his new airline venture proved to be a tough challenge. While it had taken just six months for Vueling to move from the idea stage to securing its first major investors, raising funds for Volotea took no less than two years, from 2009 to 2011.

Investors were finally found, led by CCMP, a US private equity fund and the new airline, Volotea, finally launched in April 2012.

Rather than facing the major low-cost carriers head on, this new venture was aimed at a relatively untapped market: directly connecting small- and medium-sized cities in Europe while bypassing the main hub airports.

Muñoz always avoids referring to Volotea as a “regional airline” because the term is commonly associated, particularly in the US, with an entirely different business model based on feeder airlines, which often enjoy little public recognition.

“We are neither a feeder, nor [do] we serve the large point to point markets as the large low-cost carriers do,” he said. “Volotea’s market opportunity was much less evident than the one we tackled with Vueling.”

He then turned to a stack of paper reports on one of the office shelves.

“Here is the data,” he said. “Nantes, Toulouse, Bordeaux, Lyon, Verona, Venice…these cities were all badly served.”

An opportunistic fleet choice

Besides the uniqueness of its business model, Volotea surprised many in the industry with its rather peculiar choice of aircraft: the Boeing 717. This aircraft type, of which only 156 have ever been built, was a legacy model designed by McDonnell Douglas before the latter was acquired by Boeing in 1997. By the time Volotea launched in 2012, though, the Boeing 717 was pretty much on its way out.

This provided Muñoz with a rather unique opportunity to acquire an aircraft of the right size for the job at advantageous prices.

“Southwest Airlines had just acquired AirTran [Airways] and found itself with a bunch of B717s that it had no use for. So, Boeing Capital, which was the actual owner of the aircraft, was interested in finding a new operator for them,” explained Muñoz. “It was a really quick negotiation, and we got really good terms.”

The B717 worked well for Volotea at first, but its small numbers soon became an obstacle for Volotea’s further expansion, particularly after Delta Air Lines cornered some of the last few available airframes to boost its own fleet.

At this point, Volotea began to switch to the Airbus A319 and, later, to larger A320s, which, as of April 2025, make up the majority of its fleet. The transition to an all-Airbus fleet was accelerated by the COVID-19 pandemic.

Choosing your niche wisely

But isn’t the A320 too large for the markets where Volotea operates?

“While we have increased the number of seats per aircraft to 168 on average across our fleet, if you look at the other operators, the likes of Wizz Air, Vueling or Ryanair, they have also been up-gauging heavily,” Muñoz explained. “So, the differential with them has gone down a bit, but not by that much. We had an average differential of around 50 seats per aircraft in the past and now is somewhere around 30.”

Markus Mainka / Shutterstock

Here, Muñoz pointed out a curious fact, since Volotea started introducing larger aircraft, the overlap with other low-cost airlines has actually gone down.

“In terms of ASK [available seat kilometers] overlap, we are now at 6% with regards to Ryanair, and we had been at 12% in the past. This shows, in my opinion, how well positioned we are on those thin routes. Those small markets are certainly not off-limits to other operators, but we have become the specialists.”

Muñoz shared some figures to illustrate this point: while Volotea’s average route has 28,000 seats on offer, Ryanair and easyjet routes are in the 80,000 to 100,000 seat range on average and Vueling’s can be as high as 170,000.

According to Muñoz, the fact that Volotea’s growth has happened without really overlapping with other major European low-cost carriers, all while the latter were adding hundreds of aircraft and routes, shows the formidable development of the market in Europe over the last decade.

“We have the strong conviction, and this is not just a vision, it’s an idea backed by figures and analysis, that we are just getting started,” Muñoz said enthusiastically. “If we keep linking the dots across Europe, we could triple the number of routes we operate at the moment.”

But Volotea is not just expanding its geographical footprint, it is also growing by smoothing out seasonality in many of its current markets.

“At the very beginning, our activity was heavily concentrated in Q3. In our first year the three peak summer months represented 57% of our business. Even if this figure decreased a bit later on, between 2013 and 2018 it still represented 45 to 50% of our revenue, and we are now at 33%.” Muñoz explained. “We used to operate many of our routes for only three months a year at first but, as people started to get familiar with our services, we were able to extend those services to six or seven months in many cases and some are even year-round now.”

During the summer months Volotea uses the aircraft intensively, some for 12 hours per day, but the carrier shows no qualms about grounding aircraft whenever demand drops.

“You must get rid of the idea that the aircraft have to be flying all the time,” Muñoz added. “You don’t need to fly when it’s not profitable enough to do so.”

Here, Muñoz was referring to US airline Allegiant, which also has a marked seasonal traffic profile. Allegiant’s model, he said, provided some interesting lessons for Volotea.

“It’s a different way of thinking [about] the low-cost model. Some large operators prefer large, new planes because they are focused on bringing total costs down. Others, like us, are focused on the margin that each flight brings, so we prefer mid-sized, mid-life planes because, even if costs are low, if you fly the aircraft empty, margins are going to be negative,” he said. “With this model, you must have mid-life aircraft. It doesn’t make sense to pay top dollar for new aircraft if you are not going to have them flying all the time and year-round.”

Leisure traffic is still especially important to Volotea.

“It’s approximately 50%,” Muñoz said, going on to point out how VFR traffic [Visiting Friends and Relatives – ed. note] is now around 40%, particularly in places like France, where there is plenty of domestic mobility. For example, students going home and people with second homes. The remaining 10% is business traffic. Here, Volotea’s value proposition is clear – making it possible for small- and medium-sized businesses in smaller cities to skip cumbersome connections at big hubs.

Despite its marked singularities, Volotea shares some traits with other low-cost airlines, notably a product in which ancillary revenue plays a major role.

Muñoz, who put the share of ancillaries in Volote’s revenue “at around 40%”, is particularly proud of Megavolotea, the airline’s membership program, which allows regular travelers access to a number of ancillary services in exchange for an annual fee.

“Traditional low-cost carriers have quite a bad image in countries like France where we have a strong presence. There we have, instead, a positioning that people love. We are not pushing ancillaries aggressively; we don’t pressure passengers to buy ancillaries. In fact, half of our customers don’t buy any ancillary at all, they just purchase the ticket,” he said. “But we offer them the option to buy Megavolotea and, for those who fly regularly, it is a no-brainer. In many cases it pays off already with the first trip.”

On the European competitive landscape

Muñoz also shared his thoughts about the competitive environment and the ongoing consolidation in the European airline industry.

“I am not surprised by the consolidation among Europe’s large airlines,” he said. “About the big groups swallowing medium-sized airlines like ITA, SAS, TAP…”

In fact, Volotea appeared on the sidelines of the recently frustrated merger between Iberia and Air Europa, Spain’s two largest airlines.

While not a party to that transaction, Volotea stood ready to step in case the European competition authorities had forced Iberia to divest from some of its activities at Madrid-Barajas Airport (MAD) as a condition to approve the merger. The plan contemplated Volotea going into a partnership with Abra Group, which owns Colombian airline Avianca as well as Spanish charter and ACMI operator Wamos, in order to create an alternative hub in Madrid.

Muñoz explained how, should it have gone ahead, the plan would have been quite consequential for the future of Volotea.

“It’s true that we would have deviated a bit from our core strategy. In some way this would have been like creating a ‘Volotea B’ within Volotea, but the opportunity was too good to pass,” he said. “We would have based some 20 aircraft in Madrid, and we would have worked with partners to feed that capacity. I can’t share all the details, but there was a plan.”

But the plan never went ahead. In August 2024, Iberia abandoned its project to acquire Air Europa following the serious objections expressed by the European Commission competition watchdog.

Muñoz further commented on the latest corporate moves in the airline sector.

“What surprises me a bit is that, so far, there hasn’t been more consolidation in the low-cost segment. There has been talk about it for a very long time. There were even rumors of Wizz Air being interested in acquiring easyJet, both have, actually, very complementary geographical networks.”

Could Volotea be part of any such consolidation move?

“We are in a different market altogether. We prefer to be the head of the mouse rather than the tail of a lion,” replied Muñoz. “We like to be the leader in our markets, and we don’t compete head on with many other airlines, particularly the legacy ones. We don’t go into their main hubs, we don’t go much into Madrid or Frankfurt, etc. We have a collaborative attitude.”

Muñoz pointed out how Volotea’s network is complementary to that of some of the legacy airlines and how this has facilitated a couple of strategic partnerships.

In Germany, Volotea has a commercial cooperation agreement with Lufthansa’s subsidiary Eurowings to cross-sell tickets on their respective networks. And in Greece, another of Volotea’s major markets, local champion Aegean Airlines, has emerged as a strategic partner for the airline and not just on the operational front.

In September 2024, Aegean Airlines became a shareholder in Volotea after providing half the capital in the Spanish airline’s latest funding round. The deal took the form of a €50 million convertible loan which will likely see Aegean Airlines take a 17% equity stake in Volotea.

“This is working very well, we are very complementary, and I would not rule out that we strengthen our links,” said Muñoz, who also highlighted the importance of the Greek market for Volotea.

What’s next for Volotea?

Is Volotea planning to expand its geographical reach and add new countries to its route map? While Muñoz did not rule out adding new markets opportunistically, he was clear on this point.

“Our core markets are Spain, France, and Italy, as well as Greece where we work together with Aegean Airlines and Germany, where we do so with Eurowings. We also have some presence in other places, like north Africa, in Morocco, Algeria…but we still have some way to go in our core markets, in terms of new routes and bases. I think that in the next five years we’ll be still be focusing our growth on our core geographies.”

A lingering matter is the IPO, which has long been on the cards. It was first talked about over a decade ago, but the listing has been called off repeatedly in that time.

“Technically we are IPO-ready. We have got the banks lined up, have talked investors…but we are waiting for the right moment,” Muñoz said. “If the market is bullish and responds well to big IPOs, then smaller companies will have better chances to IPO as well.”

When it comes to the future of the fleet, Muñoz confirmed the continued fleet up-gauging, with the A320 progressively replacing the few remaining A319s.

“We generally like the A320 better and, in fact, the A319s are only used in some 10 markets which all have some particularity, be it a PSO [Public Service Obligation – ed. note], some runway constraint, like in Florence (FLR), or because it is the Airbus shuttle [Volotea was selected in 2019 to operate the air service that links Airbus’ different facilities across Europe – ed. note].”

Overall, Muñoz is optimistic about the future, although he expects growth to slow down a bit in 2025.

“I am not for growth for the sake of growth,” he said. “We will grow if it is profitable and sustainable to do so. With the current conditions in the aircraft procurement market, we’ll not be adding much capacity. How fast can this situation change? I don’t know. If the aircraft market cools down, obviously we’ll add more planes faster than if it doesn’t.”

“Our activity is now double what it was in 2019,” he added. “And our five-year vision is to double again in size.”

Volotea has also been active in a number of sustainability initiatives, including a direct investment in a Spanish-Australian startup called Dovetail Electric Aviation, which is developing propulsion systems for electric aircraft.

However, Muñoz sees Sustainable Aviation Fuel (SAF) as the only realistic option to decarbonize aviation in the short term.

“SAF production is ramping up and we have not had issues with securing the supply necessary to meet the most immediate mandates. In the longer-term SAF production must go up, though, I think we can all agree on that,” he said.

The post Volotea CEO Carlos Muñoz, the man behind two successful European airlines appeared first on AeroTime.

Pegasus Airlines CEO Güliz Öztürk on leading Europe’s most profitable airline

Miquel Ros — Fri, 14 Mar 2025 04:00:00 +0000

Strategically based out of Istanbul’s Sabiha Gökçen International Airport (SAW), Pegasus Airlines has emerged as one of largest low-cost carriers in Europe, with a network stretching from northwest Europe all the way to Middle East and Central Asia.

Güliz Öztürk made headlines in 2022 when she became the first female CEO of a Turkish airline. While her tenure in the top post at Pegasus Airlines is relatively recent, Öztürk has held C-suite positions at the airline since its early days, when the business model pivoted from charter to that of a low-cost carrier.

AeroTime spoke with Öztürk during the 2024 CAPA Airline Leader Summit in Belgrade, Serbia, an event which gathered C-level executives from across the industry from November 21 to 22, 2024.

“I joined Pegasus airlines in 2005. It was then a small airline in the charter business with only 14 aircraft,” Öztürk told AeroTime. “I was part of a team which joined to transform [Pegasus] into a scheduled carrier with a low-cost [LCC] business model. We have hit so many milestones in these 19 years! I have witnessed the growth of the company, the IPO…”

Öztürk became Sales Director of Pegasus Airlines in 2008 and assumed the role of Chief Commercial Officer (CCO) in 2010, with responsibility over revenue management, network planning, customer experience, sales, and cargo operations.

On being a role model for female corporate leadership

After 12 years in the role of CCO, a period in which she oversaw the transformation of Pegasus Airlines into the largest privately-owned airline in Turkey and second largest overall, Öztürk was appointed to the role of CEO in March 2022.

Apart from the successes achieved during her time as Pegasus Airlines’ CCO, Öztürk has been hailed as an example of female leadership in an industry that has a relatively small percentage of women in senior executive positions.

“I was not focused on being a female C-suite person. There’s awareness of this fact, actually, because there are very few of us in the airline business globally, about 15-16% in these roles,” she said. “But when I was appointed CEO of the company and became the first Turkish female airline CEO, it was not just a matter of being proud about it, it also placed a huge responsibility on my shoulders, as I became an example to my female colleagues.”

Öztürk said that she has always concentrated on the positive side of any issues she faced, rather than the negatives.

“Unfortunately, this sector is male-dominated, that’s for sure,” she added. “All of us should work more on that, so that we provide equal opportunities.”

While not brushing aside her status as a role model for aspiring female business leaders, Öztürk prefers to highlight her track record in leadership positions.

“My ambition was always to expand my roles and my responsibilities. I wasn’t like, ‘I will be a CEO within the company in the future…’ Of course, that’s a great achievement. However, I [have] always looked [at] whether I’m doing what I am doing at my best capacity, doing my best, plus how I can do something different, or what more can I learn?

“I went to Columbia Business School for its Advanced Management Program in 2018 when I was Chief Commercial Officer,” she added. “This type of appetite for learning and growing helped me throughout my career.”

The key to Pegasus Airlines’ growth

But what was the vision that led Pegasus Airlines to become one of the most successful airlines in Europe?

“We have been successfully executing our business model for years, carrying more than 31 million passengers in the first 10 months of 2024, which represents a 17% growth on a yearly basis [Pegasus Airlines carried 37.48 million passengers in the whole of 2024, as per figures reported by the airline after this interview was conducted – ed. note]. So, we are growing, but we are also healthy and growing successfully and profitably. That’s also important, although we have seen lots of crises like COVID.”

Having a good foundational strategy is key, Öztürk said.

“The strategy at first was based on the fact that the LCC business model at that time, in 2005, was not executed in our country but was known in Europe and the US,” she said. “So, when the company was taken over by ESAS Holding, our main shareholder, our strategy was that because we had a vast population and flying was so expensive, from east to west, for example, it takes about 20 to 24 hours by bus, it had a huge potential, both domestically, but also part of the population flying out. Plus, it attracts lots of tourists.”

Öztürk pointed out how, at the time, the Turkish market was ripe for the low-cost flying revolution to take place.

“We said that flying is the right of everyone. If we make it cheaper, then Turkish people will start flying, maybe for the first time, and if they already fly, they will fly more. And Pegasus did this. That was the strategy behind it.”

“This was needed to improve and develop aviation in the country, and we have seen that, because this had been done in Europe too,” she continued. “We attracted the attention and the preference and choice of the travelers, so we started like that.”

Unlike its competitor, Turkish Airlines, Pegasus Airlines flies to Istanbul’s second airport, Sabiha Gökçen, on the Asian side of the Bosphorus.

“That was also the right decision to make because we were not one of the other airlines at the main airport, we were the fifth airline offering scheduled services at that time in our country,” Öztürk said. “Now we are the second biggest. So, we deliberately chose SAW because the catchment area was around 10 million at that time, and that strategy paid back.”

The low-cost airline playbook is well known, but Pegasus Airlines seems to be executing it extremely well. So, what are, to use Silicon Valley parlance, the “unfair advantages” that have allowed the airline to be so successful?

“Strategy is very important. You should set the right strategies because this is a business in which you invest 10 to 15 years ahead. For example, when you place an order today, you receive the first aircraft five or six years later. You must have a vision and a strong strategy,” Öztürk said. “But execution is also very important because you make those medium-term, long-term plans, but in the day-to-day operations, everything may change.

“So, I can count two or three factors which actually make us successful. The first one is selecting the business model. But even more than that, applying all the principles of this business model professionally and without giving up is the most critical factor.”

“Then, having a great team,” Öztürk continued. “Pegasus has a strong team at the management and at the operations level because businesses are people, that’s what I believe. You may have lots of money, you may invest in different types of businesses, but if you do not have the right people to execute what you’re trying to do, the team doesn’t continue. Turnover at the management level at Pegasus is small, we almost don’t have it. That is also important.”

“The third one is investing in the right fleet at the right time, at the right number and right flexibility,” she added. “New generation fleet investments bring you efficiency. So that’s important.”

Öztürk also explained how Pegasus Airlines has not shied away from investing in technologies that help it optimize its operations

“We do network planning and revenue management also very successfully. We have AI machine learning, working with our engineers, with our people.”

In fact, to this day, Pegasus remains a shareholder in Hitit, an independent and publicly listed software company that makes the reservation system used by Pegasus. This system is also commercialized to other operators.

But something that is in Pegasus’ DNA is cost management, Öztürk explained.

“If you ask at Pegasus what is the most important KPI, everybody will say CASK,” she said. “Cost management, efficiency measures and continuously improving on that is the strongest muscle of Pegasus. Everybody knows that in this business model. You must get your CASK low so that you can offer the lowest prices to customers. Otherwise, it doesn’t work. Our CASK was the lowest in the airline industry globally last year and the year before.”

Fleet management is one of the key areas in which Pegasus focuses its efficiency-enhancing efforts.

“We have new generation aircraft that consume about 15-17% less fuel compared to older generation aircraft. Our fleet age is 4.5 years. It’s a very young fleet. We receive 12 to 15 new generation aircraft every year and that, of course, also helps,” Öztürk explained. “Our utilization is also very high. In 2024, it has been 13 hours per day. And this is an achievement. The ground times are efficiently managed. This helps with the CASK – an effective and efficient fleet, and all operational efficiency measures, of course, like high utilization and direct distribution. We work with the agencies, but we sell, like, 60% of our tickets on our digital channels.”

Redefining the low-cost airline playbook

Interestingly, Pegasus does offer some services that are usually not associated with low-cost carriers, such as connecting flights and a loyalty program. Does this run counter to the idea of keeping costs and complexity to a minimum?

“What we are doing is look at the feasibility and if it brings complexity or not. But Istanbul is so advantageously located, that this brings us a competitive advantage and incremental traffic,” Öztürk said. “When we defined our LCC model, we included transfer traffic from the first day, because we knew that this would bring us a competitive advantage.”

She continued: “We are not trying to be the best connecting airline or something like that. We just check the connecting times, and we design the connecting times according to our operations. And also, think that we have 13 hours of utilization. So, we are not doing it and giving up on utilization. It’s not like we lose utilization because we are carrying transit traffic, we don’t do that. We just go for the utilization, and then connecting traffic comes as a second thing.”

Pegasus also has the advantage of being able to operate flights around the clock, as any traveler passing through Sabiha Gökçen airport in the early hours of the morning can attest.

“We have night flights and this helps, of course. Also, our ground times are optimized, so that we can offer many connections domestically and to Europe, to the Middle East and to other destinations,” Öztürk said. “If you look at the parameters, this does not bring complexity financially to the airline, because we can offer the lowest CASK. Our profitability margins are strong. Our utilization rate is high. So, it was the wise way to do it and to include this in the definition of LCC.”

She also explained how the airline’s loyalty program is a net positive asset for the carrier.

“And we have the BolBol program which is also itself a business. We don’t have a plastic card, for example. From the first day, 15 years ago, it worked just with telephone numbers. We see that if our customer is a mobile member, then they use our app, our digital channels and they buy more and they fly more.”

Ancillaries do play a major role in Pegasus’ business model. The airline sells some 25 different ancillary services which, all together, account for around 30% of its revenue. Is there scope for further growth on this front?

“The strategy we have behind the ancillaries is some new and more of the same. Of course, there will be some new products we will add going forward, but more will come from the penetration of the current products,” Öztürk said. “And of course, adding more international destinations to the network will grow the ancillaries too, as will personalized offerings and dynamic pricing, offering the right price at the right time to the right customers on the right channel.

“We’re doing this right now, but a more dynamic management will be possible by adding AI with this dynamic pricing model, which I think by the second half of next year will be the growth engine behind the ancillaries,” she added.

Öztürk is also planning to add new destinations to what is already a rather dense network.

“We want to fly to North Africa, for example, Algeria, and we want to include the Baltics in our network. We want to fly to Lisbon from Istanbul because we already fly there from Ankara and Izmir. We want to add some more destinations in France, Italy, Spain. There are other destinations we may fly to. But these all depend on the international air service agreements.”

In many ways, this massive international expansion has mimicked that of its close competitor, Turkish Airlines, although, as Öztürk was keen to point out, there are some differences.

“We are flying head-to-head, but, of course, when we look at a destination to fly, we do not do it automatically. We have a team to work on which airport to fly to. What’s the cost of it? So, for example, we fly to Bergamo. We don’t fly to Malpensa. We fly to London in the summer with six or seven flights daily. But we are flying to London-Stansted (STN). So, we look at the cost and then we get into contact with the airports. We fly to different airports but, generally speaking, we fly to the same destinations.”

Reaching maximum capacity at Sabiha Gökçen airport

A real bottleneck for further growth could be the very pressing capacity constraints at its Sabiha Gökçen base.

“Last year, in December, we had the second runway opened at SAW. The two runways are in parallel right now,” Öztürk said. “We have right now 42 moments per hour with the first runway. Now in theory, when you have a parallel second runway, this may double up. Even if it doesn’t double up, capacity goes up by 80% or 90%.

“However, we need the second terminal to execute this growth, because the current terminal this year will probably get 40 million passengers, which is at the very maximum of its capacity.”

Öztürk went on to explain how there are plans afoot to overcome this issue in the not-so-distant future.

“Of course, there are some projects going on to increase some capacity within the current terminal. But to execute the maximum capacity a second runway will bring, we need definitely a second terminal, and we need it as fast as possible. There is a project that, if it starts right now, by 2025, I believe [at the] latest by the second half of 2027 or 2028, we will be having a second terminal. It may be built in two to three years.”

In any case, Pegasus is already making plans to ramp up its capacity. On December 2024, the airline placed an order for 100 Boeing 737 MAX 10 aircraft plus options for another 100. This follows an order, placed earlier in 2024, to take its Airbus fleet to the 170 aircraft mark. The airline also confirmed plans to keep its remaining B737-800 aircraft for the time being. These had been previously slotted for retirement.

Öztürk also commented on the decision to return to the dual fleet strategy:

“Right after the COVID, demand was strong, and both internationally and domestically, so we decided to keep our Boeing, nine of them within the fleet, so that we foster and utilize that growth. The first plan is to keep them until the end of 2028, but we will see, it depends on growth: capacity growth, demand growth… We have 118 aircraft by the end of 2024, and we aim to complete aircraft deliveries of 150 aircraft under Airbus order at the end of 2029, because we have aircraft delivery under Airbus order. We have like 80-90% of our fleet on financial lease. But this is managed dynamically, because you don’t know what you can expect in the coming years. We’re talking about five or six years ahead, so we’ll see.”

Indeed, shortly after this interview was conducted, Pegasus Airlines announced in December 2024 that it was placing an order for up to 200 Boeing 737 MAX 10 aircraft (100 firm orders plus 100 options).

AeroTime reached out to Pegasus Airlines for additional comment on this, obtaining the following response.

“This order is a key part of our long-term growth plan, ensuring a modern, efficient fleet. Starting in 2028 and continuing until 2039, the delivery of Boeing 737-10 aircraft will also play a crucial role in achieving our sustainability goals, including our 2050 Net Zero Climate Transition Roadmap. The new aircraft will be deployed on both existing routes and newly opened destinations, supporting Pegasus’ growth strategy by expanding into new markets and enhancing the service on current routes, with a focus on Europe, the Middle East, Central Asia, and Africa.”

On growth outside of Istanbul

Even if its Istanbul base may be approaching congestion point, Pegasus Airlines has other avenues for growth, namely at other Turkish airports.

“Until 2022 it was more opportunistic growth. But right after COVID, we defined our strategy with those secondary bases” Öztürk said. “Take Antalya, for example. Before COVID, we were running eight or nine aircraft out of Antalya. In 2024, it was 19 and in 2025 we will grow with the addition of more aircraft to our fleet.”

Öztürk mentioned plans to boost the carrier’s operations out of Antalya (AYT), Izmir (ADB) and Ankara (ESB).

“We plan to grow. Antalya is our second hub in the country, and we want to keep it that way. Izmir is running about five to six aircraft and Ankara three aircraft. So, as long as we have cash generating routes out of Izmir, Ankara, and Antalya, we want to use them as secondary hubs. As long as we have capacity in Istanbul, the main hub remains Sabiha Gökçen, but those secondary hubs will be staying with us.”

What seems clear is that, propelled by a buoyant Turkish air travel market, privileged geographical location and ruthless cost discipline, Pegasus Airlines will continue to expand its footprint in the European airline scene.

The post Pegasus Airlines CEO Güliz Öztürk on leading Europe’s most profitable airline appeared first on AeroTime.

Xander Lao on how Cebu Pacific is changing the Philippine aviation landscape

Jean Carmela Lim — Fri, 14 Feb 2025 00:00:00 +0000

Cebu Pacific (CEB) was without a doubt one of the busiest airlines in 2024. In October, the Philippine low-cost carrier signed a landmark purchase agreement with Airbus and RTX’s Pratt & Whitney for up to 152 A321neo aircraft, equipped with Pratt & Whitney GTF engines.

Valued at approximately PHP 1.4 Trillion ($24 billion) based on list prices, the acquisition is the largest commercial order in Philippine aviation history. By the end of 2024, Cebu Pacific received 17 aircraft deliveries, and carried 24.5 million passengers, an increase of 17% from 2023.

AeroTime recently caught up with Cebu Pacific President and Chief Commercial Officer Xander Lao at the airline’s headquarters in Manila for an Executive Spotlight feature.

Cebu Pacific President and CCO Xander Lao with AeroTime lead journalist for Asia Pacific, Jean Carmela Lim

In this interview, Lao shares the reasons behind Cebu Pacific’s momentous 2024, and what’s in store for the year ahead.

High economic growth rate, young population, and a great location

Cebu Pacific President and CCO, Xander Lao. AeroTime

Lao, who has been Cebu Pacific’s President since 2023, and Chief Commercial Officer since 2021, said that a year and a half’s time of deliberation and planning went into CEB’s historic commercial aircraft order.

Lao credits Philippines’ economic growth as the main reason for the airline’s milestone order and remarkable expansion.

“The Philippines is a country that is the envy of many others in terms of economic growth,” Lao said, adding that the airline expects the Philippines’ 2024 Gross Domestic Product (GDP) growth level of 5.6% to maintain over the next six to seven years.

“Other economies throughout the world are not growing as fast,” Lao continued.

According to the Asian Development Bank’s (ADB) September 2024 Outlook, Southeast Asia is expected to grow by 4.7% in 2025, with the Philippines and Vietnam leading the ASEAN nations in this economic growth.

Another reason that Lao attributed to CEB’s decision for the large aircraft order is the Philippines’ young population. According to a report by the United Nations Population Fund (UNFPA), the Philippines currently has the largest generation of young people in its history.

30 million young people between the ages of 10-24 account for 28% of the Philippine population.

Lester Balajadia / Shutterstock.com

A young population has traditionally shown significant contribution to a country’s labor force, driving economic growth. As the younger generation enter the workforce, they increase the available labor supply, boosting productivity and innovation.

This young population, coupled with a developing middle class, is great for air travel growth, Lao said.

Another factor that proved advantageous to CEB’s development, Lao said, is the Philippines’ unique geographical location.

“We are strategically located between North Asia and Southeast Asia, and if you draw a four-hour flight circle around the Philippines, we are able to service around two billion people,” Lao shared.

HamzahStudio / Shutterstock.com

Seeing developments in the country and, in particular, at its airport hub in Manila, further encouraged CEB. In early 2024, a private consortium won the bid to operate Manila’s Ninoy Aquino International Airport (MNL).

There are also plans to develop Sangley Point Airport (SGL), currently a domestic airport some 34 kilometers south of Manila, into an operational international hub by 2028.

Development of another international airport (New Manila International Airport), roughly 35 kilometers north of Manila, is also planned to begin by 2028.

Airports outside of Manila, such as Mactan-Cebu International Airport (CEB), Clark International Airport (CRK), Davao International Airport (DVO) and Iloilo International Airport (ILO), have also been further improved and developed and privatized.

Mactan-Cebu International Airport mayura benjarattanapakee / Shutterstock.com

“The government is making investments in smaller airports, so we are seeing capacity come in finally,” Lao said.

Creating international hubs outside of Manila

Nate Hovee / Shutterstock.com

In 2024, Cebu Pacific launched international flights to and from airports outside Manila such as:

Davao International Airport (DVO) to:

Hong Kong International Airport (HKG)
Bangkok’s Don Mueang International Airport (DMK)

Iloilo International Airport (ILO) to:

Hong Kong International Airport
Singapore’s Changi International Airport (SIN)

Clark International Airport (CRK) to:

Hong Kong International Airport (HKG)
Tokyo-Narita International Airport (NRT)
Singapore Changi Airport (SIN)
Bangkok Suvarnabhumi International Airport (BKK)

Kim David / Shutterstock.com

While CEB already operated international flights out of Cebu, Clark, and Iloilo before the COVID-19 pandemic, Lao said that the second half of 2024 allowed the airline to further develop these secondary airports into international hubs.

Dispersing international flights into these airports allows the decongestion of Manila International Airport, which unfortunately takes the spot of ‘world’s worst airport’ on many global lists.

The development of these new international hubs comes as a relief to both locals and inbound international tourists, who are no longer forced to stop or transit in Manila.

This growth has also attracted other international carriers to secure spots in these secondary airports. On January 16, 2025, Singaporean low-cost carrier Scoot, a subsidiary of the Singapore Airlines Group (SIA), announced the launch of flights to Iloilo starting April 2025, using its fleet of Embraer E190-E2 aircraft.

“We at CEB want to be in a position to support the growth of the Philippine economy, and we think that this aircraft order is one way to facilitate air travel,” Lao said.

Sticking to what the airline does best

Cebu Pacific’s current longest route is Manila to Dubai International Airport (DXB), a roughly nine-hour flight on its fleet of A330-900.

Will the airline explore possibilities of expanding beyond Dubai, even by way of codesharing? Most likely not.

“We will stick to what we are good at,” Lao said, pertaining to the airline focusing on its core target market: Filipinos.

Cebu Pacific lights up Dubai's Burj Khalifa – AeroTime https://t.co/p1kO4OzVdw
— Monica-مونيكا (@vargasmoni) November 26, 2024

There are around 450,000 documented Filipinos living in Dubai as of November 2024, representing about 21.3% of the city’s population. The large Filipino population makes Dubai an attractive market for CEB, which recently boosted its frequency to the Emirati city to 10 times weekly from daily.

“We are studying other longer routes where there’s a big Philippine base (population), but the majority of our operations internationally are still short-haul. And that’s where our time is mostly spent because we think there’s a lot more value to unlock [in these destinations],” Lao said.

Developing customers’ digital experience

While Cebu Pacific customers won’t be given the option of premium class seats anytime soon, what they can look forward to are improved digital and in-flight meal experiences.

Lao said that in the last few years, the airline invested in improving its digital processes, from buying tickets online or checking in for a flight. However, upgrading to a seamless digital user experience is not a simple task for a country and government that generally still relies on paper documents.

Even though electronic processes may be the norm for many other airlines and countries, the Philippines’ digital development is sorely lagging primarily due to outdated infrastructure and government regulations, lack of high speed and reliable connection, and deficiency in cybersecurity awareness.

“We are one of the few carriers here in the Philippines that really encourage digital processes,” Lao said. “We know the infrastructure is not going to grow as quickly, but we’re trying to make the passenger experience a lot more seamless.”

Cashless payment methods and shifting customer service from phone to chat box are among the things Lao said CEB will continue to develop and invest in.

Faizal Ramli / Shutterstock.com

When it comes to improving the digital experience onboard, Lao said the airline is prioritizing efficient onboard charging and is starting to look at possibilities of in-flight WiFi, as most CEB passengers bring their own entertainment by way of smartphones or tablets.

No business class, but better meals

Despite its outstanding growth, Cebu Pacific is not entertaining the notion of premium seating class.

“If you’re going to ask me if we’re going to invest in business class or maybe in-flight entertainment, probably not,” Lao said.

“We are a low-cost carrier, so we need to make sure we are super focused on that,” he continued. “At the end of the day, what we do offer is making sure that it’s [flights are] affordable, safe, convenient and on time.”

What the carrier has recently invested in is improving its in-flight meal experience for passengers. In December 2024, CEB launched hot meals that can be selected and purchased onboard selected flights.

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This is in addition to the usual chips, cup noodles, and pre-purchased onboard meals that the carrier ordinarily offers.

First in Southeast Asia: Sustainability linked loan

In early January 2025, CEB became the first Southeast Asian low-cost carrier to secure a Sustainability-Linked Loan (SLL).

The loan, arranged by Crédit Agricole CIB and structured under a Japanese Operating Lease with Call Option (JOLCO), ties financial incentives to the airline’s ability to meet specific sustainability-related targets.

“If we hit those [targets], then the loan is paid out,” Lao explained.

Brand new Airbus A321neo procured by Cebu Pacific through the Sustainability-Linked Loan facilitated by Crédit Agricole CIB Image: Cebu Pacific

He added that there’s still a lot more work to be done in this part of the world when it comes to sustainable aviation.

“We know, for example, that Sustainable Aviation Fuel [SAF] is maybe a couple of years away, and I’m being generous. But clearly, we need to start awareness so that governments and other stakeholders support sustainable flying,” Lao emphasized.

Southeast Asia, as a whole, has lagged behind Europe and North America in terms of sustainability efforts and government mandates regarding the use of SAF. In the Philippines, the possibility of SAF production is still being studied.

In October 2024, at the Aviation Summit in Manila, the Philippine government announced its partnership with Airbus to explore the feasibility of SAF production in the country.

Department of Transportation Philippines

Despite the Philippine government’s involvement with SAF production still being in its infancy, Cebu Pacific has demonstrated considerable effort towards sustainable aviation. In 2022, CEB became the first low-cost carrier in Southeast Asia to incorporate SAF in its commercial operations on a Manila to Singapore flight.

In November 2023, CEB operated a Narita to Manila flight powered by SAF, making it the first Philippine carrier to use SAF on a commercial flight from Japan.

Well-prepared to mitigate the effects of supply chain issues

CEB had what Lao calls a “rough patch” a year and a half ago with supply chain constraints. Since then, he said that CEB has taken steps to mitigate the impact of the challenges, which he acknowledged will not go away anytime soon.

Lao mentioned the ways in which CEB is prepared.

“We’ve added more standby aircraft. We probably have more standby aircraft today than we did before COVID-19. We’ve also placed a lot more focus on ground support equipment (GSE), we’ve invested a lot more in spare engines than we’ve had in the past.”

#image_title

“We think these challenges will be around for the next two to three more years, at least, but it’s incumbent upon us to make sure we deliver the service we promised our customers,” he added.

While Lao acknowledged that it’s “difficult” to be in a place like the Philippines, where access to scarce parts can be harder, he is confident that the CEB team has done a great job in mitigating these challenges.

2025: A high growth year ahead for Cebu Pacific

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Because of the remarkable progress and expansion that the airline set in 2024, Lao believes that the percentage of Cebu Pacific’s growth for 2025 will be around “low to mid-20s”.

“Looking back, last year was super busy. We opened 24 new routes, established two new bases in a span of maybe four to six months,” Lao said, contemplating the airline’s productive 2024.

He said that CEB intends to develop and continue a lot of the markets that it started in 2024.

“We opened 24 new routes, not all of those will survive,” Lao said pragmatically. “I’m sure some of them will fall to the wayside.”

All this, he said, is part and parcel of the airline’s growth strategy. Lao said he saw around seven new aircraft deliveries coming for 2025, and shared that he looks forward to CEB’s integration of AirSWIFT, a Philippine boutique airline acquired by CEB late last year.

Lao believes that CEB will be in a high growth phase throughout the year but also acknowledged that most of that growth started in the fourth quarter of 2024.

For Lao, the airline’s goal is to develop and progress the seeds that were planted in 2024. However he was quick to add: “You can’t keep growing for growth’s sake, it has to be sustainable.”

The post Xander Lao on how Cebu Pacific is changing the Philippine aviation landscape appeared first on AeroTime.

“Our people are what makes us fly” A. Meijer, Embraer Commercial Aviation CEO

Miquel Ros — Fri, 31 Jan 2025 04:00:33 +0000

Commercial aircraft manufacturing remains, for the most part, a de facto duopoly with Boeing and Airbus vying for supremacy in the market for mid-sized airliners and larger. However, Brazil’s Embraer has emerged as a champion of the regional and small narrowbody jet market.

But what are the key elements that have made it possible for the Brazilian manufacturer, which is considerably smaller than its two giant competitors, to successfully carve a niche for itself in this extremely capital-intensive and competitive industry?

AeroTime caught up with Arjan Meijer, President and CEO of Embraer Commercial Aviation, during the Sustainable Aero Festival, an event which gathered aerospace startups, industry leaders and investors in Amsterdam, the Netherlands, on December 2-3, 2025.

Meijer leads one of Embraer’s three major business areas, Embraer Commercial Aviation, which, based in Amsterdam, is responsible for the firm’s commercial aircraft product line. The other two major product areas at Embraer are Defense and Executive Jets.

The E2 business case

During the ensuing conversation, Meijer shared some insights with AeroTime about the current status of Embraer’s flagship program in commercial aviation, the E2, and also offered a glimpse at other longer-term initiatives, such as the Energia program to develop a clean-sheet sustainable aircraft.

The E2, the first of which was delivered to Norwegian airline Widerøe in 2018, is the latest generation of Embraer’s popular E-Jet family, which includes the E170/175 and E190/195, covering the segment ranging from 65 to 120 seats.

“The E2 family is the most efficient option that there is right now in the market in the narrowbody space,” Meijer said. “It not only has the lowest fuel burn per seat but is also the quietest. We also believe it is the best complementary aircraft to the larger narrowbodies like the Boeing 737 MAX 8 and the A320neo. Customers that operate it are really telling us that the cost per seat is the same as that of bigger narrowbodies.”

Embraer

Embraer has delivered more than 1,800 E-Jets since the launch of this aircraft family in 2004. The vast majority of these, close to 1,700 of them, are first generation E1s. Many of those operators are now among the most promising prospects for the E2, as they start thinking of options to replace and modernize their fleets within the next few years. However, Meijer explained, it is not the only market Embraer is targeting.

“There are three key customer segments we are targeting with the E2. First are the existing E-Jet operators. This [the E2] is the ideal replacement for those aircraft. It can even be flown by the same pilots.

“Next are the large network carriers that fly larger narrowbody aircraft. For them, the E2 is a very good complement in order to fly smaller routes with more frequencies and at the same per seat cost as a larger narrowbody.

“The third one is low-cost carriers that also fly with bigger narrowbodies. We are engaging more and more in conversations with them about adding smaller complementary aircraft like the E2.”

An example of the latter is Scoot, the low-cost subsidiary of Singapore Airlines, which ordered nine E190 E2s in 2023 to complement a fleet which includes much larger A320s and B787s.

Meijer did not appear concerned about a number of major airlines deciding to upgauge their fleets with ever larger narrowbody aircraft.

“Upgauging is certainly happening in the larger narrowbody segment as the smaller members of the family like the A320 tend to be less efficient than their larger brothers. However, this is creating a larger gap between regional aircraft and those larger narrowbodies, which is increasing the demand for small narrowbodies like the E2,” he explained. “The most efficient and versatile fleet for an airline today is to use an E2 to increase frequency and open new markets and larger narrowbodies for its trunk routes and congested airports. One complements the other.”

However, some operators that were traditionally confined to regional or very local operations, such as Widerøe in Europe, or Porter in Canada, have been opening new longer-range markets with their E2s.

So, could there be any opportunities for Embraer to move up to making larger planes? Meijer was clear about this possibility.

“First of all, Embraer is honored that airlines are shouting out to us to do something, because that’s what we’re seeing at the moment,” he said. “Airlines are showing their interest in Embraer. We have aircraft that show what we’re capable of. The E195 E2 is already larger than an A320 in terms of length, our KC390 is a multi-purpose aircraft for the military that has the size of a Boeing 737, and the width of a B767. So, capability-wise there’s a lot that Embraer can do.

“But today, we already have the E2, the KC390, the Phenom, the Praetor…a very good product line across our businesses. That’s where our priorities sit at the moment, and we have no concrete plans to move forward [towards making larger airplanes].”

On Embraer’s key strengths

Is it feasible, though, for a relatively small (compared to the two giants Boeing and Airbus) aircraft maker to go it alone? And just what is the secret ingredient that allows Embraer to be so competitive in these markets?

“The “special sauce” for Embraer is its engineers,” Meijer said “We, at Embraer, say our people are what makes us fly. And if you see what Embraer has been doing, if you look back all the way to the 2000s, we’ve brought a new model to the market every year. There’s an enormous development power in Brazil.”

Embraer is often praised in industry circles for its technical competence. In a recent interview with AeroTime, for example, legendary aviation entrepreneur Steven Udvar-Házy spoke highly of the Brazilian firm’s engineering prowess. So, it’s perhaps not surprising that Meijer brought this up in conversation when talking about Embraer’s capacity to execute efficiently and on time.

“We have an extremely smart engineering base. They’ve shown [this] over and over again, not only in designing the planes, but also in building the planes within budget, within time and within specification, and then certifying them with the authorities as planned. For example, the E2 family was certified on the same day by the Brazilian authority, by the US authority and by the European authority.”

Meijer was clear about this particular point:

“So, the capability that Embraer has to develop new aircraft within that segment and to continuously be ahead of the market in terms of efficiency, I think that’s the ’special sauce’ that Embraer has, and we’ve been shown time and time again how good we are at that. The E195 E2, for me, is the pinnacle of all that. That’s an aircraft which is much smaller than anything else and it’s the most efficient aircraft with the best relation between cost per trip and cost per seat that an airline can have.”

Embraer’s rather unique way of structuring its engineering teams is another source of competitive advantage, Meijer said.

“We don’t have engineers that just work for commercial aviation,” he stated. “We have an engineering organization that stretches across the different business units, so the same engineers that work today on a commercial, might tomorrow be working on defense or on executive jets.”

Here, Meijer provided a specific example of technological spillovers across Embraer’s different functional areas.

“For example, when we did our first E-jets, we did a fly-by-wire system. Then, when we did the KC 390, we developed another fly-by-wire system, which was improved from the E1 [the aforementioned generation of E-Jets, including the E170/175/190/195 – ed. note]. We then, with the experience of the other two, applied an improved version of that system on the executive jets. That was version number three. Then version number four was used on the E2 [Embraer’s current E-Jet version – ed. note. That’s why we call it our fourth -generation fly-by-wire system, because we went through three different families before. And now, we’re able to improve it yet another time. And I think that’s a strength that illustrates what the common engineering power in Embraer can offer.”

Looking ahead: what’s next for Embraer?

In 2021 Embraer announced it was working on a rather futuristic, clean-sheet sustainable aircraft program called “Energia”, which would be a family of turboprop aircraft with a significantly lower environmental footprint.

What’s the status of the Energia program? “For us Energia is really a family of concepts,” Meijer said “The reason we have started work on the Energia program is because we want to talk to suppliers, partners, and operators. That’s exactly what we’re doing. It is still very early on because we need to understand what the customers need and where technology is leading us.”

“It’s not a launched product yet,” he added. “It’s a concept for us to talk to the market and understand what’s going to happen in the segment up to 50 to 70-seat aircraft.”

So, what’s next for Embraer Commercial Aviation?

“The E2 came to markets now six years ago so it’s a very young aircraft,” Meijer said. “We have a group of people in product marketing, which look forward into the future. They look at all the options. They dream about the future. But 99.9% of my organization today is focused on the E2 and the rest of the organization is focused on the KC390 and the Praetor and Phenom [Embraer’s flagship products in defense and executive aviation, respectively – ed. note].”

“I believe the products we have developed over the last 10 years are so good that we’re very fit for the future,” Meijer confidently concluded.

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MBR Aerospace Hub CEO on backing Dubai’s vision as world’s aviation capital

Miquel Ros — Tue, 28 Jan 2025 04:00:00 +0000

Dubai’s Mohammed Bin Rashid Aerospace Hub (MBRAH) is the largest and most ambitious aerospace hubs in the world today.

Ambitious even by Dubai’s standards, the MBR Aerospace Hub is part of the larger Dubai South project, an urban development plan that aims to transform the area around Dubai’s Al Maktoum International Airport (DWC) into a vast new city combining industrial, commercial and residential districts.

Housing for around one million inhabitants, as well as office buildings, retail, logistics and a major aerospace industry hub, is expected to rise from the sand that surrounds what is currently Dubai’s second airport.

Some of the world’s most prominent players in different segments of the aviation industry are gradually starting to take positions within MBR Aerospace Hub project.

This process will culminate in all of Dubai’s commercial aviation activity, including that of its two major airlines, Emirates and flydubai, moving to an expanded Al Maktoum International Airport within ten years.

During the 2024 MEBAA business aviation show, AeroTime met with Tahnoon Saif, CEO of Mohammed bin Rashid Aerospace Hub and asked him about the path ahead for the organization he leads.

Tahnoon Saif, CEO of Mohammed bin Rashid Aerospace Hub

“The airport is the heart of the project,” he said. “We are talking about the biggest international airport, once it is completed by 2032-34. That’s the time frame.”

“We are expecting it to have five runways, in addition to an independent runway for training.”

Once completed, DWC will be capable of handling approximately an additional 150 million passengers per year, on top of the 27 million passengers it is capable of handling at present

How will the transition from DXB to DWC take place?

Saif indicated that this process is already underway. Most freighters already land at Al Maktoum International Airport and cargo is then moved between the two airports through a land bridge: two trucks every hour move cargo between DXB and DWC connecting the two systems.

When it comes to passenger services, Dubai Airports had its strategy to allocate flights at DWC, said Saif and currently, most of the passenger activity at DWC consists of point-to-point and charter airlines, as well as private jets.

However, things will look different soon as the new airport facilities come into use and the date of the big airport migration approaches.

But the airport itself is just part of the story. In fact, the airport proper will only take half of the 145 square kilometres destined for aerospace activities at Dubai South. Around the airport, there’s already an operating Logistics District, a Residential District, the Mohammed Bin Rashid Aerospace Hub as well as the Business Park in Dubai South.

Miquel Ros / AeroTime

The Mohammed Bin Rashid Aerospace Hub caters for aircrafts maintenance, repair and overhaul (MRO) activities, business aviation and other commercial activities related to aviation businesses, such as training, commercial aircraft chartering and licensing.

“All of this will be happening at DWC as a one stop shop,” Saif said. “Dubai South is a government entity with the status of free zone authority. Additionally, we provide commercial activities such as licensing, employee visas, planning and zoning, which are all done in-house.”

He went on to explain how the free zone status will offer advantages to companies operating from Dubai South in general and from MBR Aerospace Hub in specific. The value proposition includes foreign ownership rules, the applicable tax regime and visa regulations for employees.

Saif confidently stated that many registration and administrative processes will not take more than a week from start to finish, while highlighting MBRAH’s focus on the aviation industry.

“The Mohammed bin Rashid Aerospace Hub is an ecosystem for aviation only,” he added. “We do not cater for non-aviation companies, whether general logistics or any other industries, if it’s not aviation or aero logistics. We are completely focused and became one of the biggest aerospace hubs in less than 10 years.”

An important milestone will take place in 2027, when Emirates Airlines will complete work on a massive maintenance center at DWC.

“After Toulouse and Seattle, it’s going to be the biggest,” Saif said proudly. “It’s under construction as we speak and expected to be completed by the second half of 2027. And flydubai will also have its maintenance shop here, so the area is getting very much populated.”

Other approved maintenance centers for private jets are also moving into the area. For example, during MEBAA 2024, two large executive jet operators, Comlux and ExecuJet, inaugurated their respective service centers at DWC. Saif stated that he expects the area to be populated by 2028/2030, prior to DWC becoming Dubai’s main airport.

The Mohammed Bin Rashid Aerospace Hub is also expected to play a major role in the advent of the advanced air mobility era and the roll-out of electric vertical takeoff and landing (eVTOL) aircraft in Dubai. Some of the most prominent players in this space, such as US-based eVTOL developers Joby Aviation and Archer, have also announced plans to establish a presence in the area.

Saif added. “Our role is to host a maintenance hub for those [eVTOL] companies and MBR Aerospace Hub already have a helicopter center. The same infrastructure with proper framework will accommodate the business of eVTOLS.”

Where will money come from to finance such ambitious growth plans?

Saif said there are two parts to the financial set-up. “We are a government entity but commercially driven. “We create value and raise funds for MBRAH projects by commercializing it. . This is our approach and model with financial institutions.

On the other hand, third party investors contribute in funding the project and building their state-of-the-art facilities and we expect $1.5B to be injected in infrastructure and assets in the next 2 to 3 years.

Saif estimated that the whole project, excluding the construction of the Al Maktoum International Airport, would require $US17 billion at today’s exchange rates. He added that, by the time the airport goes into service, and once inflation is factored in, the figure may climb to US$20 billion.

The goal, however, is for the aerospace hub to be operating at close to full capacity by the time DWC starts operating as Dubai’s main air hub.

“This is going to be completed before the airport. We signed almost all the lands you see on the airside; they are gone. All the adjacent districts will be completed by 2030. I will not say I’m conservative here, but I will tell you, we can see that the project will be mature before the airport starts its major overnight move,” Saif said. “The completion of some components, for example, car rental areas, hotels, and other airport-related ecosystem for the airport community, will be dependent on the airport’s completion. But other than that, logistics, aerospace and residential will be 100% developed.”

He also highlighted how, despite the availability of land, MBRAH is applying innovative constructive techniques to make the most out of the existing space, for example by ‘going vertical’. Saif explained how some of the current buildings at the aerospace hub already follow this approach.

Saif pointed to the interest of companies in operating out of these types of facilities at DWC. For example, one of the facilities being readied is a maintenance center with a ground floor plus three additional floors, containing a training center, several engine shops, and other auxiliary activities.

As part of this design, trucks drop off parts and components at a reception area located on the ground floor and these are then moved around via elevators. The entire facility is designed to allow forklifts to manoeuvre. From the outside it looks like it could be an office building, but it is a multi-level MRO facility.

“We are just being cautious on land, so we are going vertical from today. That’s very important. We can see land scarcity. Dubai built an airport more than 50 years ago. Now this is the airport for the next 50 years and beyond.” Saif said

The project is being built with multi-modality at its heart. In this regard, Saif explained that, besides the planned connection to the United Arab Emirates rail network, the airport is also well connected by road. Not just to Dubai, but also to neighboring Abu Dhabi and to Dubai’s seaport.

“There is a seamless bridge connectivity between Al Maktoum International Airport, Dubai South free zone with the seaport. So, imagine goods used to take two days to be processed from the ship to the aircraft. We are talking less than four hours today,” Saif said. “That time reduces the financial burden for clients. Where they needed to put some capital or security deposit, now there is no longer a need. That’s one bonded area.”

According to Saif, the aerospace hub is part of a much larger vision for what Dubai’s place in the world economy should be.

“We are not building the largest airports in the world. We are building the aviation capital of the world” this vision was stated by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. “What we are working on goes beyond building an industrial area, we are adding a lifestyle element to it. You will have retail shops, the busiest private jet terminal in the region. We are building the ecosystem for that – for example, private shopping. That’s one of the models we are working on. We are building a community for aircraft brokers, insurers and other types of services.”

He continued: “So, with the diversified products we have, airside, landside, technical and commercial, we are trying to be one-stop shop for the industry. By the end of December, we announced a new industrial tenant, which within a period of two years will build a test engine cell on a 100,000 square meters’ plot within MBR Aerospace Hub.”

“There’s no such thing as luck,” Saif said. “Luck is simply when opportunity meets preparation. We focus on being ready. While we have the infrastructure in place, what we’re truly building is confidence in the industry’s growth. It might seem like speculation, but we’re certain it will fill up quickly.”

Saif was enthusiastic about the pace of growth anticipated in the coming years.

“And all this is happening without even Emirates Engineering and flydubai having moved here yet,” he said. “Imagine, in two years’ time when flydubai has its maintenance shop operational here, and in less than three years’ time when Emirates Engineering will have the biggest maintenance shop here. What will be the ripple effect?”

Saif concluded: “Our goal was to secure anchor tenants early on—even before attracting GE, Lufthansa Technik, and other major players. Their confidence in our project allowed us to secure funding and build the ecosystem.”

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“We are at cruising altitude.” Turkka Kuusisto, CEO Finnair

Andreas Spaeth — Sat, 11 Jan 2025 04:00:00 +0000

Turkka Kuusisto is Finnair’s first CEO taking office during the new normal for the Nordic airline. Since Russian airspace became off limits for Western carriers almost three years ago when Russia attacked Ukraine, Finnair’s entire and formerly lucrative business model fell apart.

Helsinki is no longer the shortest connection hub between Europa and East Asia, rather the opposite, the necessary detours are even longer than from most other hubs now. Despite this unfortunate development also threatening Finnair’s well-being, the Finnish airline has been able to make an impressive recovery by shifting and adapting its strategy swiftly. Turkka Kuusisto took over the CEO post in April 2024 and only now starts to talk to international media about his take on the top job.

The 45-year-old son of a former Finnair pilot had been previously heading Posti Group, the Finnish postal service and largest logistics company around the Baltic Sea region. He sees many similarities between the two, as both are service companies moving goods and people. And both are extremely meaningful companies for the wider society, he says. “Both Finnair and the logistics companies keep the wheel spinning.”

In an exclusive interview for AeroTime, aviation journalist Andreas Spaeth talks to Turkka Kuusisto about his efforts to redefine Finnair’s course in a much-changed environment.

Andreas Spaeth: One of your first big tasks here as Finnair’s new CEO is to update the company’s strategy. Can you share any insights into how that might look like?

Turkka Kuusisto: We will communicate about the updated strategy in early 2025. The process is on schedule, but we need to add a few more touches for the final outcome. It is very important for us, after 101 years in operation and after the recent double crisis of the pandemic and closure of the Russian airspace, to define what role Finnair will play in the so-called new world order and what’s the purpose of our existence. That’s an effort we’ve been engaged in over my first months in office. We are the fifth-oldest airline in the world and I think right now is a good time to crystalize why we do exist. And then develop our strategy accordingly.

Spaeth: Are you confident that Finnair will be able to extract this sense of purpose in a world that has changed dramatically, especially for Finnair?

Kuuisisto: Yes, I am, because both 2023 and 2024 delivered ample concrete evidence that Finnair has done a fantastic job after the double crisis. The organisation has been able to redesign and rebalance the network after the closure or Russian airspace. 2023 was an extraordinarily strong year for Finnair and the entire industry and 2024 proved to be very stable in terms of executing the existing strategy. We are at cruising altitude and can now start to build the next chapter in Finnair’s future.

Spaeth: Which assets, which strengths are enabling Finnair to adapt so quickly?

Kuusisto: There are many characteristics demonstrating that the organisation has been extremely resilient and determined. They have learnt to be more agile, this can-do attitude, I guess, is in the Finnish DNA. It’s a team effort of a lot of different activities that have been implemented very decisively.

Spaeth: Can you give us some examples?

Kuusisto: Yes, let’s take the North Atlantic for instance. We are flying much more westbound long-haul than we used to do. The new Helsinki to Dallas/Fort Worth route, for example, has been a great success for us, during the current winter season we fly it daily, next summer we will fly eleven times per week. We also fly more to Seattle, having daily flights to Chicago, North America has become a much more important destination for us. But at the same time, you have to keep in mind that we have eleven destinations in Asia. None of the peer companies in northern Europe has such a footprint in Asia. In the winter season we fly 13 times weekly to Japan, for example. In summer we will add capacity and offer 25 flights to Japan per week. We are still an extremely relevant connector between Asia and Europe.

Spaeth: In your career you didn’t work in aviation before, but your father was a Finnair captain. How did you view Finnair before, and did your perception change since you took over the CEO post?

Kuusisto: I have always followed Finnair, it’s been a part of my life since my birth. As a son of a pilot, you understand what everyday life as a pilot is like, and I’ve often been in the jump seat flying with him, the MD-11 was the last aircraft I flew on that way. Before I joined Finnair, I was already a very frequent flier, holding a Platinum card for ten years in a row. And it was always on my wish list, that maybe one day, I could lead Finnair. Because it’s an extremely important company for Finland and all Finns. A complex industry and a big organisation in transformation, that was always an interest of mine. I knew some of the Finnair spirit because of my family origin. Ever since I joined the company, I haven’t found any big surprises. But I had very many positive findings.

Spaeth: Is there anything you’d like to change in Finnair?

Kuusisto: The major difference that I want to make is that we will genuinely become more customer-centric and oriented. For various and maybe obvious reasons, the voice of the customer was not heard or maybe not paid enough attention to during the crisis time when you needed to take a lot of quick, rapid and decisive actions to save the company. Therefore, it’s time now to develop this great operational platform, but with additional emphasis on understanding customer’s needs today and tomorrow.

Spaeth: How important is the closer cooperation with Qatar Airways for Finnair and what is the plan going forward?

Kuusisto: I would position this as a transition partnership. After the closure of Russian airspace, we did have some overcapacity, the Airbus A330 can’t fly to Asia if it can’t fly over Russia. All of a sudden, we had excess capacity, while our Oneworld partner Qatar Airways didn’t have enough capacity to recover after the crisis. We found a solution in which we deployed three A330s to fly to Doha from Copenhagen, Stockholm and Helsinki. From mid-January, the two aircraft flying from Copenhagen and Stockholm will be redeployed into our own network while we most probably will continue the Helsinki to Doha operation. So, it has been a kind of a strategic partnership, but it is pretty much related to the transition of over- and undercapacity after the pandemic.

Spaeth: What about your activities leasing out long-haul aircraft to operators like Discover Airlines in Germany or Qantas?

Kuusisto: Our number one priority is to fly our aircraft in our own network. We have eight A330s in our fleet, and if we, like after the Russian airspace closure, have no useful way to deploy them in our own network, the Qantas example is a great one. We have wet-leased three A330s flying from Sydney to Bangkok and Sydney to Singapore, these will be transferred to dry leases from the winter season 2025/26. Our pilots fly rosters from Helsinki to Bangkok on the A350, then after resting, an A330 from Bangkok to Sydney, and then the same returning home. A tour of nine days, some pilots really wait for their turn to fly this route. The cabin crews come from Qantas. And these are the only remaining aircraft that we lease out. We fly our A330s now to New York, Miami and Dubai.

Spaeth: Is the rebalancing of the network still work in progress, or have you done all the necessary readjustments?

Kuusisto: The big rebalancing of the network is now done. Now it’s time for continuous further improvement and optimization. One concrete example is that we decided to further develop the Dallas route. The big pivot is now done.

Spaeth: What about the Chinese market, which has become a weak spot for you?

Kuusisto: In China, we now fly two weekly frequencies to Shanghai, in the summer that will double. But as long as the Russian airspace is closed, we are absolutely unable to get back to pre-pandemic levels in traffic to China. With Chinese carriers flying through Russian airspace, the playing field is not level, that’s a huge competitive advantage for them.

Spaeth: What about fleet development, your latest A350 just arrived?

Kuusisto: Yes, the 18th, Whisky Tango (registration OH-LWT, the editor), landed on December 17th, 2024. The last one will then enter our fleet in the third quarter of 2026. Currently we have 80 aircraft in our fleet and the widebodies are extremely modern, with all cabins having been upgraded to the new Business Class and Premium Economy cabins. The A330 is a very capital cost-efficient aircraft which needs to fly on suitable routes. The next decision we have to take is the short-haul narrowbody renewal. But that’s a rather limited scope of our fleet, less than 20%. We have five A319s and ten A320s, whose average age is somewhere around 23 years, so obviously we need to do something here. There is no timeline yet, but some news can be expected within the next fiscal year. First and foremost, we need to finalize our strategy process and the longer-term network plan and then evaluate which aircraft type supports our thinking the best.

Spaeth: What is the plan with your regional affiliate Norra?

Kuusisto: Norra is a production or operational platform for us, its aircraft are owned or leased by Finnair. So, all their fleet, or in our current case cabin renewal investments are the decision of Finnair. Norra is very important for us because it is a great vehicle for regional flying and connecting destinations not supporting operations of bigger narrowbody types. One of our upcoming strategic decisions is to see how much we need to increase the role of regional flying. As the long-haul network has changed because of Russia, there might be different needs and customer bases to fill those widebodies. Our twelve ATR 72 turboprops are operated by Norra as well our twelve E190s. They complement the mainline equipment very well on some routes like between Helsinki and Oulu, where we use A321s in the mornings and ATRs at mid-day frequencies.

Spaeth: Finnair had some pilot’s strikes recently, has that labour conflict been solved now?

Kuusisto: We are negotiating a new collective labour agreement since August, after the old one has ended. It has taken a bit longer than what we expected and hoped for. Unfortunately, the union took industrial action with two days of strikes in December as well as overtime and standby bans. I hope we will find a solution as quickly as possible, as I would like to minimize all disruptions to our customers. But at the same time, we need to find agreements that are sustainable.

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‘Something will definitely change.’ Steven Udvar-Házy on the aircraft market

Miquel Ros — Thu, 19 Dec 2024 04:00:00 +0000

Few people have been more influential in shaping modern commercial aviation than Steven Udvar-Házy, founder and Executive Chairman of Air Lease Corporation (ALC).

By 2024, nearly half of the world’s airliner fleet belongs to leasing companies, which place large aircraft orders and then rent them out to airlines, providing capacity flexibility to operators and lowering the barriers of entry to new market entrants. And Udvar-Házy is widely credited for his role in the creation and rise of this multi-billion-dollar global industry.

Born in Hungary shortly after the Second World War, Udvar-Házy moved to the United States as a child, his family fleeing Communist repression in his home country.

Once in the US, he developed a passion for aviation that led him to get involved in a series of business ventures from a young age. This culminated in the creation of International Lease Finance Corporation (ILFC) in 1973.

This pioneering firm, which eventually became the world’s largest aircraft lessor by market value, helped spur the development of the modern aircraft leasing industry while securing Udvar-Házy a spot on the Forbes billionaires list.

Udvar-Házy sold ILFC to insurance giant American International Group (AIG) in 1990 but continued at the helm of the company for another two decades, leaving in early 2010 to start his new venture, Air Lease Corporation (ALC).

During all this time, Udvar-Házy has remained one of the most respected voices in the aviation industry and his endeavors have also extended to the domain of philanthropy, among others the creation of the Steven F. Udvar-Házy Center, a partner facility to the US National Air and Space Museum, being perhaps the best-known example and the largest aviation and space museum/exhibit complex in the world.

AeroTime had the chance to speak with Udvar-Házy during the CAPA Airline Leader Summit 2024, which gathered C-level executives from across the airline industry in Belgrade, Serbia, on November 21-22, 2024.

In a brief but insightful conversation, Udvar-Házy commented on some of the main developments currently taking place in commercial aviation and shared his views on the possible paths some of its main players may take.

On supply chain constraints and the state of the industry

We started our conversation discussing, rather inevitably, the supply chain crisis that is slowing down production across the industry. As major customers of original equipment manufacturers (OEMs) such as Boeing and Airbus, aircraft lessors have not been immune to this.

“To give you an example, we were supposed to take 92 new planes this year from Boeing and Airbus, and, I think, if we get maybe 71 or 72, I’ll be happy,” Udvar-Házy said. “That gives you an idea.”

Do these supply bottlenecks offer an opportunity for new entrants like COMAC? Udvar-Házy provided a pretty straightforward answer.

“No, because they can’t get FAA certification,” he said. “That is, unless it’s in certain countries that don’t care about EASA [the European Union Aviation Safety Agency] and where they could almost buy their way in through political muscle.”

What about 10 to 15 years into the future? According to ch-aviation data, the increasingly assertive Chinese manufacturer has racked up more than 700 orders for its C919 mid-sized airliner, 99% of them in its home country. The company announced the first order for its future C929 long-haul aircraft in November 2024, but it is still a preliminary design.

While acknowledging that China is willing to play the long game, Udvar-Házy highlighted some of the challenges it will face if it is to become a peer competitor in aircraft manufacturing.

“Absolutely, they’re committed. But the US has a lot of leverage because we have the engines and the avionics and the APU [auxiliary power units – ed. note] and, the US could cut them off in five minutes,” he explained. “They wouldn’t be in a position to replicate that.”

“It’s more than just the aircraft,” he continued. “You [have] got to create a whole global airline product support network. It took Embraer a long time to get that. So, they have some hurdles: certification, product support and manufacturing in quantity.

“You know, if you make four or five [aircraft] a month, it’s not going to move the needle when we are talking about [a market of] more than 1500 jets a year.”

In any case, Udvar-Házy did not sound too upbeat about the prospects of the production constraints being lifted anytime soon.

“I think we’ll get better, but not much better,” he said. “Look, Airbus set some ambitious goals, 75 narrowbodies a month. I don’t think that’s achievable in the next two years. It’s like saying, ‘I can run 100 meters in 10 seconds’. I can’t. But I tell the outside world I want to run in 10 seconds. Well, it’s not realistic.”

Udvar-Házy also had some words for US manufacturer Boeing, which is still reeling from multiple crises.

“I think they missed some golden opportunities to refresh their product lineup,” he said. “And, you know, they invested a lot of money in the 777X which, in retrospect, will turn out to be an expensive judgment error.”

Udvar-Házy was also critical of Boeing’s decision not to pursue a New Midsize Airplane (NMA). A concept that has been extensively discussed in aviation circles for quite a few years, it would involve the development of clean-sheet aircraft for high capacity, medium haul routes, such as the US Transcon market.

He said: “Boeing should have made a move already, but I think the window of opportunity is gone now, because what kind of engine are they going to use? And where do you make it? Do you make it in a union state, in a non-union state? These are questions that Boeing will have to deal with.”

Airbus’ past decisions also got some criticism from Udvar-Házy, particularly the A380.

“A financial flop for Airbus, except for Emirates,” he stated.

In a conversation with AeroTime back in 2023, Emirates’ CEO Tim Clark had expressed his wish for an even larger plane. But Udvar-Házy is not having any of it.

“That’s Emirates,” he said. “But they don’t speak for the whole industry. For them, the A380 is fine, but for most airlines it’s no good.”

Udvar-Házy also expressed skepticism about Boeing’s 777X program, stating: “What 777X, and when?”

On the future of the aircraft making industry

So, is it time for a paradigm shift in the industry? And is the drive towards sustainability an opportunity for new entrants to disrupt the market with radically new technologies and concepts, such as the blended wing body aircraft proposed by JetZero?

“Maybe, but not on a large scale because, again, they don’t have the funding,” he said. “They don’t have the production capability. And those new designs always have hurdles. Yeah, they might look good on paper but once they get into actual operations it’s challenging to replicate a global franchise of commercial aircraft.”

Udvar-Házy also had words for the much talked about advanced air mobility space.

“All of this reminds me of the US automotive industry,” he said “In the 1930s there were hundreds of companies making cars and then by the time the Second World War ended they were down to seven or eight. So, it’s the same thing. A lot of good ideas. But what are the commercial applications?

“I would say 80% of the money that’s invested in that space is going to be lost. So, you see Lilium already. You’re seeing businesses fold one by one. Because you can’t get from concept to economical production. It’s a big step to get certification. It’s not a space for us because the dollars are so small.”

We couldn’t conclude our conversation without also mentioning the third major commercial jet maker, Embraer.

“They have a good engineering capability. The C390 [a multirole military cargo aircraft – ed. note] is a really good airplane, but it’s too bad that their Boeing relationship ended because I think that would have actually been positive,” However, Udvar-Házy underlined that the Brazilian manufacturer is unlikely to challenge the dominant players on its own. “Not on a huge scale, they need a brother to hold their hands,” he said.

So, where is the commercial aircraft market headed? And are we still going to see what is essentially a duopoly 20 years from now?

“No, it won’t be a duopoly,” Udvar-Házy said. “But I don’t know whether it’s going to be three players or four. Something will definitely change.”

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SkyTeam CEO Patrick Roux on the goal to be the ‘most integrated’ airline alliance

Miquel Ros — Wed, 11 Dec 2024 04:00:00 +0000

In June 2025, SkyTeam, the youngest of all three major global airline alliances, will turn 25.

From the four original founding members, Delta Air Lines, Air France-KLM, Aeroméxico, and Korean Air, SkyTeam has grown to encompass 19 carriers from all over the world.

AeroTime spoke with SkyTeam CEO Patrick Roux to better understand the current state of the alliance, its inner workings, and what sets it apart from its global competitors, Star Alliance and oneworld.

A telecommunications engineer by background, Roux is an airline industry veteran who, prior to leading SkyTeam, held a string of senior roles at Air France-KLM at different locations around the world.

“I started in revenue management, implementing the first yield management system at Air France,” he said. “That was prior to becoming the Chief of Staff of Air France’s CEO.”

A key development in Roux’s career took place in 2004, with the successful merger of Air France with Dutch flag carrier KLM. As the airline’s then Head of Marketing, Roux was instrumental in defining and implementing the group’s dual marketing strategy, a set up that remains in place to this day.

One project Roux is particularly proud of is the merging of both carrier’s loyalty programs to create the Flying Blue frequent flyer program.

“It sounded like a crazy project at the time because it was the first time in the industry that two major loyalty programs merged,” Roux said. “And we did it. That was very exciting.”

After this achievement, Roux moved to New York to head Air France-KLM’s United States operations, just in time to oversee the group’s closer integration with Delta Air Lines and to forge partnerships with Latin American carriers such as fellow SkyTeam member Aeroméxico and GOL in Brazil.

“These were the early days of the joint venture with Delta,” he said.

Since 2009, Air France-KLM and Delta Air Lines have been in a joint venture to manage their transatlantic operations.

“We completed the integration of our commercial teams in the US into Delta’s organization, and they did the same in Europe,” Roux said. “So, we created a very powerful sales tool. That was my first strong interaction with Delta.”

In 2008, Delta Air Lines acquired Northwest Airlines, a carrier which had a long history of cooperation with KLM, which made the integration a lot easier. Roux then headed to the Asia-Pacific region, with a role analogous to the one he held in the US. From there he helped establish or consolidate strong partnerships with a handful of Asian carriers, such as China Eastern Airlines and Vietnam Airlines.

“It became quite obvious that I had a passion for alliances and when the position of Head of Alliances at Air France-KLM became vacant, I was appointed to that position,” said Roux, who took on the post of SVP Alliances at Air France-KLM in 2016.

The role was a natural conduit for Roux to become the CEO of SkyTeam five years later.

How to manage an airline alliance

But how does managing an airline differ from managing an alliance? What is the governance structure of an alliance like SkyTeam? And what mechanisms hold so many different carriers together?

“We have the CEO meeting, which takes place twice a year and we call it the ‘Alliance Board’, and we also have another meeting, which we call ‘Executive Board’. The latter is roughly composed of the CCOs of each of the members and its purpose is more business-oriented, aiming to define priorities and projects.” Roux explained. “We have it three or four times per year. At this executive board we also appoint the members that will act as sponsors of each of our strategic projects and priorities.”

He continued: “It’s what we call co-creation and co-ownership, that’s our real DNA, our way of working. It’s not a team developing a project and then asking the other members whether they want to use it or not. As a group, we develop projects that make sense for all of our members.”

But what is SkyTeam’s main selling point for airlines that want to join? And what sets it apart from the other two major alliances?

“Usually, we are not hunting very actively because, as we always say, we don’t want to be the largest alliance, we want to be the most integrated one,” Roux explained. “Most of the time, one or several of our current members acts as sponsor for an airline that wishes to join. It was the case with Virgin Atlantic and, more recently, with SAS. Those two airlines were already part of an ecosystem which included a significant subset of our members.”

The two airlines are the latest to become part of SkyTeam with Virgin Atlantic joining in March 2023 and SAS in September 2024.

“Joining SkyTeam made total sense for them,” Roux added. “Also, from the customer experience side, or to be able to use very strong products like Sky Priority, or to be part of our knowledge exchange program, which shares best practices with all other members. But, again, it all starts with cooperation among a few members, which creates strong benefits for the customer. Thanks to SkyTeam, they can then extend those benefits.”

So, what requirements must airlines comply with to join SkyTeam?

“Well, there is a long list of requirements: joining requirements, membership requirements. There are more than 40 of them,” Roux said. “What we do is define a plan together with them [the prospective members] and at the end of this process, we organize an audit.”

“It was the case for SAS,” he continued. “The audit was done in August, and they joined on the first of September [2024]. What is nice is that this audit is not only done by us, as an alliance, but also by other members. It’s a co-owned process to make sure that all those requirements on the checklist are fulfilled before they join.”

“By the way,” Roux added. “This audit is not only done during the joining process. We conduct audits on a regular basis to check compliance with our requirements.”

As usual, whenever alliances are concerned, there is a fine line separating the responsibility of each airline and what pertains to the airline. Roux is clear and straightforward on this.

“Usually, we don’t act on behalf of the airlines,” he said. “They are the ones selling, operating, and talking to customers. We are acting behind the scenes, creating products that they can benefit from and that they can put in front of their customers, but are not necessarily visible as SkyTeam products. So, we always let our members be in the lead.”

He continued: “We have some important brands, like SkyPriority, that all our members use, but then it is up to the airline to use them. For example, Air France is organizing its own SkyPriority process at Paris-CDG, while Korean Air is organizing its own SkyPriority process in Seoul (ICN). So, we organize the commonality, the seamlessness, but, at the end of the day, it’s each of the airlines that is implementing these services with their customers.”

Airport lounges are one of those rare instances where SkyTeam is investing under its own brand.

Roux explained the rationale behind this.

“We have five SkyTeam lounges in the world. We decide jointly with the airlines, where do we have a gap, where we don’t have one of our members with a lounge able to accommodate all other members. It then becomes a SkyTeam lounge. It’s one of the exceptions, in which SkyTeam offers a branded proposal directly to the customers.”

In this regard, Roux did not rule out the launch of other customer-facing products under the SkyTeam brand. One such product could be a SkyTeam around-the-world ticket like those already offered by Star Alliance.

“We had that for a long time, and we are not now considering a relaunch because there’s a real customer expectation around that,” he said. “That was a B2C product that you could book on the SkyTeam website. If we relaunch it, though, I think it would be more behind the scenes, because we are not a distribution channel.”

That said, it is ultimately loyalty benefits that many travelers care about when it comes to assessing the different alliances.

“When you see where the expectations and value creation lie among carriers in an alliance, the number one is network expansion,” Roux said. “But the second one and perhaps if seen from the customer perspective, even the first one, is customer recognition. So, not only being able to earn and burn miles throughout the alliance but also being recognized across the board when traveling on another SkyTeam airline. That’s one of our key roles, to provide the technology that creates this seamless experience.”

In fact, a lot of what an alliance does relates to the integration of the digital processes that power any modern airline, connecting systems regardless of the software platforms each of the individual airlines is using.

“It’s a joint IT platform. We call it the ‘digital spine’, and it hosts all these interconnections between different systems that create a seamless experience,” Roux said. “Once an airline is plugged in to our platform, it is immediately connected to all other members. This allows for what we call ‘elite recognition’ among our loyalty members, but also for seamless check-in, baggage tracking, real time flight information and so on. For example, a Delta customer can stay in the Delta app and check all this information when traveling on Korean Air, for instance.”

A recurring topic when talking about alliances is whether the model is still as relevant as it used to be at the time of its creation, particularly after many individual members have sought their own bilateral partnerships with non-aligned carriers or even, in some instances, with members of competing alliances. Roux, of course, has a strong opinion about this matter.

“This has been said for at least 10 years, that the alliances are from the past and that the ‘new black’ is the joint ventures or equity partnerships,” he said. “Well, first of all, alliances have shown their power when they are in place. But there are also some limits because they create closed environments, so you need to have a more flexible or hybrid model and extend it to other partners. An alliance can play a very active role in that.”

Secondly, Roux noted how the COVID-19 pandemic revalidated the alliance model.

“COVID has shown the power and beauty of being part of a family, especially when you enter into uncharted territory, and you can be quicker in implementing new solutions that were never tried before,” he said. “That was the case at that time, with all the sanitary measures and checks, when scale could play a very important role. The value of alliances has grown again for all these reasons.”

SkyTeam, for example, has defined rules to regulate how much its member airlines can partner outside of the alliance.

“The way to do it is to define a kind of flexibility bandwidth. If you remain within the bounds of this bandwidth, defined as a percentage of your business volume that takes place within the alliance, the more you’re allowed to be unfaithful,” Roux said jokingly.

“That’s quite a virtuous circle, because the more you work through the alliance, the more tolerance you get,” he continued. “When you exceed this bandwidth, you have to go to the board to get a waiver and also to give a chance to SkyTeam to get first refusal rights and make sure that if you go outside sky team, you have first explored all other opportunities to partner within the alliance.”

However, Roux added that this option is not used often.

So, is there a natural limit to an alliance’s growth?

“There’s a limit which is linked to complexity,” he said. “You cannot manage 100 airlines, otherwise, you will align on something that will be not meaningful.”

Roux also spoke about the sort of criteria that determine which airlines get invited to join an alliance like SkyTeam.

“It’s a mix of size and complementarity,” he said. “We need to have big partners, Tier A partners, in all regions, and we also complement them with more local ones that can bring different flavors to the alliance. But other than that, we try to make sure that the members are bringing something, either a home market or a unique flavor, customer experience or specific knowledge about a topic.”

“It is all of this combined that makes the power of SkyTeam,” he added.

Here, Roux returned to the recent arrival of Virgin Atlantic, which was already partly owned by Delta Air Lines, and SAS, which made the switch from Star Alliance after receiving a substantial investment from Air France-KLM.

“The two of them are bringing a kind of new joiner energy, which is really great. It is a totally new thing for Virgin Atlantic because they were unaligned and their whole model was built on their independence and the uniqueness of their customer experience. So, it was totally new for them to be part of a wider family,” Roux said. “But they immediately saw the benefit and beauty of extending their customer benefits while keeping this unique DNA and brand. They bring to the alliance this full focus on customer experience, and that’s very good.”

Roux also spoke positively about SAS.

“SAS is different. They know, of course, what an alliance is because they were a founding member of Star Alliance. So, for them, it was a no-brainer to join another alliance. What they bring is a deep knowledge of alliances and a lot of professionalism, energy, and enthusiasm. They also bring something unique, which is being a Scandinavian airline, adding to our network all the extra reach in the northern regions,” he explained.

At this point in the interview, Roux underlined the curious fact that SkyTeam is currently the only alliance serving both the northernmost destination in the world, Svalbard (LYR), Norway, and the southernmost one, Ushuaia (USH), Argentina, with a scheduled commercial air service.

“But on top of that, they [SAS] are bringing something else: a concern about sustainability, which is, as you know, quite sharp in the Nordic countries,” he continued. “So, they are also contributing to our strategy about sustainability.”

And, just as some carriers are joining SkyTeam, another may be on its way out. If and when Lufthansa finalizes its acquisition of ITA Airways, the Italian airline is expected to gravitate towards the Star Alliance family.

When it came to this topic, Roux was brief.

“Now it’s in the hands of the European Commission, which needs to give its final approval in November [2024],” Roux said “If it’s confirmed, we’ll organize the transition with them. It will make sense. The same way it makes sense for us to move, but we are waiting for their go-ahead because it will be their decision.”

Roux also highlighted how, in the case of SAS, the transition between different airlines was relatively quick and smooth.

“It takes between one and a half and two years for the joining process, but in the case of SAS, it took only between six and seven months to make it happen,” he said. “This is also because of their professionalism and the deep knowledge of how alliances work.”

SkyTeam has also been looking outside of the airline industry to provide more transportation options to its passengers. In September 2024, the alliance signed an agreement with Eurostar to facilitate connectivity between air and rail at Paris-CDG airport. Shortly after, SkyTeam also began to collaborate with Italian train operator Trenitalia.

“It’s important for us, for tourism. This is, first of all, part of our sustainability strategy to extend the airline experience to train operators. It’s a customer request. It’s a strong customer expectation to be able to combine an airline and a train trip,” Roux said. “For us, it is important to create a seamless experience, as we already do between our member airlines. This is why we engaged first with Eurostar and then with Trenitalia to see how we can extend this seamless customer experience to train operators and connect them to the airlines.”

Roux clarified that while those train operators can be considered strategic partners, they are not alliance members. “Maybe one day,” he added.

“From the customer experience angle, we want to create the ability if to not to check-in, because there is not really a check-in the process in the train, at least to offer real time train information,” he said. “For instance, in the Air France app, and to distribute multi-leg segments more easily and also have this customer recognition that I was talking about and be able to earn and burn miles easily when combining the two experiences.”

Roux also explained how some SkyTeam members already have bilateral agreements with other train operators and how this could serve as a launchpad to expand the alliance’s multimodal offering.

“What we want to build is something robust, a little bit plug and play that can be used to accelerate agreements with train operators and being able to recognize our joint customers in both systems,” he said. “We are now exploring what pieces we can implement as soon as possible with the train operators.”

The sustainability challenge

SkyTeam also considers sustainability to be a non-competitive advantage, something that can be fully shared.

“Each airline has their own sustainability policies and initiatives, and we’re not doing that on their behalf,” Roux explained “So, our role is to accelerate and exchange the best practices. We feel that it’s necessary to help our members accelerate towards this transition.”

One way SkyTeam is trying to do this is through friendly competition between alliance members called “The Aviation Challenge”, which aims to test new ideas, evaluate the results and, ultimately, adopt and implement them.

The Aviation Challenge is already in its third edition, and in 2024 two non-SkyTeam affiliated carriers, Corendon and TUI, are also taking part for the first time.

“In the first two years it was more about testing new ideas and this time we said, ‘Okay, we want to see how you adopt each other’s ideas in order to accelerate this transition’. We think it’s for the sake of the whole industry, and not only for SkyTeam,” Roux said.

While the Aviation Challenge is presented as a competition, complete with its own awards ceremony, the main return is the pride of being a good citizen and contributing to accelerating the transition, helping the whole industry to move forward.

“We don’t consider that as a competitive element,” Roux added. “It is an element of good citizenship. This is probably the main engine in all our members’ motivation.”

SkyTeam has another platform aimed at creating an innovation ecosystem with technology partners and universities in those countries where it has members.

“We organize challenges about innovation. It’s like an incubator, to accelerate some digital projects, for example, distribution projects,” he said. “It’s wider than sustainability.”

In any case, and in addition to the aforementioned initiatives, SkyTeam also has certain benchmarks and guidelines that its members must follow in terms of sustainability.

“We believe it’s also part of the commitment of SkyTeam members to commit to certain standards. We also created nine sustainability standards, which are being rolled out right now, where all members make certain commitments, not only with regards to climate change and CO2 emissions reduction, but also in areas such as gender parity and social responsibility,” Roux said. “For example, SkyTeam was the first alliance to sign the 25by2025 initiative of IATA [a campaign to drive greater gender equality across the aviation industry – ed. note] a few years ago.”

Roux highlighted the RISE leadership program launched by SkyTeam, through which each of the member airlines selects one or two female talents who will receive training with a view to becoming future industry leaders.

What’s next for SkyTeam?

When it comes to discussing the alliance’s next challenges and milestones Roux mentioned SkyTeam’s Cargo Alliance, the first for a major airline alliance. The program, he explained, aims to offer the world of air freight the same seamlessness that alliances bring to the passenger experience.

“We can also see the industry’s new challenges popping up. One of them is the new distribution capability (NDC), which also creates some opportunities in the retail arena,” Roux said. “That’s something we are active in and are launching some innovative projects around that, because this is a way to create more concrete benefits for our customers and this is where an alliance can play an active role.”

Roux concluded the interview by reaffirming the core tenet of the alliance – to act behind the scenes, streamlining the experience its airline members offer to their passengers.

“The other priorities are to continue creating deeper benefits for our customers, as far as technology, sustainability and loyalty are concerned,” he said. “Those are our main priorities, together with intermodality and the expansion of all these benefits to train journeys.”

The post SkyTeam CEO Patrick Roux on the goal to be the ‘most integrated’ airline alliance appeared first on AeroTime.

Air Astana: How Central Asia’s largest airline is looking abroad for growth

Miquel Ros — Tue, 19 Nov 2024 04:00:00 +0000

Kazakhstan barely figured on the global aviation map back in 2005 when Sir Richard Evans, then Chairman of British aerospace and defense group BAE Systems, offered Peter Foster the top job at the newly established Air Astana.

Foster, who had previously held senior executive roles at Cathay Pacific, Philippine Airlines and Royal Brunei Airlines, accepted the challenge to take the new fledgling national carrier and turn it into the largest airline in Central Asia.

BAE’s involvement in the Air Astana project, in which it took a 49% equity stake, was almost a byproduct of conversations with Kazakh authorities about selling them a military radar system.

And while the radar deal never materialized, Air Astana proved wildly successful. The airline went on to become the undisputed regional leader, holding simultaneous share listings on the London Stock Exchange and the Kazakhstan Stock Exchange in February 2024.

Under Foster’s leadership, Air Astana has also been instrumental in opening up this huge country, roughly the size of Western Europe, for tourism and business.

Far from declaring that the mission has been accomplished, though, Foster still sees huge potential for further growth in the Kazakh air travel market. The country’s emerging middle class is increasing its propensity to fly and tourists from around the world are starting to discover Kazakhstan as a unique and relatively untouched travel destination.

AeroTime traveled to Almaty, Kazakhstan’s largest city and Air Astana’s main hub, for an extended conversation with Foster and to learn more about Air Astana’s current and future projects.

“We have had a pretty solid first six months of the year [2024 – ed. note], with, give or take, a 12% increase in revenue and performance and capacity and the booking curve for the third quarter was very positive,” he explained after AeroTime mentioned how our Air Astana flight from Europe was full to capacity.

However, Foster was careful not to provide specific figures, since Air Astana is currently a listed company with all that entails in terms of information disclosure.

Air Astana’s successful IPO is an achievement that Foster is understandably proud of and one which has also been transformational for the company’s capital structure.

“We had just two shareholders for 22 years [51% of the airline was owned by the sovereign wealth fund of Kazakhstan, the other 49%, by BAE – ed. note], now we have some 60,000 shareholders. That process went well,” said Foster while noting that, while both foundational partners remain major shareholders in more or less similar proportions, their ownership share has been diluted to the point that Air Astana can no longer be considered a government-owned company. “This changes everything,” he added.

The IPO could be seen as a sort of recognition of a long-running growth trajectory. Even the pandemic only managed to make a small dent in this trend.

“We came out of COVID much earlier than everybody else because the Kazakh government allowed people to start flying reasonably early, so we came out of the pandemic much faster,” he explained. “We had good growth, but it was spread over a wider period of time, therefore it was less precipitous than for other carriers. We didn’t have a boom and bust and continued on a fairly even trajectory, which is how we like it.”

Getting Kazakhstan to fly

“This region is a massive growth market. We are only really seeing the beginning of its potential,” he continued, highlighting that the Kazakh market still has quite some scope to grow if it is to catch up with other markets with similar demographic and economic parameters.

“In 2019, the average Kazakh traveled by air only 0.2 times per year and that’s for a country that’s the ninth biggest in the world by area where it takes 3.5 hours to fly from one end of the country to the other,” Foster explained. “Imagine a country the size of Australia, with vast distances. So, clearly people have to travel by air, and yet, the propensity to travel is very low.”

“There is a comprehensive rail network, but it’s an old Soviet one, and it’s slow,” he continued. “Even today, after we launched FlyArystan [Air Astana’s low-cost carrier – ed. note] propensity to travel is still at about 0.45 trips per year, well beneath countries like Malaysia, with a similar GDP per capita, but a much smaller country,” Foster said, reiterating is long-term optimism about Kazakhstan’s untapped growth potential.

While it operates a substantial domestic network, Air Astana’s attention is focused on the international market. The Kazakh carrier has been a pioneer in narrowbody aircraft use on long routes, with some of its Airbus A321LRs racking up segments over eight or nine hours long on westward flights to Europe. In fact, Air Astana has not waited for Airbus to launch the long-awaited A321XLR and has started to fit its current A321LR fleet with extra fuel tanks to extend their range.

This modification brings the regular A321LR aircraft close to the range of the XLR version and, since September 2024, it has allowed the airline to operate the route between Almaty (ALA) and London-Heathrow (LHR) nonstop. Previously this route required a technical stop in Western Kazakhstan.

“A lot of people were asking us, why aren’t we getting the XLR instead. Well, the answer is that the LR, with the ACT [Auxiliary Centre Tank – ed. note], will do what we want it to do,” Foster said. “When we took the decision to modify the A321LRs, the (A321)XLR wasn’t even certified. It is now, but it has not flown yet. So, would you rather take something we know works or take a chance? So that’s your answer. On paper the XLR might have just an extra 200-300 nautical miles on top of our modified LR.”

While the European manufacturer collaborated with Air Astana on the range extension project, the actual modification was performed in-house at the airline’s own Maintenance, Repair, and Overhaul (MRO) center in Astana.

“We have a very good base maintenance capability,” Foster said.

Air Astana plans to add this extra fuel capacity to all its A321LR fleet and is already considering deploying them to destinations other than London, likely in Asia.

“When we got our first A320s in 2006, you couldn’t conceive of flying them between Kazakhstan and London or Japan or Seoul. So, it just goes to show how technology has enabled us to do stuff that we couldn’t even imagine we would ever be able to do,” Foster said. “We were trundling around with B757s until 2020 so, we’re getting 40-50% of fuel savings with the same aircraft configuration we were operating years ago.”

He continued: “We hope to get all of them done by the end of next year or beginning of 2026. We made an order for seven extra A321LR aircraft, and we won’t get them modified at the time of manufacture, but they’ll come here and get it done, because there is no point in having non-modified aircraft.”

Awaiting the Dreamliners

In addition to this extensive use of the A321LRs capabilities, Air Astana is currently preparing for the arrival of three Boeing 787 Dreamliners, which will considerably expand the carrier’s long-haul network options.

Foster declined to comment on speculations that Air Astana may try to launch nonstop flights to the United States and did not provide a timeframe for entry into service.

“Last time we were told it would be by the end of 2025 but obviously with what’s going on, we can’t be sure,” he said. “What we’re seeing with Boeing is almost like a slowly unfolding Greek tragedy. It just gets worse and worse and worse.”

However, Foster did confirm that the three Dreamliners will not be replacing the three Boeing 767s Air Astana currently has in its fleet.

“We’re going to keep the 767 until the end of 2028. They are doing a good job for us,” he said. “We use them in the summer on European routes and in winter on the Southeast Asian ones. The B767 is, for us, what I would call a high season aircraft. If you’ve got a high season aircraft, you don’t need vast numbers of them.”

Foster explained that Air Astana’s network expansion is not driven by the number of aircraft available, but by a rather conservative approach to market expansion.

“We have relatively thin markets in Central Asia,” he said. “It is a big growth market, but the aggregate market size is still pretty small.”

Air Astana also used to operate Embraer E-Jets, including one painted in a special eye-catching livery depicting a snow leopard. These relatively small jets, however, are now on their way out.

“They’ve been a good partner all these years. If we wanted to have a regional jet, Embraer would be perfect, but we just don’t need regional jets now,” Foster said. “We want volume and high quality and, unfortunately, Embraer can’t provide volume and can’t provide high quality. All the pilots have been converted to Airbus, so we’re just waiting for these jets to go.”

Connecting Kazakhstan to the rest of the world

Air Astana targets a rather eclectic mix of passengers, with around 15% connecting traffic. This is a figure Foster expects to go up, particularly after the opening of a brand-new international terminal at Almaty International Airport in June 2024 and the upcoming inauguration of Air Astana’s flagship business lounge at that airport.

“At the moment, roughly speaking, our traffic is 75% Kazakh and 25% foreign. Now that’s maybe too much if you take a sort of an academic view of what a market mix should look like,” he explained. “Most people would tell you that relying on 75% on your home market is too much, particularly since our home country only has 20 million people. But, as I say, it’s 20 million people who are increasingly traveling more.”

When it comes to international traffic, Foster highlighted the growth of the Indian market [Air Astana flies daily to Delhi (DEL) – ed. note], which is mostly driven by the increasing interest of Indian tourists in Central Asian destinations.

“Without saying more than I’m allowed to say at this point, we are very conscious of the huge potential of the Indian market, extremely conscious,” Foster said, before moving on to talk about other markets the airline serves.

“We don’t do as well as we should do in some other outbound markets, such as Korea. We hope to do much better from there. We look forward to doing well from Japan, which, notwithstanding the weak Yen, is also having a good period in terms of outbound travel,” he said. “We do pretty well from Europe, as well. In Germany, for example, a lot of our business is the German diaspora, ethnic Germans who used to live in Kazakhstan and went back to Germany, but still travel back and forth. We ought to do better in all these markets, particularly now that Central Asia is becoming more of a destination, for business and for leisure.”

Air Astana was also forced to readjust its network after Russia’s full-scale invasion of Ukraine in February 2022. The airline ceased all flights to neighboring Russia on March 11, 2022, without prospects to resume anytime soon and has avoided overflying Russia, adding flying time to its European routes.

Foster explained that the airline has managed to mitigate the impact of these measures.

“The Russian market hadn’t fully come back after COVID,” he said. “Russia was very slow to reopen after the pandemic, so it was still a very small market for us. Also, as a result of what’s happened, a lot of business has gravitated to Kazakhstan and other countries in this region.”

Air Astana splits its international operations between Almaty and Astana (NQZ), the country’s newly developed capital. It also operates some services from other Kazakh cities, such as Atyrau (GUW) to Amsterdam (AMS), which mostly serves the oil and gas business or the recently launched routes between Western Kazakhstan and the Gulf.

However, Foster highlighted that Almaty, Kazakhstan’s largest city, remains the principal hub of the airline.

“We have a secondary hub in Astana, but when we look at the international services out of Astana, they’re all operating for a specific reason. The Astana to Beijing route, for example, is because of the relations between the two governments, and there’s a lot of investment from China and a lot of Chinese investment,” he explained. “Most Chinese investment tends to be state-owned Chinese companies. And so, state-owned Chinese companies tend to invest in, you know, oil and gas and minerals, and tend to have their headquarters in Astana. The same goes for Seoul, Abu Dhabi, and Dubai.”

He added: “There is good business from Astana, but it is not a hub in the sense that Almaty is.”

Air Astana expects to end 2024 with a fleet of 59 aircraft, which, Foster said, is slightly ahead of target.

“That’s because we’ve got two more CEOs than we had planned for in order to address the issues with the GTF engines, which everybody is talking about,” Foster said, confirming the carrier has also been affected by the global supply chain issues across the industry.

At this point, Foster sounds quite critical of the OEMs not being able to get their act together.

“The OEMs keep blaming global supply chains for everything that goes wrong. Actually, we all have supply chains in life. Don’t we? We need our groceries and transportation and everything else,” he said. “Hiding behind supply chains is becoming increasingly irritating. We expect OEMs to get a handle on their supply chain. It’s just like the rest of humanity has to do.”

Air Astana has been forced to ground 16 aircraft due to the GTF engine issues and has kept some of these grounded during low demand seasons to guarantee they will be ready to fly during peak demand periods. In Kazakhstan these are basically June to September and mid-December to mid-January.

The launch of FlyArystan

In 2019 Air Astana launched its own low-cost airline, FlyArystan, which has been instrumental in growing the Kazakh air travel market by getting more segments of the population to fly. While still wholly owned by Air Astana, FlyArystan has become increasingly independent from an operational and marketing perspective.

“FlyArystan is now formally separate. It’s got its own AOC and it’s already marketing its flights under the FS code,” Foster explained. “Richard Ledger [FlyArystan’s CEO – ed. note] runs it as a separate organization. That said, of course, there were tons of synergies. We share pilots and engineers and a lot of other shared services.”

Foster referred to similar cases in which a full-service airline and its low-cost subsidiary operated coordinately while keeping a degree of operational independence.

He said: “I think you could probably put Scoot and Singapore Airlines into the same basket or Qantas and Jetstar. There has to be some arbiter who decides who gets what route and says, ‘you’ll have this, and you’ll have that’, so we do have ultimate control of who gets what capacity, and we try and manage that process as best as we possibly can.”

Foster explained how the two airlines cater to different publics and have different passenger profiles.

“There is some overlap but it’s very little. Sometimes we have to do brand substitutions and if we replace an Air Astana aircraft with a FlyArystan one, it usually does not go well, despite FlyArystan providing a perfectly good service for what it sets out to do.

“They’re not rude in any way,” he added. “In fact, they’re very good. But it is a very different market profile.”

Foster picked Cebu Pacific, the Philippine low-cost airline, as an example of the sort of dynamic FlyArystan has unleashed in the Kazakh domestic market.

“When they started, they completely changed the profile of travel in the Philippines,” he said. “All those people who were traveling by boat between the islands started traveling by air. It completely changed the market. So, we’re seeing the same here. Kazakhstan is, of course, not split by the sea, but it is split by these huge distances. So, you’ve got the choice between a three-hour flight or a 24-hour rail trip. Which one are you going to take?”

Partners and competitors

Foster does not see Air Astana joining any of the major alliances for the foreseeable future.

“We codeshare with Lufthansa to Frankfurt (FRA), with Turkish Airlines to Istanbul (IST), with Asiana to Seoul (ICN), and we very much hope we will codeshare with Korean Air to Seoul as well,” he said. “We used to codeshare with S7 to Moscow (DME), although that’s no more, and with Cathay Pacific to Hong Kong (HKG), but we don’t fly to Hong Kong anymore.”

“We will start code sharing with Japan Airlines to Tokyo soon, though,” he continued. “It’s not in our interest to join any one particular alliance because we can codeshare with all the three major alliances.”

The maze of restrictions and regulations put in place during the COVID-19 pandemic led Air Astana to experiment with some new routes that have since consolidated as regular leisure markets.

Foster said: “During COVID we started flying to the Maldives and Montenegro because these countries said, ‘you can come here with just a PCR test, and it’s fine’. So, we said, ‘fine!’ and everybody loved those routes. Then we started Phuket for the same reason. We had always done Antalya (AYT), but now we are also doing Bodrum (BJV) and Heraklion (HER). We’ve announced Phu Quoc in Vietnam, Sanya in Hainan, China, Colombo in Sri Lanka, and we’re looking at others as well.”

“The Kazakh market is a very sophisticated and well-traveled market these days,” he continued. “There’s a big leisure demand and the middle to upper class travelers [have] got money and high spending. People like to travel and stay at nice hotels. So, there’s a big leisure demand from this region. Dubai, for example, is primarily a leisure destination for us.”

Foster also acknowledged that the Air Astana brand is not as well-known as he would like in most foreign markets.

“We need to do better on this. If I think back to my Cathay Pacific experience, going back into the late 80s and early 90s, that was the time when all the Asian airlines started flying to Europe and, at that time, those airlines were completely unknown,” he said. “Ditto Emirates. They were completely unknown. Nobody knew who these carriers were, but they immediately established a reputation for excellence.”

For this reason, Air Astana relies heavily on travel agents and other intermediaries to sell tickets overseas.

“In Kazakhstan, everybody knows us,” Foster said. “We could sell every ticket directly if we wanted to. But in foreign markets where we are small, we have to rely on the distributors and tour operators. That’s where we need to do better.”

Foster also outlined a number of countries that he sees as strategic for Air Astana’s continued overseas growth.

“Japan, Korea, China, Western Europe, the Gulf, Saudi Arabia, and India. These are the big opportunities,” he said. “We do get quite a lot of business from China and it’s a big opportunity, but it’s slow.”

Embracing competition

Foreign low-cost carriers have also flocked to the Kazakh market. Airlines such as Air Arabia, IndiGo, Jazeera, and Wizz Air Abu Dhabi have all launched routes into Kazakhstan recently, adding capacity and competitive pressure on some markets.

“There’s a lot more competition now,” Foster said. “If you look at our market share, in terms of capacity, the biggest drop we’ve had is to and from the Gulf. But this is actually one of our biggest growth markets too. And domestically, our main competitor is SCAT, which was, perhaps, not a brilliant airline a few years ago, but they’ve got B737 MAXs now and they have also taken over all the Russian flying from us. They’re a different airline now, not really the type of airline we are, but they’ve got about 34% of the domestic market share. So, they’re a substantial domestic operator.”

While Air Astana is undoubtedly a full-service carrier, Foster outlined how the carrier’s efficient cost structure allows it to compete when it comes to both product and price.

“First, we’re an efficient airline. We’ve got high utilization of the aircraft. Obviously, the more you fly an asset, the less the unit cost of owning the asset is,” he said. “Second, our staff costs are relatively low compared to European carriers and similar to those of Asian carriers, even if our pilot costs would be on a par with European ones, maybe slightly lower.”

“Then we’ve got an advantage when it comes to the fuel we buy here,” he continued. “We buy it directly from the refineries and it’s probably about 15-20% cheaper than what we pay at foreign airports. So that’s a big advantage.”

“So, we do have a cost advantage,” he added. “At the IPO, for example, we were able to demonstrate to investors that compared with a basket of about 20 airlines, our unit cost is about the third or fourth lowest. We all know that this ultimately a unit cost game. That’s why we can undercut the competition and still put a good product in the market.”

Cost efficiency hasn’t prevented Foster from thinking about ways to enhance the product Air Astana offers, particularly when it comes to its long-haul services.

“We’ve got FlyArystan, which is a volume carrier,” he said. “We’ve got Air Astana, which is ahigh-quality carrier with a good reputation.”

While Foster expressed his broad satisfaction with the current in-flight product, he did not rule out the introduction of some new services using the new B787s, particularly concerning in-flight entertainment. Some of this would be in the form of an expanded content selection, including the addition of more Japanese, Korean and Indian content, but also the potential installation of in-flight internet, which the current fleet lacks.

Foster did not appear overly enthusiastic about the economics of in-flight internet, although he conceded that new lower-cost systems like Starlink, which is starting to be offered by some airlines, could change his position on this.

“For sure, we’ll have internet on the 787s, although in-flight connectivity is terribly expensive, and the market is not really screaming for it,” he said. “Starlink is an interesting option because we think the technology is going to get much cheaper because it is modularized, and you don’t need to have those big stations all over the place. It doesn’t have universal coverage yet but sooner or later it will.”

“We’re watching it carefully,” he added. “It will change things.”

As we came to the end of our conversation, Foster reiterated Air Astana’s clear international vocation.

“There’s no question that the Kazakh market is destined to grow and that’s great,” he said. “But our big marketing sales opportunity is overseas, specifically India, Gulf, Japan, Korea, China. We’ve got open skies with the US, with the Gulf, with a lot of places with the European system. We’ve got traffic rights from everywhere and there’s nobody using them apart from us.”

“There’s no question that the Kazakh market is growing fantastically well and we’re happy with that,” he continued. “We’ve got a strong team here and we’re extremely well-positioned.”

The post Air Astana: How Central Asia’s largest airline is looking abroad for growth appeared first on AeroTime.

How private aviation firm Comlux takes care of the world’s largest private jets

Miquel Ros — Thu, 17 Oct 2024 03:21:00 +0000

In the exclusive world of executive aviation, Comlux is one of a kind.

This is not just because it is one of the few industry players operating at the top of the market, which includes airliners converted for private use such as Airbus Corporate Jets (ACJ) and Boeing Business Jets (BBJ). Comlux’s rather unique business model also sets it apart from others, with the firm covering every link in the value chain from the acquisition, sale, operation, and crewing of jets, to performing maintenance, cabin fittings and pretty much every service that a private jet user may need.

Comlux has even partnered with Airbus to develop an executive version of the Airbus A220 aircraft, a design it expects will create an entirely new category of large business jets.

When asked to summarize Comlux, Richard Gaona, the company’s CEO, used the word “diversification”.

Gaona is an industry veteran who headed Airbus’ corporate jet division for several years before joining Comlux in 2007.

“When I joined the group, the shareholders asked me to build up the company, to build up an aviation group,” Gaona told AeroTime. “And I have always tried to build a diversified business: diversified in what we are doing, diversified in terms of the territories where we operate and diversified in staff, because I strongly believe that an international team is always better able to understand the client.”

“If you satisfy a VIP client in one particular domain, you have a good chance that he will come back to you for either the same service or something different,” Gaona explained, before proceeding to enumerate the three main areas in which Comlux is active.

He started with Comlux’s work helping clients acquire or sell aircraft, along with the full set of services necessary to operate them.

“When they buy an aircraft in the Airbus or Boeing category, we are also able to do the interiors and operate the plane,” Goana said. “If the customer is happy, if the product is good, in three or four years, they are going to start thinking, ‘What should I buy next?’ I had several clients at Comlux who have been going through this exercise several times.”

He continued: “They have been buying one plane after another every three to four years, and we are their advisors. We are helping them buy at the best price because we are not working for any OEM [Original equipment manufacturer] or as an agent for someone else. We work only for our clients. We are fully transparent.”

Comlux also has an airline division dedicated to helping owners manage their aircraft. For example, by occasionally renting them out on a charter basis. In this regard, Gaona further elaborated on how Comlux’s different business areas support and complement each other. For example, if customers that rent an aircraft have a good experience they may come back and ask for advice on how to acquire their own. When they take this step, Comlux will then provide them with an A-to-Z service.

“We help our customers acquire the plane in the best condition and we then help them build the interior they want,” Gaona said. “Once this is done, we operate the aircraft for them as well. This is how our company has been operating for more than 20 years.”

Diversification at Comlux is also geographical.

“There is always something happening somewhere in the world, territories where you cannot go because there is some problem,” Gaona said. “If you are only in that territory, you die. So, that’s why we are almost everywhere. In America, in Europe, in the Middle East, in Asia. And we also try to respond to the market demand because this is something you can’t control. It’s the customer who decides.”

Comlux also has its own completion center and MRO (maintenance, repair, and overhaul) facilities in Indianapolis, United States, where it can customize and refit aircraft cabins.

“The MRO is complementary to our cabin completion activity,” Gaona said. “MRO is not our core business, but we are very well placed when it comes to doing maintenance on VIP aircraft. If the client decides to upgrade the cabin or change something we are very good at doing that.”

He continued: “We are also doing maintenance work and C-checks on VIP aircraft. For example, right now, we are doing an A319. We don’t do engines because this is controlled by the engine manufacturers, but if we have to remove an engine and send it to the shop, we will do it. It’s part of our job.”

“We are a service center approved by Airbus and Boeing,” he added. “We were originally doing some Bombardier maintenance as well, but Bombardier has now decided to take care of its own after sale service to the point that, for us, there isn’t enough volume to maintain this activity, so we have preferred to focus on ACJs and BBJs.”

Everything you need under one roof

Comlux

Returning to the topic of diversification, Gaona shared how the ability to provide a whole suite of services under one roof is ingrained in his vision of what Comlux is.

“So, we are not a broker or an operator. We are not just doing trading. We are not just a completion center doing cabin fittings and MRO,” he said. “We are all of these things together. We are unique.”

He added: “I don’t know if you’re aware, but Comlux is the contraction of two words: comfort and luxury. This is how the name Comlux was created, not by me, but by the founders of the company 21 years ago, and it has never been changed because we believe in what we are trying to do: deliver a luxury product that is comfortable.”

But how defensible is this competitive position? And aren’t competitors trying to do the same thing?

“Well, first of all, it takes time,” Gaona said. “You cannot build this immediately. You need time to build up an organization such as ours. Second, it takes money; you have to invest. And when I say you have to invest, I don’t mean just renting a hangar or buying some tools. You need people who are able to do this job.

“In aviation, and perhaps even more in private aviation, it is very difficult to build up a team of top professionals and then find enough business to keep them busy, working full time. Some MROs, for example, are trying to get involved in cabin modifications, but they don’t have the sort of skills we have in our shop.”

He continued: “If you come to Indianapolis, we can modify anything. To do that, you need to invest in a huge facility, we have 132,000 square feet. It’s big. On top of that, we have an extremely good engineering team. You need engineering as well because as soon as you touch an aircraft, unless you do something which is standard according to the MPD [Maintenance Planning Data] manual, or you need to do an STC [Supplemental Type Certificate] or a Minor Mod [alterations of the original design that require regulator’s approval – ed. note].”

At this point in the conversation, Gaona mentioned one of the flagship projects Comlux has been involved in: the development of the Airbus ACJ TwoTwenty, the executive version of the A220 airliner. This is a rather complex project for which Comlux has managed to gain certification from two major aviation regulators, the European Union Aviation Safety Agency (EASA) and Federal Aviation Administration (FAA) in the United States.

“There is no compromise. It’s either you have safety, or they don’t approve your modification,” he explained. “So, to be able to do this, you need to have a Design Organization within the company, which we have. It’s a team of seven or eight people who are just doing certification work. These people are difficult to find in the market. If you do just one aircraft a year, it’s not interesting to have it in-house. So, it’s a combination of time, of finding the right people at the right time, and investing.”

Once again, Gaona highlighted how know-how and experience is essential for this type of completion project.

“I remember how, years ago, I saw an A319 aircraft with a galley at the back that, when the door was closed, the toboggan slide did not allow the galley to open. This happened because it had not been designed by people who knew how it worked,” he said. “There are these kinds of mistakes. For example, when we do a cabin interior, the first thing we check is the center of gravity of the cabin. You have to be able to do weight evaluation and calculate the center of gravity. Once we have that, we give it to our pilots who make sure that you are not flying with dummy weight in the cabin. I know of a case in which one of our competitors made that mistake, and the client is suffering forever.”

He added: “So, if you don’t have this expertise, like we have in our team, you can make mistakes, which cost a lot of money.”

The art of selling big jets

If technical expertise is a necessary condition, what about the commercial side? What sort of skills are required to sell large executive aircraft to a highly sophisticated and demanding clientele?

“As you know, I headed the ACJ division at Airbus when it was created. I was appointed to sell aircraft. And I remember how I was told to try to sell 30 planes in 10 years,” Gaona explained. “After eight years, we had sold 120 planes. So, I can say, without being humble, that I know a bit about selling aircraft.

“So, when I joined Comlux, I came with all my experience, and then three friends that used to work with me joined me as well and we built up the new organization,” he continued. “Severine, the current EVP Commercial Operations at Comlux, who was the head of marketing at Airbus joined us, too. We then expanded tremendously because we are very good at selling aircraft and at buying them as well.”

Gaona also explained how it is often more difficult to sell a second-hand aircraft than a new one.

“When an aircraft comes from the factory, it is perfect. You know it will be good because it’s new. You don’t have corrosion; you don’t have any wrong equipment or problems with the engines,” he explained. “When you buy second hand, though, even if the aircraft is only two or three years old, you need to go through all the records of the life of that plane and, if you don’t have very good engineers in your team, you cannot make the proper assessment of its status.”

“If you sell this aircraft and, after delivery, your customer finds a problem that you have not seen during the inspection, you face trouble,” he added.

One of Comlux’s strong points, according to Gaona, is that when buying or selling second-hand aircraft, it is always the firm’s own airline-experienced engineering and maintenance team that will perform a thorough inspection.

“We will do a deep review of the manuals. We will know exactly what the status is and will be transparent with the client,” he said. “Then, if the aircraft is purchased and the client wants to change the interior, I am going to send it to our completion center in the US and we, as experts, will say what’s possible and what’s not possible and how much it is going to cost.”

“So, the client has one entity who can provide all these services. This is what I call the ‘one-stop shop’. We will always find the right expert,” he added. “We know exactly what the status of each aircraft is. If we find an aircraft that has the right price tag, but we know it will have to go through a C-check soon and that’s going to cost the customer four or five million extra, we can raise this point up with the customer, so that we can factor this in before taking a decision.”

“You can only provide this type of personalized advice if you have all the competencies under the same roof,” he continued. “And when the aircraft enters service, we can provide our pilots, our crew. Even if the customer already has a crew, we can provide a replacement crew from our pool when needed and they don’t need to search for a new one themselves.”

Gaona also explained how Comlux helps some of its customers monetize ownership of their aircraft, much like Airbnb.

“My experience is that when customers acquire their first plane, they use it even to go to buy bread. They always find a reason to fly the plane! But when they have been operating the plane for some time and they start getting monthly bills, they usually ask ‘How can I reduce my cost?’, and we tell them, ‘Well, the way to reduce your cost is to give access to your aircraft to others on a case by case basis’. If the customer agrees, we then let them know every time the opportunity arises to rent it out and, this way, they can start generating income.”

“This is a smart way a private jet owner can reduce the cost of operation,” Gaona added. “It doesn’t cover all the costs, but it can help.”

Comlux is one of the few operators in the world focused on the largest segment of executive jets. When asked about how this market differs from that of smaller business jets, Gaona returned to the firm’s A220 ACJ TwoTwenty flagship project.

The TwoTwenty: creating a new executive aircraft category

“ACJs and BBJs are bigger than other executive aircraft and therefore they are the more expensive and sold in much smaller numbers. This is why the TwoTwenty is such a great opportunity because this aircraft costs more or less the same as a purpose-built business jet and its operation costs are about the same but with a much larger cabin,” he explained. “So, we have started to attract clients that were used to buying, for example, Gulfstream or Bombardier, and they are now buying TwoTwenties. It’s not that many because we don’t have too many to sell but the trend is that we can really expand on this one.”

Next, Gaona continued to explain the differences between the market for executive airliner versions and purpose-designed business jets.

“The second difference is that Airbus and Boeing aircraft have been originally designed for the airlines, which are flying them three to four thousand hours per year, while a private operator may fly just 300 hours per year. So, the lifetime of an ACJ or BBJ is much longer,” he said. “You have ACJs that are 10 years old, and they have maybe three to five thousand hours. On an airline that would be just 18 months of utilization. So, the first generation of BBJs and ACJs are regularly resold by their first owners and the new ones are going to invest maybe five to 10 million to upgrade the cabin completely because the life of the aircraft is still long, and they will still be flying essentially a new plane.”

“The third point is the price,” he added. “You can have an Embraer Legacy for $25 million but you have to spend $110 or 120 million for an A320. So, not everybody can buy that. These are two different markets.”

Gaona returned to the importance of specialized skills and experience in this special market.

“We are the specialists in this market and, as I said, we help clients buy. This means that after advising a client on which aircraft he should buy next, I can buy the plane, and I will negotiate the best contract for them and the best customer support conditions,” he said. “The OEM is also happy because it knows we are professionals and whatever happens to the client, we will not walk away from the deal. They know they are dealing with a professional organization.”

“If I was selling just one aircraft, then I would have to go to the market, do a tender for the cabin and, if I don’t have specialists, I may not be buying at the right price,” Gaona continued. “I have the specialists because I have a company that does just this. So that’s why I built this model of find, sell, outfit, fly, sell, outfit, fly and always keep the client happy. This last point is very important to me.”

When it comes to geographical diversification, Comlux is currently investing heavily in the Middle East. The company has already established a significant presence in the region, particularly in Dubai, where its charter sales team are based. This foothold will be expanded with the opening of a new facility at Al Maktoum International Airport (DWC).

“The reason we are in the Middle East is because we have a lot of clients in the region, and we are helping with their operations as well,” Gaona explained. “And then, if they want to replace a battery, for example, we cannot tell them to fly all the way to the US. So now we can say, ‘come here, and we will do that very quickly’. We can put three or four A220s inside the new facility, or two A321s or two or three BBJs, plus all the small aircraft around.”

Cabin interiors also have a strong aesthetic component. So, how does Comlux’s own in-house cabin design work resemble that of other luxury fashion houses?

“At our facility in the US, we have a team which is just doing research and development, and they are constantly coming up with new ideas and solutions. It’s not the same as making a watch, of course, but we work on something that flies high and fast,” Gaona explained, emphasizing the high-tech component of today’s cabin interiors work.

“For example, right now we are developing a new satellite communication system, which we will install on our aircraft. I remember how, at the beginning of the 2000s, you could not have Wi-Fi onboard which was able to transmit data because you could not even talk on the phone, the speed was too slow,” he said. “Today, you can watch a Formula One Grand Prix on TV during your flight. That technology did not exist just a few years ago and, in the future, it will probably be superseded by something new, faster, and less expensive.”

Gaona also explained how many of those elements are not directly visible to the client, such new materials, which are lighter, more resistant and prevent corrosion. The A220, for example, has more composites and less metal than either the ACJs or BBJs of the past.

“It is lighter and less exposed to corrosion, which also extends the life of the plane,” he said. “And when you look at the fuel consumption, the A220 is on the same level as much smaller private jets. So, we are greener because we are saving 30 to 40% of fuel. And more economic, too since fuel represents 40% of the cost of operations.”

“The point is, if you have a smaller business jet, let’s say a [Bombardier] Global or a Gulfstream, and you want to fly long range with more than five or six passengers, I can tell you that the comfort on board is less than what you would get on business class because the cabins are small,” Gaona said before laying out the business case for the TwoTwenty’s development.

He continued: “Aircraft owners are flying maybe 50% of the time with three or four people onboard and that’s okay but the day they want to fly eight or 10, the aircraft becomes too small. So, I have some clients who have two aircraft, one for when they fly a large group and family and so on, and one for other occasions. But not everybody can afford that. So, if the cost of operations is low enough, which is the case with the TwoTwenty, you may have people thinking it’s better to take something in between the A320 ACJ or 737 BBJ and the Global and Gulfstream, and then have one aircraft which can fulfill the two missions.”

Comlux

“This is why I’m a strong believer in the TwoTwenty,” he added, “because I believe that it is in the two segments, and it’s a new offering. Of course, there will always be people who have been buying, for example, Dassault or Bombardier or Gulfstream, and they will keep buying it all their life and they will never change. But you have more and more ultra-high net worth people, who are 40 or 50 years old, who are starting to have grown-up children and need to travel from time to time with everybody. And if they manage a corporation, when they go to meetings, they may take four or five people on the smaller private jet, and the others must go on an airline. But now they can take everybody.”

Comlux delivered the first A220 TwoTwenty to Dubai-based luxury hospitality group FIVE in May 2023 and the second to an undisclosed client (although it is operated by Comlux) a few months later. At the time of the interview, two more TwoTwenty aircraft were undergoing the final stages of completion and set to be delivered.

Gaona has nothing but praise for this aircraft type.

“We have already sold six TwoTwenties that we bought from Airbus and resold. I think it’s working very well. The buyers are very happy, I think, with their decision,” he said. “The A220 works extremely well for airlines and the ACJ TwoTwenty comes from the same production line, so we need more [production] slots. This is a message I passed to the CEO of Airbus Canada. I said, ‘Give us more aircraft. We’ll sell more planes!’ It’s honestly a very good aircraft, well beyond what I thought. And I’m very, very happy.”

First luxurious ACJ TwoTwenty delivered in Dubai

ByMiquel Ros

When asked about his favorite aircraft type, Gaona did not hesitate to provide an answer.

“Today, I will take TwoTwenty, no doubt,” he said. “And it’s not because I’m selling it. If I have to travel for just one hour, I may charter a smaller plane. But if you have a long-range mission, there is no doubt that this is the plane that you should take. It’s the perfect one.”

The post How private aviation firm Comlux takes care of the world’s largest private jets appeared first on AeroTime.

How Gulf Air Group is placing Bahrain on the global aviation map

Miquel Ros — Fri, 27 Sep 2024 07:11:30 +0000

The Gulf region has unquestionably become a key node in the global aviation industry. And amid the vigorous competition between fast expanding hubs and their corresponding airlines, one group has managed to stand out, not just because of its heritage as a pioneer of commercial aviation, but also because of its distinct integrated management approach.

Bahrain International Airport and its home airline, Gulf Air, have been connecting the world for nearly 75 years. Launched in 1950 as a joint project between several countries, Gulf Air came to be associated from early on with a level of excellence and service that has since been somewhat mirrored by younger airlines that have emerged in the region

As each of the original partners later developed an interest in having its own national carrier, Gulf Air strengthened its connection with the Kingdom of Bahrain, becoming its sole flag carrier and an essential component of its portfolio of aviation assets.

Gulf Air

A vertically integrated aviation group

Because, rather uniquely in this industry, Bahrain’s commercial aviation sector is highly integrated, with the Gulf Air Group representing the national aviation assets of the Kingdom of Bahrain, the group has total and partial ownership of companies across the value chain. This includes Gulf Air, as the national airline, as well as the Bahrain Airport Company, which manages the Kingdom’s international air gateway, the Gulf Aviation Academy, Bahrain’s flight training school, which trains future pilots, tour operator Gulf Air Holidays, and several joint ventures with external companies which run auxiliary businesses.

The most prominent of these is Bahrain Airport Services, which runs ground handling and airline catering, but the group also holds stakes in other businesses providing hospitality and airport food and retail services.

Overseeing this diverse collection of businesses is Jeffrey Goh. A lawyer by training, Goh has worked in the aviation industry for most of his career, first practicing aviation law before moving on to the International Air Transport Association (IATA) and then Star Alliance, where he spent 16 years, the last six of which were as the CEO of the major airline alliance.

“I was offered the chance to move to Bahrain and after learning of the project, I thought this is a train I wanted to catch,” Goh said, explaining his move from Star Alliance to his current role, which he took up in January 2023.

“Our vision is to be a leading international aviation group,” he continued. “What we do is geared towards two very clear missions: to be a net positive contributor to the GDP of Bahrain as well as increase the international brand equity of the Kingdom.”

To do so, the Gulf Air Group aims to increase the connectivity between Bahrain International Airport and key cities around the world and to drive up the number of visitors and volume of cargo. Moreover, the group also wants to grow internationally by exporting its know-how to other geographies as an integrated national aviation group.

So, how does the group plan to achieve these goals in the highly competitive commercial aviation market of the Middle East?

In this contest, Bahrain is counting on the charms of its newly inaugurated airport. Unlike other airport projects in the area, this state-of-the-art facility, which opened in 2021, was not designed to be gigantic, but with efficiency and easy connectivity in mind.

“You can get to your gate in about 10 minutes, provided the check-in process is straightforward, and, while our advertised connection time between flights is 60 minutes, most of the time you are able to do it in about half this time,” Goh said proudly.

In 2024, Bahrain International Airport (BAH) expects to recover its pre-COVID traffic numbers of around 10 million passengers per year, which will leave about 40% of capacity (it was designed to handle 14 million annual passengers) for further growth.

Goh highlighted how both the airport and airline strategies are aligned with the Kingdom’s long-term strategy, which is encapsulated in an initiative called “Vision 2030”. This plan aims to boost visitor numbers and make Bahrain a major international tourism and logistics hub.

“We see ourselves as an enabler of this national policy on tourism and economic development,” Goh said. “We now have the project to recalibrate Gulf Air’s network and connect [Bahrain] to key cities and key leisure markets around the globe and make sure the airline remains relevant.”

Goh also mentioned some of the new destinations Gulf Air announced in 2024, such as Shanghai (PVG), Munich (MUC), Guangzhou (CAN), as part of this rebalancing of the network which, he said, is necessary to achieve these goals.

Being under the same corporate umbrella, there is obviously a deep dependency and a symbiotic relationship between the airport and airline. However, Goh clarified that this is not an impediment for other airlines coming into the airport. This is encouraged since it is seen as positive for the Kingdom.

Goh pointed out how Bahrain Airport Company has a program that has been developed within the group to provide an attractive proposition for airlines to fly to Bahrain and bring extra connectivity. In 2024, for example, four operators launched services to Bahrain in 2023 and six more have followed suit so far in 2024.

Talking about Gulf Air’s positioning in the broader international market, Goh said: “From an airline perspective, with our recalibrated network and fleet plans we believe that the pie is large enough to have our slice.”

“We don’t need to be a 400 aircraft airline,” he added. “To the extent that we keep a 50-60 aircraft fleet and remain disciplined and focused on our unique proposition and customer service, Gulf Air will keep its relevance in the international market.”

He continued: “Even if there are more airlines flying to Bahrain as a result of Bahrain Airport Company’s framework to attract new carriers and connectivity, Gulf Air is up to face this additional competition, this will only make us stronger. But what it is important, for both Gulf Air and the BAC, is to look at it from the perspective of a national aviation asset. If there is a net positive for the Kingdom, then these activities are to be supported and developed.”

Building brand equity for its home country

Like most of its neighbors, Bahrain is investing in the development of its local tourism infrastructure. The goal is to entice more visitors to spend time in the country and contribute to the development of the local tourism sector.

Goh explained how, at the moment, transit passengers account for around 60% of traffic at Bahrain Airport, but he is confident that, with time, this number can be balanced with origin and destination (O&D) traffic.

“In the meantime, as we develop this tourism infrastructure, as we introduce Bahrain to the world, as we build the country’s brand equity, we are working together with Bahrain’s tourism authority to develop what I would call ‘interim propositions’ to attract more visitors,” he continued.

One of the projects is a stopover program called “Hello Bahrain”, launched in 2023 and spanning several phases.

The first of these phases is aimed at passengers with transfers of more than five hours. This service provides passengers with a glimpse of several of Bahrain’s most interesting sights between flights.

The group is now moving to implement phase two of the stopover program in cooperation with the Kingdom’s tourism authority. This new product will facilitate stays of one or two nights in Bahrain at advantageous rates, as part of the connecting experience.

The third phase will involve multi-city stopover packages, in which Gulf Air will facilitate travelers using their stopover to combine a visit to Bahrain with other cities in the region, such as Muscat or Riyadh, for example.

Goh explained that what has been implemented so far has received a warm reception.

“More than 90% of those [Hello Bahrain users] that completed the survey said they would come back as a result of this introduction to the country,” he said.

He also explained how the Gulf Air Group is planning to strengthen its cargo and logistics business. The airline does not have dedicated cargo aircraft but carries lots of cargo in the belly of its passenger aircraft.

Bahrain Airport has long been a major regional hub for the logistics firm DHL. This, Goh remarked, helps establish Bahrain’s credentials as a logistics hub. The Bahrain Airport Company plans to continue investing in the development of this sector, including the creation of a new area within the airport dedicated to logistics activities.

“The whole logistics development program is flexible and open, in this regard,” he added. “We can accommodate different types of goods and merchandise.”

Another important project that Gulf Air Group is working on involves the construction of a new facility for the maintenance, repair, and overhaul (MRO) of aircraft.

This MRO facility, which will occupy a sizable plot and is still in the planning stage, is viewed by Goh not only as a significant opportunity to establish a foothold in a globally growing market but also as a platform for the training and career development of many qualified local professionals.

Goh concluded by explaining how both the Bahrain Airport Company and Bahrain Airport Services are considering expanding abroad to provide services and expertise to other airports around the world. While Bahrain Airport plays a central role in the Kingdom’s project to build its international brand equity, some of the group’s next major projects may well take place overseas.

The post How Gulf Air Group is placing Bahrain on the global aviation map appeared first on AeroTime.

Star Alliance’s CEO on managing the world’s largest airline alliance

Miquel Ros — Tue, 06 Aug 2024 13:52:38 +0000

Little more than a quarter of a century ago, in May 1997, five of the world’s largest airlines, United Airlines, Scandinavian Airlines, Thai Airways, Air Canada and Lufthansa, came together to form what is still the world’s largest airline alliance, Star Alliance.

This move kicked off a chain reaction, with some of their direct competitors scrambling to form their own alliances. British Airways and American Airlines led in the formation of oneworld, while Air France had a similar role in the launch of SkyTeam.

Fast forward 25 years and it’s hard to find a major flag carrier that hasn’t joined one of these three major blocs. But at the same time, the airline industry landscape has become more complex than it used to be in those early days. Large chunks of a growing market have been swallowed by non-aligned low-cost carriers and large regions of the globe, such as China, India, and the Middle East, have become major nodes in the global air traffic system. And all of this has happened amid a wave of technological change that has turned the distribution and marketing landscape upside down.

So, are airline alliances still relevant in 2024? And how can they best serve the interests of their members?

Exactly one year after his appointment, AeroTime spoke with Theo Panagiotoulias, CEO of Star Alliance to try to answer to these questions and learn about the way Star Alliance is navigating the increasingly complex environment while striving to provide value to its members.

Panagiotoulias, who is Australian with Greek roots, has been in the airline industry for more than 26 years. Prior to taking on his current role, he held a series of executive positions at American Airlines and Hawaiian Airlines, as well as at Sabre, one of the world’s leading providers of airline booking software.

Although some of these roles had a global dimension, the fact that Panagiotoulias was predominantly based in Asia-Pacific also provided him with a privileged vantage point to witness the rapid growth of aviation in the region.

“Having spent many years in Asia-Pacific has obviously been very helpful because you’ve got so many emerging markets in Asia-Pacific where a lot of the growth is coming from,” he said. “I combine that with having also worked for US companies in the past.”

“This has helped me better understand what direction the industry is taking and what role the alliance has to play,” he added.

The operational, technological, and commercial experience Panagiotoulias gained in those engagements has certainly come in handy within his current role. But when it comes to leading such a diverse alliance a big dose of diplomatic skill is also paramount.

“Within an alliance, you’ve got multiple members with different business priorities serving different types of communities and different focus points and priorities. So, you’re looking for consensus to drive forward enhancements and improving the customer experience,” Panagiotoulias explained. “That’s at the core of what we do.”

What sort of governance mechanisms exist within Star Alliance?

“Consensus is at the core of what we do,” Panagiotoulias said. “There’s nothing negative about that at all. When you think about the different business models that are represented within an alliance, by different airlines with different priorities, different focus points, serving different communities. So, there are going to be many different perspectives, and it doesn’t make any of them wrong.”

He continued: “The overwhelming majority of these airlines have got very successful businesses. So, finding the sweet spot, focusing on that, and achieving consensus is at the heart of Star Alliance.”

As of July 2024, Star Alliance counts 26 members in its ranks. The anticipated entry of ITA Airways, following the European Union’s approval of its acquisition by Lufthansa, will balance out the move of SAS, one of its founding members, to SkyTeam. The latter resulted from Air France-KLM becoming an investor in the Scandinavian carrier.

“We understood and respected the fact that their business had evolved. They had their own challenges; they restructured their business and that has led them down a different path,” Panagiotoulias said. “That’s business. That’s life.”

“They were a founding member and contributed greatly,” he continued. “I know that they got great value from Star Alliance, and we wish them nothing but the best. From our own perspective, though, network-wise, we’ve got still multiple carriers that continue to serve Scandinavia very strongly.”

Another important point is, how much room for maneuver does the alliance enjoy? And which areas of responsibility are covered by the alliance, and which pertain to the individual airlines?

“We put it through the lens of the customer experience: what are the initiatives airlines cannot otherwise do on their own or what are those they cannot as efficiently or as effectively implement on their own?” Panagiotoulias said.

To illustrate this point, he referred to Star Alliance’s new lounge at Paris-Charles de Gaulle Airport (CDG) airport, which opened in October 2023.

“In Paris, for example, we have 20 airlines serving Charles de Gaulle Airport, so it’s obviously a critical market for our member carriers. So, we came to the determination that the most viable and effective way of moving forward would be to have a Star lounge providing all the features, attributes, and services that you need and expect of a lounge in such an important market. So, it’s a good example of that,” Panagiotoulias said. “The alliance is not here to duplicate efforts or to do things that the individual airlines can do.”

So far, Star Alliance has opened five other branded lounges at Amsterdam Schiphol (AMS), Rio De Janeiro-Galeão (GIG), Buenos Aires-Ezeiza (EZE) and Los Angeles International (LAX), all which are located at major international airports that are not Star Alliance hubs.

The lounges may provide a tangible experience, but most Star Alliance projects take place behind the scenes. The alliance’s role is, more often, to smooth processes such as inter-airline bookings and airport connections, and to help provide a seamless experience across its members’ combined networks.

“That’s where our customer experience focus is so crucial because we work on multiple projects and initiatives in areas where the airlines themselves simply cannot do it on their own,” Panagiotoulias said. “I’ll give you another example, a really straightforward one. When we look at baggage tracking, airlines have invested a lot of money in technology to be able to track baggage, but when customers are traveling across the alliance network, the airlines themselves really struggle to deliver that in a cost-effective manner. So, we have the Star Alliance baggage hub.”

“All member carriers connect into that hub, which gives the customer the ability to track their bag across multiple airlines in the network as if they were flying on just one airline,” he said.

When it comes to realizing this seamless across-network experience, Star Alliance has identified four pillars on which to focus.

“When you think about the customer journey, you’ve got the booking experience, the airport experience, the connection experience at the airport and the loyalty experience along that pathway,” Panagiotoulias explained. “There are so many opportunities for us to be working on behalf of the carriers to make that experience more seamless and solve problems for customers. And at the heart of that, it’s IT and digitalization, that’s what our primary focus is.”

As anyone who has worked in an airline’s IT department can attest, getting an airline’s many different software systems, which manage different aspects of its operations, to talk to each other is often a daunting task. Now multiply this by 26. How does Star Alliance manage to smooth things out across its eclectic membership?

“It’s not an easy one at all,” Panagiotoulias said. “It requires a lot of investment and effort, but we actually have multiple IT hubs at Star Alliance, which provide our airlines with the ability to connect onto the rest of the network.

“I just gave you the example of baggage tracking. We give them the ability to do that through all kinds of different ways where it is just much more cost-effective and practical than doing it on its own. But, most importantly, we are delivering that seamless customer experience. This is no longer an expectation by customers, it’s actually a demand.”

Panagiotoulias also highlighted another of Star Alliance’s projects – facilitating cross-carrier seat selection when booking.

“By the end of this year we’ll be rolling out seat selection, which will give customers the ability to choose their seat across multiple member carriers,” he proudly stated.

Marketing is another area in which any alliance must distinguish its own actions as an organization from those of its individual members. A visual example of this is the Star Alliance livery with which member airlines commit to adorning 3% of their international fleets.

Star Alliance is a brand in its own right, but how can it best complement or add to the brand of each of its member airlines?

“We are the ones behind the scenes. Ultimately, it’s the member carriers that communicate the messaging to the customer,” Panagiotoulias said. “For example, if you are traveling on Lufthansa from Frankfurt to Okinawa, and there’s a connection in Tokyo with ANA. Lufthansa, they will be able to have the bag connected all the way through and they will communicate that. That’s the point of seamlessness. It’s providing the customer with the opportunity to engage with the outbound airline of their choice within the alliance and then connect to another Star Alliance member and do it seamlessly.”

“And that’s exactly what we’re focusing on, what we’re delivering upon,” he added. “There’ll be more and more of that in the future.”

Another project Star Alliance is working on is customer loyalty. When fully implemented it will allow the frictionless earning and spending of miles on any of the members’ respective loyalty programs.

“The key point about this is giving the customer the ability that, if you’re flying Lufthansa and you are a Miles & More member and you want to redeem your miles, for example, with ANA, you will be able to do it instantly,” Panagiotoulias said. “We are the only alliance that will offer that.”

“On each of our four pillars [booking, airport, connection and loyalty experience – ed. note] there are various initiatives going on at each given time because these are the most critical touch points from a customer perspective. And we will continue to do that moving forward in the future,” he continued, adding that Star Alliance is also working on biometrics to enhance the airport experience.

One of the most stressful experiences regularly faced by passengers is short connecting times. This is another area in which alliances can provide a differential edge, Panagiotoulias explained.

“We have connection centers that attend strategic airports around the world,” he said. “We have technology in place that informs the airline employees when flights are coming in late and are going to potentially misconnect with other flights further on.

“These connection centers are at key strategic hubs, places like Chicago (ORD), Frankfurt (FRA) and Houston (IAH). So, we have the technology in place to inform, proactively get to the gate and physically escort customers to their onward flights to mitigate the impact. Last year, for example, we helped 300,000 customers avoid misconnections this way.”

He added: “We all understand that irregular operations happen. The key is how you deal with it. This is the first step and it’s a very powerful one. It’s been serving us very well. We will continue focusing on using technology to mitigate the impact of irregular operations even further and be able to reaccommodate customers proactively, more efficiently, more effectively, when these do happen.”

“Right now, we do a lot of that manually,” he said. “In the future we want to leverage technology to automate that even further.”

Star Alliance does not sell tickets directly to the public, that corresponds to each of its individual member airlines. But there is one exception: the Star Alliance Round the World ticket. As its name implies, this is a fare that makes it possible to circumnavigate the globe by combining flights on Star Alliance’s different carriers.

“That’s a unique Star Alliance product,” Panagiotoulias said. “The member carriers provide us with the fare information, etc. and we construct it. It’s a very popular product for people that want to do a multi-stop round-the-world trip, and we continue to offer that on our website.”

Interestingly, the airline executive shared that this offering is most popular among business travelers.

“If a business traveler is looking to go to New York, London and Tokyo from Sydney, for example, it’s great value, especially in the premium cabins, as opposed to getting two round trip tickets and combining them,” Panagiotoulias said. “There’s a very powerful value proposition in that. From a corporate perspective it is super popular. But what we’re now seeing is a premium leisure type of traveler.”

He continued: “We’re seeing really strong growth in that space. And I’m sure you’ve seen this in people that you’ve interviewed with other airlines. This is a segment that has grown significantly since the pandemic, and it continues to grow. This product has seen a lot of growth in that regard.”

AeroTime did not miss the chance to ask Panagiotoulias about the fact that a number of carriers have established their own network of partnerships outside the alliances they formally belong to. But he didn’t seem too concerned.

“We have very few exceptions because our network is so vast. Exceptions are granted by the membership collectively, but there are specific criteria that need to be met,” he said. “For example, where the network doesn’t necessarily serve a very specific geography. You’ll see some of those, but they’re very few and far between.

“We have very clear standards, 54 standards, that all the members must meet to be part of the Star Alliance. We’re very diligent about that and the carriers are very disciplined with that, as well. So, we are very comfortable with where we stand and as long as the members are comfortable.”

“What it comes down to is that, from a network perspective we are very strong,” he said. “And we are comfortable being the largest alliance in the world.”

Panagiotoulias also explained the process an airline must go through when seeking to develop partnerships with carriers outside the alliance.

“There are terms and conditions that airlines adhere to as part of being in Star Alliance. Anything outside that, they will bring it forward to the chief executive board for discussion and a decision will be made on whether to grant it or not,” he said. “But as I said, it’s so few of them. If any member carrier wanted to pursue that because there was some unique opportunity, there are rules. And they need to submit it for review and approval.”

Is it a similar process when it comes to deciding on new projects and initiatives?

“Our role is to mediate and facilitate the various initiatives and ideas that come up,” Panagiotoulias said. “The subject matter expertise really sits within the member carriers and our role is to facilitate and mediate the conversations amongst the carriers and to bring forward these types of initiatives, achieve consensus, and then drive and implement what the carriers want.”

“We facilitate those conversations,” he continued. “We also facilitate the various subject matter experts across the member carriers. Once we get consensus, then the responsibility is to serve the members and make sure we follow through and implement those initiatives.”

Decision-making within a 26-member group is not an easy task. What are the different ways member carriers use to reach decisions?

“There are various sorts of criteria depending on the level. We’ve got multiple levels. It starts with the chief executive board who sets the strategy. Then, we’ve got the airline management or the alliance management board, which makes sure that the strategy gets executed,” Panagiotoulias said. “We’ve also got committees where the subject matter experts are, which is where many of the ideas originate and are voted upon. There are all kinds of different ways of doing it. But ultimately, the key point is achieving consensus.”

Ultimately, it seems that some compromise and flexibility is an important part of getting everyone onboard and moving things forward.

“By and large, our governance works very, very well, although we’re always looking at it to enhance it further to make sure that we’re doing it as quickly as possible and as consensual as possible and driving the initiatives where there is consensus across the membership,” Panagiotoulias said. “With 26 member airlines, you’re obviously going to get a lot of different perspectives and points of view.”

He added: “These are not right or wrong, because different airlines have got different priorities.”

When it comes to implementing its own alliance-wide projects, Star Alliance has its own team and resources.

“In terms of resourcing, we obviously have our own IT organization. We have a mix of our own people and partnerships with third party vendors,” he said. “Whether it’s Accenture, TCS or others, we dedicate substantial resources to the development and delivery of the various solutions. There’s a mix of both. But we’ve got a significant number of resources to support that.”

“In addition, we’ve obviously got other types of resourcing, customer experience, focus and working with the various carriers on identifying the right solutions and initiatives,” he added. “We’ve got commercial people, finance people, a broad group of people.”

So, are there any other airlines ready to join Star Alliance? Panagiotoulias wouldn’t say.

However, since Star Alliance is already the world’s largest alliance, Panagiotoulias appeared to be more concerned with qualitative rather than quantitative growth.

“We are the world’s largest airline from a geographical perspective. We cover 95% of the globe. So now the focus is very much on customer experience enhancements, on making the journey more seamless for travelers,” he said. “You’ve got many consensus points there amongst the airlines, irrespective of their differing business models and priorities. That’s what we focus on.”

The post Star Alliance’s CEO on managing the world’s largest airline alliance appeared first on AeroTime.

How Oman Air’s new CEO plans to streamline a classic Middle East airline

Miquel Ros — Fri, 19 Jul 2024 03:00:00 +0000

In May 2024 Con Korfiatis was appointed Oman Air’s new Chief Executive Officer (CEO). An aviation executive with three decades of experience in the industry, Korfiatis is no stranger to the Middle East commercial aviation scene.

Between 2016 and 2023 he was the CEO of flyadeal, a Jeddah-based low-cost carrier, which is part of the Saudia group. In little more than six years and under Korfiatis’ watch, the Saudi airline has grown from zero to nearly 10 million passengers per year and a fleet of 35 aircraft, with plans to grow this number to 110 in the near future.

Prior to that, Korfiatis held several senior executive positions at airlines across Asia and in his native Australia, including Citilink, Viva Macau, Singapore Airlines, Jetstar Asia Airways, Qantas, and Ansett Australia.

“I’ve been in aviation for 30 years,” Korfiatis told AeroTime. “I went into consulting after university and had some aviation clients. I just loved the complexity of the business and felt that this is an industry, I’d like to work in long term. So, in the late 1990s I joined an airline in Australia called Ansett and I’ve been in aviation ever since.”

But what attracted Korfiatis to a career in the airline industry?

“I’ve had the opportunity to work with some great airlines in a number of different countries and cultures,” he explained. “I’ve done startups, I’ve done transformations. I have worked my way through the ranks, and I’ve also been blessed with the opportunity to work on different parts of these organizations as CFO, CCO, COO, head of network, head of strategy and CEO.”

“This has given me exposure to the totality of what this business is about,” he said. “I guess that’s why I’ve stayed in it so long. I couldn’t be happier.”

Having lived through the boom years of aviation in Asia and having later played an active part in the growth of Saudi commercial aviation, Korfiatis is bullish on the prospects for further growth in the Middle East.

“I left Australia in the late 90s and moved to the Far East, where I spent quite a few years in a few countries there. In those days, the aviation industry was going through its own boom cycle in that region,” he said. “Mind you, the Far East is still growing significantly. But that was really a boom time. It was the start of the low-cost airline industry in the region, which was developing in a way similar to what had happened in in Europe and the United States some 15-20 years earlier.”

This set the stage for Korfiatis next moves, first to a Saudi Arabia that was on the cusp of major economic and societal transformation, and, a few years later, to his current role leading the flag carrier of Oman, a country that has its own ambitious growth masterplan, called ‘Oman Vision 2040’.

“I went to Saudi Arabia in 2016, and it was not the same country that it is today,” Korfiatis said. “There wasn’t ‘Vision 2030’ [the Kingdom’s plan to transform its economy through major reforms and multi-billion investment projects – ed. note], or it was in its very early form. It wasn’t clear what the future would be like, but I could sense that there was something big in the making.”

This, Korfiatis said, is why he was excited to have come to Oman.

“I believe this region is going through what I saw in Asia back then. It’s now the time for the Middle East, which is the world’s aviation hotspot right now.”

With so much effervescence in the Middle East aviation scene, is there room for further growth?

“Growth has always been a big part of the agenda. But I guess what we’ve seen in the last four or five years is a step up in that growth,” Korfiatis said. “Saudi Arabia is coming into the global aviation environment in a big way, with significant aircraft orders. Even the more established players in the region are now going through another growth spurt.

“Yes, they’ve been growing for a long time and maybe that will go from crazy percentages to just very high ones. But they’re also sort of massively investing in taking about another set of changes. Some of those airlines will keep developing organically and more steadily going forward.”

As far-fetched as some goals may have sounded, Korfiatis noted how airlines in the Middle East have continued to prove the naysayers wrong.

“I remember being in the Far East when the Middle East was in its early, crazy growth phase, if you can call it that. At times, we were all scratching our heads, saying, ‘Where’s this going? This all looks like too much!’,” he said. “And history tells you it wasn’t. So, who am I to say now that the next step is not going to work? It’s going to be interesting.”

He continued: “I think travel will always increase. It’s human nature. And I think the world has become smaller and it continues to become smaller and better linked with what the airlines are doing. I’m a strong believer in that strong growth will prevail. Is there a level at which it’s too much? That’s a really good question. Honestly, none of us can really answer it easily. I think the fact that people are investing means there’s something there.”

A big share of this growth is the result of carriers such as the so-called MEB3 (Emirates, Qatar Airways and Etihad) leveraging their geographical location to connect different continents through a hub-and-spoke model. However, origin and destination (O&D) traffic is playing an increasingly important role, as some of these global air hubs are becoming tourist destinations in their own right.

Korfiatis appeared to be optimistic about Oman’s potential for driving this type of point-to-point traffic, highlighting how the Sultanate of Oman is one of the countries in the region with the strongest untapped potential for tourism.

“You can’t say this region is all one and the same. Our neighbors [referring to the United Arab Emirates – ed. note] built a destination in their own right, and you see other parts of the GCC [Gulf Cooperation Council] working on the same idea,” he said. “The Saudis have established ‘Visit Saudi’ to grow tourism. Oman has had tourism board for a while and, actually, does really, really well, but it’s small and the intent is to grow that and make it a bigger part of the economy.”

“That’s really our opportunity,” he continued. “It’s not that we are just well located from a transit point of view, we have an opportunity to build a point-to-point market.

Building awareness is key

The emergence of Oman as a major tourist destination is a developing story that transcends the work of one airline to encompass the whole Omani travel industry and the country’s broader economy.

Korfiatis explained how Oman Air expects to play a key role in fulfilling this vision.

“The whole ecosystem is [working] on this. We, in Oman, have built airport infrastructure which has capacity for further growth, we are building tourism assets, which also have capacity for growth,” he said. “We’re building hotels, infrastructure. We’ve announced in the last month or so five new airports that will take you to the far corners of Oman to beautiful places. “

He added: “There is so much diversity, so many experiences that you can have here. So, we want to make that more accessible. And we need to build awareness.”

When talking with Korfiatis about Oman, one thing remains clear – there is enormous untapped potential in the region, something which is only just being discovered.

“Oman can certainly punch stronger in terms of its awareness as a destination,” he said. “That’s definitely on the agenda for our whole tourism aviation ecosystem, to do that on a collective basis and maximize our efforts together to put Oman on the map.”

One of the region’s classic airlines

Founded in 1993, Oman Air consolidated its role as the national carrier of the Sultanate of Oman, particularly after the latter’s withdrawal from Gulf Air, another historical carrier of the region that currently is based exclusively in Bahrain (BAH).

However, the last few years have not been easy for the airline, which has accumulated losses. Even before Korfiatis’ arrival, the national carrier was going through a reorganization process.

Oman Air announced its plan to return to profit by 2027, a goal that Korfiatis expects to achieve with the rightsizing of operations and improving efficiencies, among other initiatives.

“There is a master plan, which has been signed off,” Korfiatis said. “I was brought in to lead the team and build the capabilities that allow us to deliver on this within the terms of the national tourism and economic agenda and Oman’s Vision 2040 program.”

“Some good steps were taken during 2023 and what I’m working on now is accelerating that. That’s what we’re going to be pushing through the balance of this year and into 2025 and 2026.”

Oman Air’s business model differs from that of other airlines where Kofiatis has previously worked.

“It’s a return to where I started my career,” he said, adding that the different aspects of a full-service model, including the complexity of different classes, food and beverage, design, and entertainment, is “lovely to have back in”.

Despite currently going through a process of change, Korfiatis noted that there are many elements of Oman Air’s current business that are worth keeping.

“From a customer point of view, it is an outstanding product and an outstanding airline,” he said. “The airline is a positive story.”

So, just how does Korfiatis plan to streamline the business?

“We are a 30-year-old airline that has never transformed. It has 30 years of legacy, and some transformation is required,” Korfiatis said. “We aim to bring that legacy into the world’s practices: productivity, efficiency, digitization, marketing, e-commerce, systems and ERPs [enterprise resource planning systems], database mining to understand our customers better and taking a data-led approach to everything we do, whether it be in front of our customers or running things behind the scenes.”

“We aim to reinvent everything that sits behind what the customer sees,” he continued. “It’s a big job. It’s a journey that will take us a few years.”

Despite having only been in the role for a few months, Korfiatis and his team are already hard at it.

“There was phase one, which was a few select things to start with. And now we’re making it more holistic, expanding these measures to cover the whole company and accelerating,” he said.

For example, Korfiatis has no desire to change the airline’s current product and was full of praise for the team.

“On the customer facing front, it’s an airline that’s been earning accolades for many, many years. I was in London receiving a Skytrax award a few weeks ago for the best airline staff in the Middle East. And you know what the competition is like in the Middle East. So that’s a hell of an accolade for the airline,” he said. “And then I found that it’s actually the seventh time Oman Air won that award. Sometimes people say one was a fluke, but you can’t fluke seven times.”

He continued: “I think our product competes with the best in the world and when I say product, I mean we are a modern airline, beautiful, great business class, great economy class. In fact, we won an award in the last two months for best seat comfort, as well.”

Omani’s renowned hospitality is another asset that Korfiatis brings up to highlight the airline’s commitment to providing excellent onboard service.

“We have a great crew as well,” he said. “People who know the region talk about the hospitality of Omanis. The airline works very hard to embody and embrace that culture. So, I guess, that’s why we get the accolades, the best airline stuff comes from that.”

“We’re proud of that,” he continued. “It’s at the core of Omani culture. It’s not just the airline, not just the aviation industry, but the whole country. And that’s something we have to make sure we never lose. We need to keep doing it, even if there’s always room for improvement.”

However, the big challenge, according to Korfiatis, is getting the word out.

“I guess the customer challenge is to just make a lot more customers aware of the fact that we exist,” he said. “We have an outstanding and beautiful destination to come and visit and we’re one of the best airlines in the world to [fly to] come here.”

But there is one area where Korfiatis believes Oman Air could do better, though, and that’s cost.

“When it comes to cost base, it is not what it should be,” he said. “For sure, there has been significant improvement in CASK [Cost per Average-Seat-Kilometer]. Cost is the enemy of any airline because it’s a very competitive world on air fares these days.

“You can’t just say, ‘well, the prices go up and costs go up, we just put the prices up and the problem doesn’t exist anymore’. Our cost per seat has to be competitive with the best in class, and that’s something we have to improve on. That will enable us to expand our footprint, it will open up opportunities to fly to where you get yield. Or you can also accept a lower yield, because of your cost basis, and that’s fine.”

Korfiatis also touched upon the revenue side of the business.

“On the commercial side, it is more about marketing the airline and the destination better than what we’ve done historically,” he said. “If I look at what we’ve done in marketing in the past, we’ve had very small budgets and done very little. So, we’re investing more heavily in this, starting this year [2024]. You’ll see a lot more of that in the second half of this year.”

The challenge of establishing awareness is a subject that comes up repeatedly during the conversation, not just for Oman Air as a carrier, but for the country as a destination.

“It’s more about getting people who aren’t aware and are considering other options to choose Oman,” Korfiatis said. “Why would they choose us is a big part of it. It’s awareness, it’s marketing, it’s branding. And it’s building the customer base.”

Quality over quantity

However, Oman Air is not looking to increase traffic volumes at any cost.

“We lost some of our connectivity because of the capacity rationalization for the summer schedule,” he said. “That wasn’t an accident, it was intentional because in any transformation you need to consolidate and build up your foundations.

“If you’re running flat out, pouring capacity on top of it, you don’t achieve the best results. So, even though load factors might have been a bit better before, the bottom line is improving due to the schedule changes. We were ‘buying’, if you like, some of this traffic, but our cost was higher than what we were getting in return, and this doesn’t make good business sense.”

He added: “It allowed us to push away volume that wasn’t making sense because it wasn’t the right yield for the product we offer. Once we fix all of this, we will go back into expanding with the same fleet and keeping it efficient, with a lower seat cost.”

Korfiatis also shared some insight about Oman Air’s fleet rationalization, which saw the airline phasing out its Airbus A330s in March 2024.

“It’s also about right sizing, simplifying the fleet. We had two different widebody types and within those, there were three different configurations,” he said. “And on a small fleet of widebody aircraft, it was just an insane complexity. On the one hand, we have modern fuel and cost efficient 787s, but the other half of the widebody fleet were aging A330s.”

So, what is Korfiatis’ vision for the future of Oman Air’s fleet?

“We have 737 MAXs and we have the (737)NGs, -800s and –900s,” he said. “By mid-2026, the NGs will have left the fleet and we’ll then become a full 787 and 737 MAX operator. There’s going to be commonality and a single flight type within both the wide body and the narrow body fleets.”

When it comes to the product Oman Air offers its passengers, Korfiatis said he plans to keep those elements that are working well, although he has not ruled out some changes.

“As we’re turning over every stone in the business, these are also things we have to look at, but I do see ourselves staying in full service, providing a high-quality product,” he explained. “Within that definition, there’s quite a wide bandwidth within which you can play. That’s something we’ll be having a look at in the months ahead.

“We definitely have a very strong two-class product. At some point, we’ll look at whether a Premium Economy makes sense, but we have no plans for this now. We are certainly very well invested in very high-quality business class and economy class products, and we see that recognized by the industry. That’s the core of our customer proposition. We have first class in only two aircraft. Honestly, I’m not sure that, given the demographic of our airline, that’s the right thing for us in the long term. That’s something we’re looking at.”

At the moment, Oman Air’s traffic is balanced between transit and point-to-point traffic.

“I can tell you, they’re both very sizable segments. They’re both important to the airline. If we only had transit, it would not be enough and if we only had point-to-point, it also wouldn’t be enough,” Korfiatis explained while referring to Muscat International Airport (MCT), which was redeveloped in 2018, as another element that Oman Air can leverage to offer a differentiated experience.

“We do have an intentionally structured transit product and a meaningful number of the people flying with us today use Oman for transit. We want it, it’s not by accident, it’s part of the business case,” he said. “I don’t know if you’ve ever done a transit at Muscat (MCT). It’s not a congested airport. It’s got one of the best OTPs [on-time-performance] in the region.”

He added: “We’ve built the capacity ahead of the demand, so unlike many of the airports in the region, which are bursting at the seams, it’s a very convenient airport to transit through. It’s quick and efficient. The feedback we get from our customers on the transit experience is extremely positive. So, we can definitely say ‘yeah, we’re different. But different in a good way, in a better way.”

Next, Korfiatis talked about the airline’s O&D traffic, describing the three main demographics the airline serves: the local Omani outbound market, the inbound tourists, which, Korfiatis said, is slightly tilted towards the premium end of the market, and the expatriate community living in Oman, with many of them coming from the Far East, from South Asia.

“Our current network is reflective of that,” he added. “We fly to the Far East, to South Asia, to Europe and we have a small presence in the African continent.”

Korfiatis ruminated on the prospects of China as a strategic market for Oman Air once the airline resumes growth.

“That’s a huge tourist market with completely unexploited potential,” he said, before outlining a few more possible vectors of expansion. “We have a fantastic location geographically for access to Africa. So, I see opportunities in Africa going forward. South Asia also has lots of opportunities and, of course, Europe. We’re only touching a handful of places in Europe, and we believe we can bring in people from many other places into Oman.”

Two major markets currently not in Korfiatis’ plans, though, are the US and Australia.

“I think our 787s would probably have huge payload limitations to go to Australia and, honestly, there’s so much to do in other markets at the moment, it would be a distraction to try go that far away,” he said. “But we do have interest in exploring those markets. We can reach them through partnerships.”

In this regard, Korfiatis mentioned the recent entry of Oman Air into the oneworld Alliance, which will is projected to be formalized in H2 2024.

“This gives us two key things: first, access to a network platform. We can reach places far away and connect through our partners where we don’t have the aircraft to do it ourselves,” he said. “Second, customer recognition and the benefits of coming into that program for our customers. It’s not just about the money, when they travel with our partners they will be recognized by their status and treated the same way as they would on Oman Air. These are two big positives and big wins for our customers.”

Oman Air cooperates in some areas with Salam Air, a Muscat-based low-cost carrier.

“It’s independent from us, but we do have some cooperation and we try to see where we can help each other,” Korfiatis explained. “There’s some overlap in our route structure, but there’s also a number of routes where we fly alone, and they fly alone. There is some competitive element. I wouldn’t say it’s zero, but I think it’s more a partner than a competitor.”

What’s next for Oman Air?

When it comes to Oman Air’s next milestones, Korfiatis insisted for the need to follow what he descried as a “measured” approach, where he will try to consolidate the airline’s current standing in the market before embarking on any major new projects.

“Don’t expect any new aircraft orders, not in the next six months or 12 months at least,” he said. “We’ve got to focus on our transformation and on fixing our foundations. There’s nothing we want to get in the way of that.

“We will look at the product going forward, over the next six months. Whether there’s anything that comes out of that, we’ll see. We do have some deliveries still pending in our existing order book: three B787s and three B737 MAX arriving this year, and two more MAXs arriving in the first six months of 2025. We’ll also think about the future of our existing 787 fleet, particularly our –8s, because we’ve got two of those. We certainly will be keeping our -9s. It’s a work in progress. I don’t have a definite answer right now.”

Oman Air

“When it comes to the network, we’ve been operating some summer routes and we’ve been incrementally increasing frequencies here and there, but there’s no shotgun announcement coming or anything big planned at the moment,” he continued. “I expect there’ll be some incremental capacity coming up but it’s a modest percentage growth. So, yeah, nothing crazy. It’s a measured approach. I think it is wise.”

The post How Oman Air’s new CEO plans to streamline a classic Middle East airline appeared first on AeroTime.

Filling the gap between airlines and executive aviation: Aero CEO, Ben Klein

Miquel Ros — Wed, 26 Jun 2024 03:00:00 +0000

Somewhere between flying business class on a commercial airline and taking a private jet, a new value proposition combining elements of both worlds is quietly emerging in the US travel market.

Founded by Garret Camp, one of Uber’s co-founders, and based at Van Nuys Airport (VNY) in the Los Angeles area, Aero is possibly the most remarkable example of this new breed of airline offering a semi-private experience.

Interestingly, Aero’s origins are in Europe. Aero started up back in 2019, offering flights out of Farnborough (FAB), an airport in Hampshire just outside London in the United Kingdom. In addition to hosting the eponymous air show every other year, Farnborough also sees many executive jet operations.

However, the timing wasn’t favorable as just a few months after Aero launched its services, the COVID-19 pandemic struck.

After this forced hiatus, Aero was back in the market by 2021, although this time with its own Air Operator Certificate (AOC). At the time of its launch, Aero commercialized tickets under its own brand, but it chartered the aircraft from other operators.

AeroTime recently had the chance to speak with Ben Klein, CEO of Aero, to learn more about the airline’s rather unique value proposition and how it fits into the current industry landscape.

Klein began by talking about the airline’s decision to find a new home on the other side of the Atlantic.

“We had to make a decision to consolidate our operations in the place that offered [the] best growth prospects and that was the US,” he said.

A lawyer by background, Klein joined Aero as general counsel in 2021, and has been at the helm of the startup airline since September 2023.

Klein, a self-described “aviation nut” who learned to fly aircraft from the age of 12 and holds a pilot’s license, explained how he jumped at the chance to join Aero when the opportunity arose.

“I didn’t have to think much about the chance to combine my life passion with my career,” he said. “It was an easy decision.”

For Klein, leading the airline doesn’t mean sitting behind an office desk. Aero’s top executive has the relevant type-rating to fly Aero’s aircraft and can sometimes be seen flying as first officer.

A rather unique value proposition

“Aero was created to fill a gap between the first and business class offering in commercial airlines and private aviation,” he said. “Even if you are flying first class, you still need to go through some parts of the process that are painful, such as going through crowded airports, waiting to claim your baggage, etc. You can’t really get out of that part of the experience.”

“The alternative is to fly privately,” he added. “But this is very expensive and out of reach for most people. Also, people are increasingly paying attention to their carbon footprint.”

According to Klein, the idea is to provide a private experience but to do so at a fraction of the price “by gathering a bunch of people that want to go to the same destination”.

“We saw that need in a number of markets,” he said.

As of June 2024, Aero offers premium services out of Van Nuys to a number of leisure destinations in the United States and Mexico: Aspen, Colorado (ASE), Sun Valley, Idaho (SUN) and Los Cabos (SJD), at the southern tip of Mexico’s Baja California peninsula.

Klein attributed Aero’s move to California in 2021 to a combination of better growth prospects in the US and regulatory hurdles in Europe.

“The US market is stronger. It is growing faster,” he said. “But we were also facing more regulatory hurdles in the UK that would have hampered our potential expansion there.”

However, Klein also highlighted that the move away from Europe was not due to lack of demand.

“There was plenty of demand in Europe, particularly for an airline of our size. We flew from the UK to Ibiza (IBZ) and to Nice (NCE) and to Zurich (ZRH) and Sion (SIR), Switzerland, during the winter season,” he said. “We just could not grow quick enough due to regulatory hurdles.”

“You can see now how some companies are springing up in Europe imitating our business model,” he added.

Although there are several Part 135 operators in the US market offering what is commonly called “public charter” flights, Klein explained how Aero chose to differentiate itself by targeting the highest end of the market.

“We didn’t see anyone tackling that market in Europe or in the US,” he said. “Even today there are very few operators doing what we do, providing a semi-private service.”

In addition to operating from small airports with private terminals where you can arrive 15 to 20 minutes before your flight and walk from gate to plane in seconds, Aero has added several premium elements to its service.

For example, it offers a concierge service that is ready to answer the phone 24/7 with no waiting times and it hosts passengers at private lounges where dedicated staff handle check-in and take care of any luggage. Inflight, Aero tries to mimic the type of service found in private aviation, offering a menu prepared by Erewhon, a well-known LA-area market as well as premium wines and spirits.

Since October 2023, Aero has also been offering Starlink internet connectivity onboard its flights.

“Starlink is as good as people say it is,” Klein added. “The internet is even faster than at home and it is very reliable. It doesn’t fall off with a larger number of users.”

Aero currently operates a fleet of five aircraft, four Embraer ERJ135LR fitted with 16 seats, and one Embraer Legacy 600 executive jet. The former are normally used on scheduled services, while the latter is devoted almost exclusively to charter flights.

Aero

However, the ERJ135s are also used on charter services. Klein explained that the 16-forward facing seats and large luggage hold make this aircraft type particularly well-suited for some missions, such as moving rock bands across the country.

“Charter is a growing segment of our business, and it is getting larger in 2024 than at any other time in the past,” he said. “Charters now account for around 40 to 50% of our revenue.”

Aero has also launched a service for the events market called “Aero Private” which has proven quite popular. Event organizers, for gatherings such as conferences and weddings, partner with Aero to offer prospective attendees an upmarket way to travel.

A model not without challenges

Klein also commented on two sensitive topics relevant to the future of Aero’s business model.

One is the controversy in the US over the ability of public charter companies operating under Part 135 regulations to offer scheduled services, and whether this should be restricted to carriers operating under Part 121 regulations (the ones that apply to most of the larger mainline airlines).

The matter is currently under review by the Federal Aviation Administration (FAA) and has larger established airlines and smaller operators like Aero on opposite sides of the argument.

Klein expressed Aero’s willingness to get involved in the ongoing public debate and contribute the firm’s points of view to the lawmaking process.

“I am confident this will be resolved favorably,” he added.

The other hot potato is sustainability, a particularly pressing issue in the premium segments of the market with their lower cabin densities.

“There is no avoiding the fact that aircraft burn fossil fuels, which contribute to climate change, and this presents us with an incredibly difficult challenge,” Klein acknowledged. “We are mindful of the effects of flying and advocate for change.”

“We are also seeing lots of exciting things on the regional side of the industry,” he continued. “Cleaner propulsion technologies that will be well-suited for the sort of short-haul, low density routes that we fly, and we plan to take advantage of that. We want to be among the first adopters.”

“In the meantime, we do what we can,” he said. “We are offsetting all our carbon emissions with CORSIA-eligible credits. We don’t ask our guests to pay for that, we don’t advertise it or do anything like that.”

“By the way,” he added. “I am not naive, and I know carbon offsets are not a panacea, they don’t solve the underlying problem. But it is something we can do now.”

Klein also highlighted that because of the market segment Aero targets, the carrier is consolidating part of the demand that would otherwise have flown in multiple private jets.

Aero’s market positioning

In fact, around half of Aero’s customers are no strangers to executive aviation, with Klein stating that it is “50-50 between those that come to us from private aviation and those that switch from commercial airlines”.

“We’ve got a lot of customers that have access to their own jets, either through ownership or through fractional programs,” he continued. “But when Aero goes where they want to go, they choose us because we offer a better value proposition and the same, if not better, experience.”

“We also get a number of people that are used to flying first or business class and see the value of upgrading to Aero…the shorter travel times we offer and, frankly, at certain times of the year, our prices can be pretty competitive with commercial airlines,” he added. “In peak season a first class ticket from LA to Aspen can cost a couple thousand dollars and we are not that far off that figure while providing an exponentially better level of service.”

One thing commercial airline have, though, is feeders that help them fill their planes. Klein acknowledged that this was another challenge for small, independent, and differentiated airlines like Aero, but said the carrier has developed its own marketing approach.

He said: “Take Aspen, for example, an airport that has limited commercial service, so people that want to visit are going to look for new ways to get there. It’s a small community and we benefit a lot from word of mouth.”

“We have been operating for three years now in the LA area and we get a tremendous number of referrals. But it takes time to develop. It doesn’t develop out of nowhere,” he continued. “There is a cost associated with this way of marketing. This is why we are very careful about how we launch new routes.”

He added: “All of our routes share some characteristics. There are lots of people in the LA area that own second homes in the places we fly to. We work with a number of partners on the ground, with home-owner associations and premium hotels in Cabo, Aspen and Sun Valley. We also do traditional marketing on social media, at airports. But we are very much reliant on word of mouth.”

These are obvious leisure destinations. So, how does Aero handle seasonality?

“We are affected by seasonality,” he said. “There are ebbs and flows, yeah. But places like Aspen are great year-round, [it’s the] same with Cabo outside of hurricane season and with so many of our guests having second homes, we see traffic all year round.”

There is also intra-week demand variation, which is why Aero structures its schedule around the weekend. Unless there is some special holiday or event, it doesn’t fly on Tuesdays and Wednesdays.

“These are leisure destinations and for the most part we won’t put a seven-day-a-week schedule,” Klein explained.

With so many regular travelers, is Aero considering the introduction of a loyalty program?

“Stay tuned,” Klein said.

What sort of figures are we talking about?

“From a revenue perspective, we have been growing since 2021,” Klein said, adding that in 2022, the airline doubled its revenue. “We grew another 65% in 2023 and we expect significant revenue growth in 2024.”

In terms of number of passengers, Klein said the airline flies some 500 to 600 passengers on scheduled services each month.

So, what’s next for Aero?

“At the moment we are very focused on building our LA base, which is a fantastic market for us,” Klein said. “We have built a very loyal guest base here that allows us to keep growing and we plan to continue expanding our LA presence by adding new routes.”

When it comes to network expansion, the airline is focusing on flights from LA in the short-term. However, Klein noted that Aero does intend to launch a new base in the US “in the medium term”.

“I don’t think it is going to be on the West Coast,” he said. “LA is a strong market for many obvious reasons, and I think there are other similar markets in the US that share some of these characteristics and will present opportunities for Aero to grow.”

“We just want to be very deliberate about the way we do it and, of course, we will be adding to the fleet with aircraft that have a bit of a longer range and allow us to do routes that we are not able to do now,” the executive added.

Before the interview ended, Klein took the opportunity to praise the Aero team.

“I’d like to emphasize what a fantastic and service-oriented team we’ve built here at Aero,” he said. “We have an average NPS score of 93, which is unheard of in the industry. This is indicative of something very unique and special what we have done.

“These are numbers you see at the type of hotels our guests are going to,” he said. “And our guests often remark that the flight they take with us is just as memorable as their ultimate destination.”

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“Passengers are not mere numbers to us”: interview with Beond CEO Tero Taskila

Miquel Ros — Sat, 18 May 2024 07:29:26 +0000

On November 16, 2023, an Airbus A319, painted almost entirely in a distinctively elegant black livery dotted with little golden bubbles, took off from Munich (MUC) bound for the warm latitudes of the Indian Ocean.

Beond, the world’s newest luxury airline, was finally a reality.

Only 24 hours earlier, that same jet was part of the static display at the 2023 Dubai Air Show, where visitors were able to get a glimpse of the carefully crafted business-only cabin that would shuttle holidaymakers between Europe, the Middle East and the Maldives in utmost comfort.

At the time, AeroTime had already been able to take a close look at this new product offering, which aims to extend the luxury resort experience vibes from the moment the passenger steps on onboard. However, we were eager to learn more about the genesis and development of this rather unique and ambitious project.

For this instalment of our Executive Spotlight series, we sat down for an in-depth conversation with Beond’s co-founder and CEO, Tero Taskila, who shared some details about the vision behind the Beond project and its plans.

Taskila, who over the last couple of decades has held executive positions at carriers such as Finnair, Gulf Air, airBaltic and Estonian Air, is not alone in this venture.

A few years ago, while working for one of the major aircraft makers, Beond’s co-founder Max Nilov realized that the arrival of a new generation of longer-range narrow-body aircraft would open up opportunities for the development of new business models. Between them, Taskila and Nilov then started to brainstorm ideas.

Familiar as they were with different airline business models, the pair quickly identified the premium segment of the market as offering the most promising opportunity.

What soon became clear, though, was that they wouldn’t be able to compete in the traditional business class market. Having neither the scale nor the access into the corporate market to go up against the major network airlines, launching in locations like London and New York was out of the question.

“From our time working in the consultancy business, we knew that the so-called experience travel or luxury travel was the fastest growing travel market segment in the world.” explained Taskila.

“There was no airline that was purely focusing on that niche,” he said, reminiscing about the very early days of the project that would become Beond. “This is a type of market that doesn’t require the frequencies and corporate travel deals which you would need in the very competitive North Atlantic market. So, we looked at what we could call ‘bucket list destinations’, known for being premium travel destinations, which could be viable with this strategy. We identified a few of them and the Maldives turned out to be potentially the number one, particularly when taking into account that it bounced back from COVID particularly fast.”

He added: “We then went to talk to the government [of the Maldives] to see whether there would be an appetite for a new private airline to come to the market and serve a very niche segment. That’s how the project came about.”

But luxury can be a somewhat broad and subjective concept. How does Beond define it?

“Luxury travel, for us, is everything which is not work-related travel,” Taskila said. “If you are seeking an experience, you travel to an event for fun, whether that’s a World Cup or some other major event, whether that’s your holiday or just visiting friends and relatives. But you do not want that to overlap with your work. So, that’s how luxury travel is defined. It is not that I’m working for Morgan Stanley and now I need to fly very fast from London to New York. That’s not luxury.”

Starting a new airline can be complicated. It’s an unforgiving, capital-intensive business with lots of risk, but the founders of BeOnd reached into their own pockets to fund the project’s initial steps.

“Obviously, at that point we still needed to do a little bit of more homework in terms of defining the product, what we really wanted to do out of Maldives, what capabilities we could count on and then, of course, creating the brand.” Taskila explained.

The basis of the project was already laid out, though. Now it was time to find the money.

Beond’s co-founders pitched the project to wealthy families and private funds in order to raise seed capital, get things started and start building a small team.

They were soon faced with a choice: either getting a large sum of money upfront, but at a relatively low valuation, or getting a smaller amount at first and getting the rest at a later stage – at a relatively higher valuation, but conditional on hitting certain milestones and key performance indicators (KPIs).

“We chose the latter option,” Taskila said, “which in hindsight was the smarter move and not only for financial reasons. It is a way to make sure that we remain always very cost-minded and focused on creating an efficient airline. Swimming in cash can lead to taking potentially stupid decisions.”

As of May 2024, Beond has raised US$33 million, and it is aiming to raise an additional US$25 million through a Series A round. This money facilitated the launch of the airline in November 2023 and should enable its growth over the next three years.

Creating the Beond experience

In recent years, airlines have been investing a significant amount of money in revamping their premium cabins. We asked Taskila how is Beond going to differentiate itself in this respect.

“We wanted to create a concept which is mostly about the experience and how it makes you feel. The old texture, the tactile elements of the seed and the seed thrust, everything else, it just feels different. It has sort of a private jet feeling. We also wanted to keep the monuments [the different elements, such as seats, that furnish the cabin – Ed. Note] quite low so the design has a more airy feel – so that it creates an atmosphere where you can converse with your loved ones, with your family, when you’re traveling. It’s not like in a traditional business class, where the focus is on your own personal privacy.” he said, in reference to Beond’s classy cabin interior, which has been fitted with seats designed by Italian manufacturer Optimares.

“Those were the key elements of what we wanted to achieve. Also, when we talk about experiences, people want to pamper themselves, but not by having a big TV screen [Beond offers inflight entertainment by streaming it to the passengers’ own electronic devices rather than through seatback screens – Ed. Note], but rather through the food and other service elements. In fact, I would say one of things we take the greatest pride from, based on the feedback we are getting, is the food.”

He added a personal anecdote in this regard: “I recently got a lengthy email from a person I didn’t know, and he basically said that in the past 18 months he had traveled over a million miles and this had been the best food he’d ever had anywhere on the planet. So, people are noticing that. We take a lot of pride in it.”

Taskila enumerates the three element that he reckons make this possible:

The first is selecting the right people to design the inflight eating experience. In this regard, Beond is collaborating with chefs from some of the best resorts in the Maldives.

The second element is the choice of suppliers and catering companies in each of the markets in which the airline operates. Taskila avoided naming them, but highlighted that quality, rather than quantity, has been the primary factor in their selection.

The third element is the related service element. In Taskila’s own words: “Although it doesn’t necessarily have so much of a direct link on the taste of the food, it is essential to the experience of enjoying that food: how we lay it out on the plate, for example. Our food doesn’t come on those trays which are already prepared by the caterer. It is plated by our crew, and we do a lot of emphasis on the training, on how to serve it.”

Taskila didn’t miss the chance to highlight other boutique-like elements of the Beond experience, turning the carrier’s small size into one of its sources of strength.

“The other thing we have is our cabin crew. We always emphasize that the passenger for us is not a number, and the same is true of our employees. For us, they are not a number. We need to do things differently from the big boys, because if you are an airline with 300 aircraft, 400 destinations and 6,000 team members, you cannot avoid it – you will be a number. We wanted to have this sort of boutique, family element where people know each other by their names. At this moment, I still know – I promise – all our crew by name. I don’t know if I will still know them when we have 32 aircraft, but at least I will try to get as far as I can!”

“That sort of a family culture would be what we want to create,” Taskila said. “There’s a creative side, too. Even if we are quite good on social media, we don’t publish everything. Our cabin crew is creating memorable events for our passengers – for example, presenting a birthday cake when they realize that that person has a birthday. This always puts a smile on people’s face.”

The challenges of being a small, independent carrier

Even if Beond operates a low-density fleet and doesn’t have that many seats to fill, operating without a feeder network has traditionally proven to be a major challenge for independent long-haul carriers. What are Taskila’s feelings about this?

“We are operating quite small aircraft, just 44 seats. So, in that sense we do not need that much of a feeder. So far, we haven’t been considering coaches or interlining, although there have been some requests. At this point it’s more about making sure that our value chain is intact. It would be more of a hassle than a complement to our business model. I’m not saying that this may or may not change in the future, but at the moment we are not putting a focus on it.”

Beond does have partners, though, and these operate within the Maldivian luxury tourism ecosystem.

“We are working with luxury travel agencies who have clients from different socio-economic segments. They really focus on creating experiences for travelers. We are collaborating already with the best results in the Maldives, so we are part of those offerings. In addition, we are also getting more and more hotel partners in the Maldives that are using us. If a customer calls them and wants to come to the resort, they’re basically saying ‘you can come to the resort and please check out Beond’. They are then building the packages.”

Although luxury travel agencies, tour operators and hotels are key distribution channels for BeOnd, Taskila doesn’t dismiss the direct distribution channel either.

“The business plan was always calculated in a way that estimated 65% of traffic coming from travel agencies, but now we are actually at 50-50. BeOnd has got an amount of publicity, which was – pun intended – beyond expectations, and this has driven a lot of direct sales as well!”

Beond flies to Male (MLE), the capital of the Maldives and its main international gateway, but from there, holidaymakers still need to get to their island resorts. Taskila explained how Beond has facilitated this, too.

“We are doing a collaboration with all the resorts, because it’s the resorts that are the final destinations. So, we have been teaming up with them to make sure that when the customer arrives, they are greeted either by our personnel or by the resort staff and escorted to a seaplane, a ferry or a boat, since all the resorts have their own boats and some have seaplanes. They get that seamless experience. They don’t carry the bags to and from the airport. So basically, when you land, you go through fast-track immigration, you identify your bag on the belt and the next time you see your bag is in your room at the resort. It’s quite seamless!”

Planning Beond’s future fleet

Though Beond is admittedly a small operation at present, Taskila doesn’t shy away from sharing the airline’s ambitious growth plans.

As of May 2024, Beond has two aircraft, the aforementioned 44-seater A319 and an A321 that it received back in February of this year, which at the time of this interview was still being fitted. If all goes according to plan, though, Taskila envisages a 32-aircraft fleet by 2035.

“I think we are restricted by two things operationally. One is the availability of aircraft, and the second is the availability of pilots and cabin crew. When we look at the market, we believe that it is realistic to assume that we can grow by eight aircraft per year. We are going to have four aircraft in 2025, eight aircraft in 2026, and then grow further. Even if there were aircraft available, we wouldn’t be able to move faster, because introducing new aircraft, getting the crews and everything else would then be a bit of a challenge.”

Although Beond plans to stick to A320-family aircraft for the foreseeable future, the exact composition of the fleet is yet to be defined, and it will depend to a large degree on the procurement and leasing opportunities that arise.

“We are looking at all the A320 family, so A319, A320 and A321s. We are in a situation in which the supply of aircraft is quite constrained, and this is something we cannot fix. It is also quite good for us to have a little bit of variety in terms of the aircraft size, as long as we have commonality. Strategically, obviously you would like to be in a driving seat and say, ‘okay, this is exactly the aircraft I want all the time’. But in real life, given the current constraints, you need to be a little bit opportunistic and say ‘okay, rather than getting the A321, I’m happy with A320s as well, provided that it gives me the range and conditions that I need’. So that’s how we are going to build it. But the plan is that, as we go along, the A319s will be route openers for the future, which makes sense from the risk management perspective as well.”

Taskila elaborated further on this idea of simply scooping up the aircraft that become available at each stage of its growth.

“Our first two aircraft are Airbus ceos, the next two are likely going to be ceos as well. And I’ll say likely, because we are now campaigning on the neos as well and it might be that the neos come faster than the ceos. So, we are likely to have four to five Airbus ceo aircraft and the rest of the aircraft would be neos. Then, the neos we will split between (A321)LRs and XLRs.”

The current and future network

Where would all these aircraft fly to, though? Beond has a map of potential destinations on its website, including cities in Central Europe, across Asia and even Australia.

For the time being, as of May 2024 Beond’s operations are somehow more limited. The airline flies nonstop between Male (MLE) and Riyadh (RUH) and Dubai Al-Maktoum (DWC). Services to Munich (MUC) and Zurich (ZRH) are being operated with a technical stop in Dubai. So too will the Milan (MXP) route, which is launching on July 3, 2024.

On its Zurich route, Beond also enjoys Fifth Freedom rights, meaning it can also fly passengers between Dubai and the Swiss city.

For further network expansion, Beond is looking east, to Bangkok (BKK). “There is a lot of travel from the Maldives to Thailand as well.” explained Taskila, without revealing exactly when this new route is to be launched.

Overall, Taskila appeared satisfied with the performance of Beond so far.

“The market reaction has been very positive,” he said. “As can be seen on social media, we are attracting quite a visible clientele, as well as a less visible one, but the reaction is on the bar. Markets are behaving exactly like we planned. We are not disclosing any load factors at the moment, but they are exactly where we wanted them to be at this point.”

The post “Passengers are not mere numbers to us”: interview with Beond CEO Tero Taskila appeared first on AeroTime.

Connecting Africa with the rest of the world: RwandAir CEO Yvonne Makolo

Miquel Ros — Sat, 27 Apr 2024 03:00:00 +0000

Landlocked in the heart of Africa, Rwanda has left behind a not-so-distant troubled past to emerge as one of the continent’s hottest tourist destinations, as well as one of its key air hubs. The national airline, Rwandair, has been instrumental in this.

The journey of the fully state-owned airline, from operating a single wet-leased turboprop aircraft to becoming one of Africa’s most successful carriers and a close partner of Qatar Airways, has taken more than two decades and a thorough rebranding in 2009.

However, the airline’s CEO, Yvonne Makolo, believes that RwandAir is still far from realizing its full potential.

AeroTime caught up with Makolo to learn more about the growing airline, its current international expansion, and its strategy for the years to come.

Makolo came to RwandAir from the IT industry, after more than a decade at Rwanda’s national telecommunications operator, where she rose to become Chief Marketing Officer. She was appointed Deputy CEO of RwandAir in 2017 and then, a year later, she became the airline’s CEO.

“What I like most about this industry is that it’s never boring. There’s always something happening. It’s exciting work,” Makolo revealed. “For me, just being part of this amazing airline that is growing and is supporting the growth of this country is very exciting.”

An ambitious airline

Makolo was clear on the airline’s long-term strategic goals:

“Our focus is to connect Rwanda to the rest of the African continent and to the rest of the world, and also to connect African countries with each other,” she explained. “We believe this continent has a lot of untapped potential and, given that the road and rail networks are pretty much nonexistent across the continent, air connectivity plays a key role.”

“We have seen the impact of the airline on the country of Rwanda,” she added.

In talking about the tourism boom that Rwanda is currently experiencing, raising the subject of the civil war and genocide three decades earlier is inevitable. In this case, though, it’s to highlight how this small African nation has moved on from that turbulent period in its history.

“We see the impact that the airline has had on the country, and where Rwanda is now, 30 years after the genocide against the Tutsi, from many perspectives: the economy, tourism, sports…” Makolo said. “The airline has been instrumental in growing those areas and we believe the same can be replicated in other countries too. We believe that aviation is key when it comes to developing our continent.”

But what came first? Is RwandAir’s growth a byproduct of the increasing popularity of its home country as a tourist destination? Or is it the other way around, with the carrier’s capacity expansion itself driving this increase in the number of visitors to Rwanda?

“It’s a bit of both,” she said. “The Rwandan government is very ambitious and very deliberate in terms of what needs to happen for the country. So, from a tourism perspective, tourism has become the main foreign exchange earner for Rwanda. Before it was coffee and tea and all that, but now it is tourism.”

“There is traditional tourism coming to see the gorillas and our beautiful country. There is also conference tourism,” Makolo explained. “Kigali now is number two, after Cape Town, in terms of the number of conferences it hosts within the African continent.”

“Rwanda is also positioning itself as a sports tourism destination. We have built lots of infrastructure – the arena, the new stadium, which has been refurbished, the golf course. There are lots of sporting events taking place in Rwanda as well”, Makolo said, citing the final of the Basketball Africa League (BAL) as an example.

But the intrinsic attractiveness of a country is often not enough to make the tourism and air transportation industry flourish. Makolo made this point clear.

“What makes Rwanda attractive for all this is the accessibility of the country,” she said. “Having direct routes through RwandAir or the other airlines that come into the country does make it a lot better to come here.

“The government has also made it easier to get visas. Anyone from any country can get a visa on arrival here in Rwanda, which is very different from a lot of other African countries that have incredibly complicated visa regimes. Plus, it’s an attractive country, it is safe. It’s clean. So, the product is really good, and I like to believe that RwandAir has played a key part in opening up the country and making it more accessible so that people can experience its beauty.”

Makolo thinks this is a model that other African countries could emulate and RwandAir can help make this happen.

Building Africa’s newest air hub

Makolo also noted that the majority of traffic used to be point-to-point, but the percentage of transiting passengers has now grown.

“Now we have both point-to-point and transfers as well as a small number of fifth freedom passengers.” [The Fifth Freedom of the Air is the right an airline has to fly passengers between two points outside of its own home country – Ed. Note]

Makolo also touched upon plans to turn Kigali’s new international airport, currently being built with Qatari support, into an alternative hub for the region, starting in 2027-28.

“Our transit traffic has grown as Kigali grows more and more into a hub,” she said.” I would say point-to-point is about 45%, while 50% is transit and 5% is fifth freedom flights.”

Asked about the general direction of these traffic flows, Makolo further elaborated on RwandAir’s network strategy, explaining that the airline currently services 24 routes.

In early 2024, RwandAir suspended its service to Mumbai (BOM), India. However, it has been adding capacity on other long-haul routes, such as those linking Kigali (KGL) to London Heathrow (LHR) and Paris Charles de Gaulle (CDG), which are operated with Airbus A330 wide-body aircraft.

“When it comes to traffic flows, it’s a bit of everything,” she explained. “What we’re seeing is growth in terms of north-south traffic, especially with our London route. We’ve been growing the London route from three flights per week to daily flights. So, by the beginning of May 2024, we’ll be operating daily flights to London-Heathrow.

“Our recently launched Paris route is also performing very well, especially connecting to Central African countries, and to a certain extent to East African countries. So, we’re happy with that as well.”

“And then, of course, we have flights to Dubai (DXB) and Doha (DOH),” she added. “At Doha we connect to the Qatar Airways network. So, it’s a little bit of everything. But our aim, as I mentioned, is really connecting Africa to the rest of the world through Kigali.”

The Qatari connection

The partnership with Qatar is particularly important to RwandAir, and the African carrier has been increasing frequencies to the Gulf hub.

“We started with three flights a week and now we have six flights a week, and we hope to continue doing that,” Makolo said. “We are very happy with that route, [and] with the fact that we are able to connect to their hub and they are able to connect to ours. So, their passengers can also access some of the routes that they don’t fly to directly.

The relationship with Qatar is more far-reaching than a mere codeshare agreement between airlines, though. The Gulf emirate is a key investor in both the Rwandan airline and the country’s airport infrastructure.

“Rwanda and Qatar, the two countries, have a very strong relationship and that has built into commercial relationships in the aviation sector,” Makolo explained. “So, for the last few years, we’ve been discussing and working towards having Qatar – previously it was Qatar Airways, now it’s the Qatar Investment Authority, but Qatar Airways is the implementing body – take a 49% stake in the airline, with the Rwandan government keeping the remaining 51%. Qatar was also to become the majority shareholder of Kigali airport, with 60%.”

She referred to the brand-new airport that is currently being built near Kigali with Qatari backing and which is going to become Rwandair’s new home once completed.

“So, for the airport, the project is ongoing, construction is ongoing. We are at 80% plus of the first phase, which is the horizontal works, and they’ll move towards the vertical works soon – later this year. For the airline it’s a bit more complicated, because we are already in operation, but we are finalizing the deal on that end.”

“In the meantime, we’re working very closely together,” she added. “From a commercial perspective, out of 74 routes we codeshare with partners, 67 are with Qatar Airways.”

Mokolo also noted that the airline’s commercial partnership with Qatar Airways extends to their respective loyalty programs.

“Passengers being able to earn and burn miles on each other’s loyalty programs, such as supporting us from a human resources perspective. So, while we’re waiting for the deals to be finalized, we’re working very closely together, and we value that relationship.”

She added: “We believe it will be very good in helping to take the airline to the next level and having a very strong airline to grow the aviation market here in Africa. So that’s at high level, pretty much what this relationship is about.”

Connecting Africa

RwandAir also operates a number of fifth freedom flights between African countries.

“We have Lusaka-Johannesburg, Harare-Cape Town, Brazzaville-Douala, Douala-Cotonou, Bangui-Douala, Accra-Abuja. So, we have a few fifth freedom flights,” Makolo noted. “A lot of our routes started off as fifth freedom flights, and then as they grew, we now service them as stand-alone. So, we were hoping even for these ones, as we grow the routes, we’ll be able to attack them and have more point-to-point.”

Makolo doesn’t shy away from expressing the airline’s ambition to become a pan-African operator. This is something that a number of operators have tried in the past, with Rwandair’s competitor Ethiopian Airlines perhaps coming closest to realizing this concept.

Makolo also identified the many challenges airlines encounter when operating across Africa, although she also expressed her belief that these could be worked on and overcome.

“The biggest barrier is definitely the cost of operation within the African continent,” she said. “Everything is a lot more expensive, which makes achieving profitability a big challenge.

“Fuel is much more expensive than what you find in Europe or the Middle East. Navigation fees, parking fees, airport taxes – everything is at a premium when flying within the African continent.”

“The second issue is Open Skies,” Makolo said. “For some countries, it’s a big challenge to either enter, start flying into another country, or build additional capacity on certain routes, adding additional frequencies or accessing additional points within the same country.”

Makolo said the potential setting-up of an Open Skies framework has been discussed many times, and it’s been advocated through different quarters, and more recently, under the umbrella of the Single African Air Transport Market (SAATM), a project the African Union to create a single unified air transport market in Africa.

“We are hopeful and keep advocating for it,” she added. “This will make it much easier for African airlines to really take off and connect the continent.”

Makolo said infrastructure is another big barrier, particularly “a lack of investment” which also presents “a big challenge from a safety perspective”.

“And, of course, the issue of visas, which is a big, big problem for many African countries. That really makes it complicated for people coming into the country, as opposed to just opening up and allowing people to move freely between the different countries,” she continued.

The potential is there, Makolo said, as the population of Africa is 1.4 billion, but the percentage of traffic is minimal, totaling around 2%.

She added: “We just need to remove some of these stumbling blocks to allow the aviation sector to really take off.”

Geography favors the Kigali hub, and the completion of the Rwandan capital’s new airport, currently being built at a greenfield location about 35-40 minutes from where the current airport is, should also help boost traffic.

“We were looking at about six million passengers in the first phase, which will be almost three to four times what we have in the current airport,” Makolo said. “Other phases will be added on as traffic picks up.”

She added that the country’s central location “definitely helps access different points much more easily”.

“Like several other airlines with a high percentage of transit passengers, Rwandair has created its own stopover product,” Makolo said. “Kigali is a relatively small city, so it’s easy to get around very quickly. If you have a one-day stopover, you can see a lot of pretty much the whole city in the one day that you have.

“We do have a stopover product which we recently launched, which we are pushing, which involves hotel accommodation, visiting different sites within the city. People have the option of going to play golf – there’s a huge golf course here as well – and visit the different markets to see the local products.”

“It’s an interesting product. It’s a very good entry point into seeing Rwanda and then deciding whether you really want to come and visit,” she added. “We believe we have the potential to grow this and in turn help grow tourism within the country.”

Building a world-class airline

RwandAir operates a two-class cabin (business and economy) across its entire fleet.

“We have a very good product, starting with the A330s, these fairly new aircraft we have, which do our long-haul flights,” Makolo said. “Originally it was a three-class product, with business, premium economy and economy, but we’re no longer selling premium economy.”

This move was primarily to ensure product consistency across the airline’s network.

“We’re selling it as economy because it became a challenge,” Makolo explained. “When you’re flying from, let’s say, London to Nairobi, going from Premium Economy on the A330 to then transfer onto another aircraft that doesn’t have Premium Economy becomes a bit of a challenge. In order not to disappoint the passengers, we thought it would be best to phase it out. So, we just sell economy and business class at the moment.”

Makolo talked proudly about the airline’s offering, particularly its premium product.

“We have a very good business class with 1-2-1 configuration and lie-flat beds,” she said. “We have a very strong onboard product. We have a very well-trained crew. In 2022 we won the Skytrax award for the Best Airline Staff in Africa.”

“There’s this stereotype that on African airlines the quality is not good, that the product is not good. We want to go beyond that and show that African airlines can deliver a strong product at an affordable price because Africans deserve good things as well.”

“We have business class on our whole fleet, including the regional jets, the Q400s and CRJs,” Makolo said. “So, the rest of the fleet is a two-class fleet as well, not just the wide-body aircraft. We’re very proud of what we offer, and we intend to grow that even more.”

As of April 2024, Rwandair is operating a fleet of 14 aircraft, an eclectic mix of Airbus A330s, Boeing B737NGs as well as Bombardier/Mitsubishi CRJ-900 regional jets and De Havilland Canada Q400 Dash 8 turboprops.

“We are working on growing the airline,” Makolo said. “Our plan is to double our fleet within the next five years, and we are on track to do that. We intend to continue growing, especially within the African continent, opening additional routes within Africa. So, the next few years we will be focusing on opening African routes.”

While the total number of aircraft in the fleet is likely to soon increase, the number of aircraft types operated by the airline is to be cut from the current five to just three. By doing so, Rwandair will have one aircraft type for each market segment in which it operates: regional, short and medium haul and long haul.

Makolo continued: “We do intend to lease rather than purchase aircraft and we are also looking at rationalizing the fleet, to at least have three types: one type for the regional, one for the medium-haul, and then the long-haul. We’ll keep the 737s and the A330s. We’re still looking for the regional, to see what exactly fits our future plans. That’s yet to be decided, but we will be rationalizing our fleet as well.”

“The 737s are currently our biggest fleet right now,” she continued. “Half of our aircraft are 737s and they’re really the ones that allow us to access quite a number of points within the African continent. So, I expect the 737s to remain our main aircraft type.”

The cargo opportunity

Another area earmarked for further growth is cargo. RwandAir received a 737 freighter one year ago and is preparing to continue investing in this market segment.

“We recognize the importance of cargo, and we want to grow that revenue stream,” Makolo said. “It is going to be a big focus area for us, possibly getting additional freighters and fully leveraging the belly capacity of our existing aircraft.”

The airline carries fresh produce to Europe and Dubai, bringing different products, such as general goods, car spare parts and pharmaceutical products back to Rwanda.

“The export sector in Rwanda is growing so we do intend to support that. With the implementation of the African continental free trade area, we do intend to leverage that to really connect the African countries and move people and goods between the different countries.”

“So, there’s a lot of potential once that this is fully implemented,” she said. “We do intend to leverage that.”

Makolo also shared some details of other projects RwandAir is currently undertaking to enable and support this projected growth.

“We want to grow our local capacity in terms of pilots and engineers, so as not to be overly reliant on expatriate pilots,” she explained.

She continued: “We recently onboarded the first batch of cadet pilots and that’s going well. We look forward to continuing growing because we do believe that, in order to be a strong airline and to be a strong aviation hub here in Kigali, we need the skilled resources, the local skill, to really leverage that to grow the company.”

To this end, in October 2023, Rwandair received a US$23.6 million loan from the African Development Bank to set up the Centre of Excellence for Aviation (CEAS), an aviation training school that is expected to open in 2025 and will have a capacity for 500 students per year.

“We are also building our maintenance capacity,” Makolo added. “We used to outsource our maintenance to different MROs [Maintenance, Repair and Overhaul]. A year ago, we set up our Approved Maintenance Organization (AMO), where we do up to eight A-checks here for all our fleet except the A330.”

“We are working towards also handling our own A330s and eventually growing into a full MRO,” she revealed. “We are doing it progressively, but that’s the future plan – to also become a fully-fledged MRO.”

Discover more insight into African aviation, through AeroTime’s media partnership with AviaDev Africa

AviaDev Insight is the first podcast dedicated to the African aviation industry, created by Jon Howell, Founder and Managing Director of AviaDev Africa, Africa’s premier event dedicated to developing air connectivity.

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Exclusive interview: Why is Scoot adding Embraer narrowbodies to its fleet?

Jean Carmela Lim — Sat, 06 Apr 2024 04:00:00 +0000

Low-cost carrier Scoot had a remarkable 2023. Among other accomplishments, the Singapore Airlines-owned company won the title of ‘Best Low-Cost Carrier’ at the Trade Travel Gazette (TTG) Travel Awards and Travel Weekly Asia Readers’ Choice Awards in October, and also bagged ‘Best Low Cost Long Haul Airline’ for the third consecutive year at the Skytrax World Airline Awards at the 2023 Paris Air Show.

While accepting the award for ‘Best Low Cost Long Haul Airline’ in Paris, Scoot CEO Leslie Thng said the airline will “continue to pave the way in redefining value travel in the industry.”

Less than a year later, Scoot is doing exactly that. The airline, which boasts a fleet of entirely Airbus A320s and Boeing B787 Dreamliners, is now adding an entirely new aircraft type – the Embraer E190-E2.

At the 2024 Singapore Airshow, AeroTime caught up with Scoot’s COO, Ng Chee Keong, more popularly known as CK Ng, for the next installment of our Executive Spotlight interview series.

Ng shared how the Embraer E190-E2 integrates with the airline’s operational vision, how the airline crew is training for the new aircraft, and how Scoot is adjusting aircraft maintenance to suit a completely new aircraft type.

Why the Embraer E190-E2 is now part of Scoot’s fleet

Ng said the single-aisle Embraer E190-E2 will give Scoot the chance to “experiment” with new routes and being able to explore new frontiers

“The Embraer E190-E2 basically will allow us to fly to places where we find that if we operate with the conventional A320 or the 787s will be over capacitated,” Ng explained. “There are some places where we think we don’t have that kind of capacity yet.”

Ng’s comments are validated by Embraer’s outlook on the Asia-Pacific region.

During a 2024 Singapore Airshow media roundtable, Adam Young, Embraer Vice President Marketing for APAC, said the company sees a demand for secondary cities or tertiary destinations in the region.

Young added that the market shift to secondary cities, which often have smaller airports, will spark a demand for small narrowbody aircraft in Asia-Pacific.

The first of Scoot’s nine E190-E2 aircraft is expected to arrive sometime in April 2024, and will come from Embraer’s manufacturing facility in São José dos Campos, Brazil.

Scoot

In March 2024, Scoot revealed the first six destinations its new Embraer E190-E2 plane will fly to, and they are all secondary cities.

New destinations:

Koh Samui Airport (USM)
Sibu International Airport (SBW)

Existing destinations:

Hat Yai International Airport (HDY)
Sultan Ahmad Shah Airport (KUA)
Krabi International Airport (KBV)
Miri International Airport (MYY)

In a May 2023 Airport Technology report, Scoot CEO Leslie Thng said the E190-E2s will allow the airline to serve “thinner routes to non-metro destinations out of Singapore”.

How is Scoot training its crew for the new Embraer fleet?

Ng expressed his eagerness to welcome the E190-E2s into Scoot’s fleet, a new aircraft type, which he said is “totally nascent” in Singapore and the region.

“I daresay that Embraer doesn’t show its face pretty much [in the region]. So, in that sense, I welcome the new addition and I’m very sure the general public and our customers are very excited,” he said.

Ng also said that because the airline is welcoming a new aircraft type, it has looked at training all departments and areas from engineering and pilot and cabin crew training to ground support and even ramp support facilities.

He added that training has been implemented for the smallest of equipment, “even as basic as a tow bar”.

“Each aircraft type has its own organic tow bar, and the E190-E2’s is different,” he said.

Image: Embraer

When it comes to pilot training for the Embraer E190-E2, Ng expressed the importance of minimal disruption to current operations, hence the preference to base the simulators in Singapore.

“We have simulators in Singapore for the 787 and the 320s, but in order for us to optimize training and to not have too much traveling time overseas, we’d rather have the simulator in Singapore,” Ng said.

Ng shared that one of the “main attractions” of having Embraer in Singapore was that it was prepared to bring a simulator into the country.

“We basically had an opening ceremony,” Ng said. “We inaugurated the simulator a few days ago, so I would say that simulator training in Singapore was a first-hand opportunity for pilots to have time optimized between traveling overseas and all that.”

On February 19, 2024, Embraer and CAE officially inaugurated the APAC region’s first E-Jets E2 full flight simulator (FFS) in Singapore. The E2 training program features CAE’s competency-based training assessment (CBTA) courseware, interactive classroom instruction with the CAE Simfinity virtual simulator (VSIM), and immersive practical training in a new CAE 7000XR Series FFS.

Scoot pilots have already begun training in preparation for the E190-E2’s entry into service later this year. For the training, pilots will experience all aspects of flight and practice multiple scenarios to enhance their skills and preparedness ahead of Scoot’s first revenue flights with the new aircraft.

Scoot’s cabin crew training for the E190-E2 is also conducted in Singapore.

“For the cabin crew training, we have the door training in Singapore, so again it reduces the travel time overseas,” Ng explained. “When you are away from Singapore, it means you don’t have much time for day-to-day operations.”

Regional MRO support

Real_life_photo / Shutterstock.com

Ng said that the current line maintenance for the E190-E2s will be performed by SIA Engineering Company, which undertook training courses designed by Embraer.

“They have to learn,” Ng said. “We have courses that were basically started by Embraer, from Brazil where they learn how to get a type rating for the engineers in order to fully service the aircraft down here.”

With the demand for narrowbody aircraft and secondary destinations, Ng said Scoot is looking forward to the possibility of a regional support for maintenance, repair and overhaul (MRO).

“For MRO facilities, we are looking at regional support and that’s a possibility we are exploring right now,” Ng said. “In time to come, we will have an established Embraer MRO presence where we can carry out our checks.”

Image: Fokker Services

In February 2024, Embraer entered into a Memorandum of Understanding (MoU) with Fokker Services Asia, assigning Fokker Services Group Asia’s facility in Seletar, Singapore as an Authorized Service Center for Embraer’s first generation E-Jets family, supporting the steadily growing Embraer presence in the region.

On its website, Scoot promises the arrival of the Embraer E190-E2s will create a “wider network” and “new adventures”.

So, with the plane manufacturer strengthening its presence in Asia-Pacific and the airline unveiling new destinations, it seems that Scoot’s customers can certainly look forward to reaching new frontiers.

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Airbus APAC President Anand Stanley on widebody demand and sustainability

Jean Carmela Lim — Sat, 09 Mar 2024 04:00:00 +0000

When Anand Stanley was appointed President of Airbus Asia-Pacific in July 2020, the aviation industry was suffering greatly due to the impact of the COVID-19 pandemic.

And while this was true across the globe, Stanley was tasked with heading up the worst-hit region. According to Airports Council International (ACI), from 2019-2021 air passenger traffic in the Asia-Pacific region experienced a 62.7 % reduction. In comparison, the total world passenger traffic decreased by only 48.3 %.

Airbus

In October 2020, three months into the position, Stanley told Channel News Asia that it would be a “long recovery” with Stanley adding “at the end of the day, we don’t need to just survive, but thrive”.

Four years on, Airbus is reaping the benefits of a surge in demand for aircraft and travel in the region. Asia-Pacific carriers are ramping up aircraft orders, and Airbus is strengthening its sustainable initiatives with the launch of a Sustainable Aviation Hub in Singapore.

It seems that Airbus has surpassed survival mode and is indeed thriving.

At the 2024 Singapore Airshow, AeroTime sat down with Anand Stanley for the next installment of our Executive Spotlight interview series, where he shared what makes Asia-Pacific a perfect region for widebody aircraft. He also revealed a bold forecast of over 20,000 more aircraft orders in the next 20 years.

Why Asia-Pacific holds the key to widebody success

AeroTime

There is currently a substantial demand for widebody aircraft in Asia-Pacific.

At the 2024 Singapore Airshow, Taiwanese carrier STARLUX and Vietnamese low-cost airline Vietjet both announced major Airbus widebody orders in a span of less than 24 hours. Full-service airlines like Cathay Pacific, Singapore Airlines and Philippine Airlines also announced major widebody orders in the second half of 2023.

So, why is there a surge in widebody orders from carriers in the Asia-Pacific region?

Stanley narrowed his answer down to three reasons, citing geography as the first, owing to the region expanding across archipelagos and islands.

“[Asia-Pacific] has such diverse geography,” he said. “Oceans, archipelagos…it is such a beautiful but large region.”

The second reason, Stanley said, is that widebody aircraft can easily connect populations across the region.

“Look at the widebodies,” he said. “They connect regionally, like the A330neo. It connects 60 to 80% of the world’s population from any of these countries.”

“And then you have the A350, which can connect any two points on the planet. So all of these are very useful,” he added.

The third reason for widebody demand in the region? Asia-Pacific is “an exciting place for demographics,” Stanley claimed.

“We have a young population, growing economies,” he explained. “We have growing GDPs. So all these put together, it’s a perfect recipe for widebody success.”

Data from the 2016 United Nations Development Program (UNDP) showed that more than half of the world’s young people live in Asia and the Pacific. Meanwhile, World Bank East Asia and Pacific Vice-President Manuela V. Ferro said in an October 2023 press statement that the East and Asia-Pacific regions remain one of the fastest growing and most dynamic regions in the world.

Stanley also shared a promising forecast in aircraft orders.

“To give you more of a prediction, we’re looking at another 19,000 aircraft of open demand in Asia-Pacific over the next 20 years,” he revealed. “And, more importantly, about 4,000 widebodies incrementally in this region alone.”

Air cargo growth in Asia-Pacific

Sorbis / Shutterstock.com

According to a December 2023 report by the The International Air Transport Association (IATA), air cargo volumes for Asia-Pacific airlines increased by 7.6% in October 2023 compared to the same month in 2022.

The IATA said that carriers in the region are benefiting from ongoing growth in international cargo ton-kilometers (CTKs) on three major trade lanes: Africa-Asia (16.7% increase), Middle East-Asia (10.3% increase), and Europe-Asia (8.5% increase).

On February 21, 2024, at the Singapore Airshow, STARLUX placed a firm order for five next-generation A350F alongside three more A330neo widebody aircraft.

The A350F was launched in July 2021 and is expected to make its first flight in late 2025. Airbus claims that it is more fuel efficient, providing 40% lower fuel burn and CO2 emissions compared to the Boeing 747F.

According to Stanley, cargo has always been “big”, and there will be a continued demand for freighters in the Asia-Pacific region.

“We will still see in the next 20 years, a demand for over 400 freighters,” he said. “We’re talking just pure freighters. These aircraft have very specialized needs.”

“When you look at something like the A350F, it is a clean sheet modern design,” Stanley said, adding that the A350F is the only freighter in that category today.

Stanley went on to cite three reasons why the A350F would work well in the Asia-Pacific region.

“Number one, it’s modern and innovative,” he said. “Number two, it [offers] up to 40% less fuel emission than the freighters it is replacing. 40% less emissions. Think about it. That’s sustainability and that’s cost.”

The third reason, Stanley said, is specialized needs.

“A lot of the specialized needs we look at are connecting Asia-Pacific directly to the United States for high-value items like electronics, semiconductors or chips,” he said. “For these kinds of high-value items, a pure freighter like the A350F is the perfect solution.”

Sustainability in Asia-Pacific: Turning challenges into opportunities

Airbus is raising the bar when it comes to sustainability initiatives. All Airbus aircraft are currently capable of flying on a maximum 50% blend of Sustainable Aviation Fuel (SAF) and conventional fuel. By 2030, Airbus aims to enable all its aircraft and helicopters to fly with up to 100% SAF.

At the 2024 Singapore Airshow, Airbus signed a Memorandum of Understanding (MOU) with the Singapore Economic Development Board (EDB) to facilitate the establishment of a Sustainable Aviation Hub.

Airbus

However, the Asia-Pacific is still lagging behind Europe and North America in terms of sustainability efforts and government mandates regarding the use of SAF.

So, how is Stanley able to pioneer sustainability initiatives in the region? He told AeroTime that what’s important is that sustainability first goes through Airbus products.

“Every product that we are introducing today immediately reduces about 25-40% less emissions than the previous generation,” Stanley said.

He also pointed out that the Asia-Pacific region is composed of countries with varying resources and capabilities for SAF production and use.

In Singapore, Stanley said that oil refining company Neste has a huge facility which gives Airbus “a lot” of SAF.

“So Singapore has a very good story,” he added.

Stanley also shared that during the AAPA (Association of Asia-Pacific Airlines) Assembly in November 2023, airlines committed to somewhere between 5-10% SAF usage by 2030.

“On top of that, we’ve seen a lot of governments also looking at mandating the use of SAF either at the airports or the airlines,” Stanley said.

According to Stanley, densely populated countries in the Asia Pacific region like the Philippines produce a huge amount of cooking oil that can be recycled. He also mentioned Australia’s capacity to deliver feedstock for biodiesel production.

“Each country has a unique wealth of resources that can be translated to SAF,” he explained.

Sustainability as a “journey”

During one of the flying displays at the 2024 Singapore Airshow, Airbus’ A350-1000 aircraft soared the skies using a 35% blend of SAF (a mix of cooking oil and tallow) supplied by Shell Aviation.

aappp / Shutterstock.com

And while it seems like Airbus is well on its way to achieving its 2030 goal of using 100% SAF on all its aircraft, Stanley pointed out that sustainability is a journey, so the planemaker’s efforts will not stop there.

“Remember, we are looking forward to the launch of hydrogen ZEROe aircraft by 2035,” he said. “And let’s not lose track of the 2050 goals of net zero.”

“The journey never stops because as our purpose goes, we pioneer sustainable aviation for a safe and united world,” he added. “We will not stop.”

The post Airbus APAC President Anand Stanley on widebody demand and sustainability appeared first on AeroTime.

Building an airline for all Australians: Bonza CEO on the airline’s first year

Miquel Ros — Wed, 21 Feb 2024 04:00:00 +0000

New Australian airline Bonza took to the skies on January 31, 2023, with the goal of dynamizing a market that, over the last decade, has seen competition falter and the two main airline groups gobble up more than 90% of the domestic market.

This startup carrier offers the traditional low-cost formula of cheap fares and a basic no-frills experience with added à-la-carte services. But it also aims to differentiate itself in a number of other ways, from an app-only booking process to the fresh and youthful vibe it projects.

Bonza, which in its first 12 months of operations has carried more than 750,000 passengers, has deliberately avoided Australia’s trunk routes to focus instead on under-served markets across the eastern half of the country.

As such, this was a perfect time for AeroTime to speak with Bonza’s founder and CEO, Tim Jordan, to learn more about this venture and what it has in store for the months to come.

Before starting Bonza, Jordan had a long and global career in the airline industry. In fact, launching a new airline was nothing new for Jordan.

Between 2018 and 2020, Jordan helped set up FlyArystan, the low-cost airline of the Air Astana Group, Kazakhstan’s flag carrier, which has since become the largest budget carrier in that geographically vast country.

Jordan started his aviation career in the United Kingdom in 1990, working for Novair, a British charter operator. Then, at the age of 27, he moved to the United States to join United Airlines at its head office in Chicago.

“I started in this wonderful industry in 1990 in the UK. That was my baptism into this wonderful industry and, despite my best efforts, I haven’t been able to escape to this point,” he said.

“I think I’m going to be in this industry for life,” Jordan joked, recalling those early days. “Then I moved to United and it was the start of Star Alliance, so that was a fantastic time to be there, to be involved in the infancy of the alliance industry.” [United Airlines was one of the founding members of Star Alliance in 1997. Star Alliance was the first of the three major airline alliances to have been founded – ed. note]

At United Airlines, Jordan was in network planning. He said he still considers himself a planner at heart, but later experiences took him into other areas of the airline business.

Following a relatively short stint as an aviation consultant at PwC in London, Jordan headed to the other side of the world. In 2002, Jordan joined the Australian branch of Richard Branson’s airline empire, Virgin Blue (later to be renamed Virgin Australia), eventually becoming its Head of Commercial.

His next project would take him slightly further north, becoming Chief Commercial Officer at Cebu Pacific, an ultra-low-cost carrier based in the Philippines, a position he held between 2005 and 2008.

It was immediately after Jordan returned to Australia from the Philippines that the idea of what would become Bonza was first seeded.

“Bonza is the outcome of a passion. It has taken 14 years to get to this point. After returning from the Philippines, I was standing on the veranda at my house, halfway between Sydney and Brisbane and I saw an aircraft fly overhead. I realized that many in my community, my street, my neighborhood, couldn’t afford to get on the aircraft that had just flown over my head,” he said.

“We had just managed to execute very, very well with Cebu Pacific and had grown the market tremendously in the Philippines and enabled many millions of people to fly for the very first time. And here we were, in rich Australia, where the same opportunity wasn’t available to many of my neighbors, and that was where Bonza was born. It just took a long time to get to where we are today – 14 years!”

Mitchell Hope / Wikimedia Commons

A market ripe for disruption

The startup capital came mostly from 777 Capital Partners, a US investment firm that, in addition to having backed Flair, a Canadian low-cost airline, has interests in a number of professional sports teams across Europe and Latin America.

“They are here because they could see the opportunity, they could see that Australian aviation was missing something,” said Jordan of his venture partners. “Australia was the only domestic market of the world’s 15 largest without an independent low-cost carrier. You may have low-cost airlines that are owned by a flag carrier, but having independence to fly where and when you like, with the pricing you like, is a very different proposition.

“Australia was missing out and consumers were missing out. Bonza seized an opportunity that existed in Australia. [777 Partners] were already executing something similar in Canada with Flair, so they got it. They came along and they’re with us now on this journey.”

Australia currently has a market structure in which the two airlines of the Qantas Group, Qantas and Jetstar, carry more than 60% of passengers, with Virgin Australia, which is owned by US firm Bain Capital, has another 33%. The rest of the market is covered between smaller regional carrier REX, and Alliance Air, which mostly serves mining locations.

Briefly, Australia had another low-cost carrier, TigerAir Australia, but it was acquired by Virgin Australia back in 2013. And while Virgin Australia started out as a low-cost operation, Jordan, who worked at the airline in its early years, does not consider it to be a true low-cost carrier anymore.

“For all intents and purposes, Virgin Australia has morphed into a full-service carrier. It now has a business class, frequent flyer points, etc.,” he said, explaining the rationale for launching a proper budget carrier in the country. “Australia has spent 10 years effectively without an independent low-cost carrier and that manifests itself.”

Jordan shared some figures to prove his point.

“I’ll give you a couple of my favorite statistics, showing you how Australia has stood still,” he said. “In early 2020, the number of low-cost operated routes in Australia was 58, zero growth. Can you imagine anywhere else in the world where, over a 10-year period and in a growing country, the number of low-cost routes just stood still? This is the Bonza opportunity.”

Jordan wanted Bonza to be more than just another airline with lower prices. He hoped it could bring about a new way of doing things, starting with its name and market positioning.

“If you actually look it up, Bonza is a colloquial Australian term, it used to be used more widely, but what it means is great, well executed…something’s ‘bonza’, mate!”

Jordan highlights that Bonza is intended as an airline for everyone, something that’s reflected in its motto: ‘Here for Allstralia’.

“We wanted to come into the market and say we are proudly Australian, we are proudly doing something different, we are a low-cost carrier and carry everybody on board.”

He continued: “84% of the 38 routes we are currently operating are unique to us. This means that we carry on board people from all walks of life, from first-time travelers to mums and dads, holiday makers and business people, because our route network is quite unique. We like to say we are for the many, not the few.”

On its website, Bonza states that during its first year of operations it has saved Australian travelers more than A$138 million (US$90 million), when comparing its fares with those which would have been available on other airlines on the same itineraries on a connecting basis. The goal this year is to bring those savings up to A$200 million (US$130 million).

“Our competition is the TV or the couch at home. It really is a case of stimulating the market,” Jordan said. “Train travel is not a big thing here. The car is for shorter markets, although people here go on long, long drives, so the car is certainly some competition. But the sofa at home is just as much competition, because people don’t travel if it becomes too hard, too complicated, too costly or too time-consuming, and that’s what we’re changing. People start to realize that you can get on an aircraft for A$50-60 dollars, fly for an hour and go see your relatives.”

Bonza has so far stuck to under-served markets, opening up new connections to secondary airports across Australia and staying away from the most transited routes linking the main cities of Sydney, Melbourne and Brisbane with each other.

“It’s got nothing to do with specific cities, it’s about whether a route is either unserved or under-served,” Jordan said. “Of the initial nine markets that we served, seven are not flown by any other airline. Even a metropolis of five million people like Melbourne has markets that are not flown by any other operator, because their business model would rather have traffic flow through their other hubs. So, we find ourselves servicing many of those regional destinations by default.”

To illustrate this point, Jordan shared a personal anecdote. “I have just flown to Melbourne from a place called Port Macquarie, which has a population of around 100,000 people. Qantas flies to Port Macquarie (PQQ) four times a day from Sydney, with a [De Havilland Canada Dash 8] Q400 aircraft and Rex, three times a day with a Saab [a Saab 340 turboprop aircraft – Ed. Note]. So, we fly from Port Macquarie to Melbourne thrice a week, with fares from A$69, and it takes 1.5 hours, which is approximately 20 minutes longer than the Qantas and Rex service to Sydney, where you would have to connect and take another 90-minute flight to Melbourne. So, we basically cut the journey time and the fares in half.”

Bonza’s business case has been strengthened by what Jordan described as “accelerated regionalization” in Australia.

“There’s been a lot of people, I think all of us to a certain degree, who have questioned our own existence since COVID. We’ve said, ‘I need to strike the right work-life balance’. For many people this has involved moving out of the city and into the countryside, moving to the regions, moving to the beach. This just accelerated the opportunity for an airline like Bonza. That’s what we are seeing.”

Asked why other carriers are not taking advantage of this trend to the same degree, Jordan was categorical.

“Well, 58 [low-cost] routes in 2000, 58 routes in 2020. I’ll let you answer that,” he said.

The Bonza way

While Bonza follows the classic low-cost formula, Jordan is particularly proud of some ‘firsts’ that set his airline apart.

One of them is the fact that Bonza is a truly mobile-first, app-centric airline. In fact, customers can’t book a flight on the airline’s website, they must go to the app. Bonza does still work with some travel agents, but more than 95% of its bookings come through the app.

Bonza has also done away with trolleys onboard its aircraft. You can order food and drink from your seat via a QR code, which brings the menu up on your phone, but the crew then delivers directly to your seat. “Your elbows and knees are now safe from the trolley,” Jordan said with a laugh.

In any case, with or without trolleys, all food and drink that passengers are served is Australian-sourced.

“We don’t even have any of those popular soft drink brands, everything is sourced locally. We try to support local manufacturers, local producers. Some are very, very small,” explained Jordan.

The crew uniform policy, in turn, is ‘wear it your way’. Bonza doesn’t have strict uniform mandates. There is a set of uniform options – trousers, shorts, T-shirts and so on – but the crew get to choose exactly what they would like to wear. They can ‘mix and match’, so there’s not just one standard uniform.

“They can even wear a pair of our Bonza-branded sneakers,” Jordan pointed out, while explaining the sort of corporate culture he wants to instill at Bonza.

“We are trying to represent everybody,” he continued. “We have recruited crew members who have 20 and 30 years of experience with other airlines and then we have also recruited people who are totally new to the industry. That has resulted in a wonderful mix of enthusiasm and experience on board and that’s something that is resonating incredibly well with our customers.”

Apparently, this casual vibe extends to aircraft as well.

“We have Shazza, Bazza, Sheila, Malc, Matilda and another aircraft that is yet to be named. We name our aircraft to bring them alive,” explained Jordan, clarifying that the Bonza team doesn’t like to refer to aircraft by their registrations.

“We found it was a little bit impersonal,” he added with a smile.

Bonza

The North American connection

Bonza currently has six Boeing 737 MAX 8 in its fleet, two of which are on loan from Flair, investor 777 Partners’ other airline. These two aircraft, which unlike the others are not named, are recognizable not just because of their registration (C-FLKC and C-FLHI) but also because they have retained some elements of the Flair color scheme, such as lime green engines and winglets.

Jordan confirmed that the two loaned aircraft will eventually go back to Canada, but that Bonza is eventually going to get more aircraft from an order placed by 777 Partners in 2019 for 66 Boeing 737 MAX 8 aircraft.

In July 2023 it was reported that the Miami-based investment firm was considering ordering additional aircraft from Boeing, but so far this has yet to be confirmed

Jordan said: “There will be additional aircraft which will take the fleet to either nine or 10 aircraft by the end of the year [2024]. The final number will be dependent on the delivery schedule. This may not be the final number of aircraft, though. The market will tell us.”

If two Flair aircraft have been sent to Australia for ‘hibernation’ during the harsh Canadian winter months, the reciprocal movement may take place after Bonza has received more aircraft.

“It’s not possible for us to send aircraft north this summer, since we will only have six aircraft, of which one is a spare,” Jordan said. “However, our intention is to make this arrangement absolutely reciprocal, since it can benefit both airlines.”

He explained that Bonza hasn’t seen any consumer backlash against the MAX following the Alaska Airlines door incident. Indeed, he had only positive words to say about the aircraft type.

“The MAX has been performing very well for us, both from a fuel burn perspective and as far as customer feedback is concerned,” he said. “For example, the onboard overhead bins: we have not had a single issue with customers not having stowage space on board the aircraft, which for a low-cost carrier is actually pretty unusual.”

Bonza operates its MAX fleet fitted with 186 seats, rather than the 189 that is common on European low-cost carriers. These aircraft were originally assigned to LOT Polish Airlines, and they retain the original configuration with which they were fitted.

Jordan dismissed reports that emerged in industry media about Bonza having difficulties hiring pilots in the current tight labor market.

“It’s not too bad, in part because of the locations of our three bases: the Gold Coast, the Sunshine Coast and Melbourne. These are very desirable locations. The Sunshine Coast and the Gold Coast are about 100 kilometers from Brisbane, but they are a world away in terms of livability. That is almost a unique opportunity for wonderful professionals to further their career flying with the youngest airline in Australian skies and with the youngest fleet and very close to where they want to live,” he said, while confirming that the airline is currently evaluating options for opening a fourth base in the near future.

While its network is entirely on Australia’s eastern side, Bonza is also looking at opportunities to grow in Western Australia, the huge but sparsely populated state that covers almost half of the island continent.

When asked about his options for network growth expansion, Jordan said: “On the day we were announced to the world, October 12, 2021, we sent out about 45 letters to all MAX-capable airports in Australia asking whether they would like to have Bonza service. Those markets that we currently service, 21 of them today, are the most enthusiastic of those airports. Ironically, the only city we have pulled out from is my hometown, Coffs Harbour, which is already not lost on me.”

What we’re not likely to see any time soon is Bonza going international. It’s not just that the opportunities to grow internationally are geographically constrained, but also that Bonza doesn’t want to add complexity when there are still opportunities aplenty within the domestic market.

“The opportunity we see domestically says that we should not do that in the short to medium term, but we should never say never,” stated Jordan.

Instead, he said he was insisting on keeping things simple for now. For example, at present Bonza is sticking to a relatively basic price structure, rather than offering multiple types of fares and service packages as other, larger and more consolidated low-cost carriers are doing.

At this point Jordan resorted to a metaphor: “Our focus has been, if you like, building the house, building the framework. As we go through 2024, our focus is about making this house more beautiful. There are lots of initiatives that we know we have to execute and lots of things that we consider to be fantastic examples in our industry and that we can happily look around the rest of the world and copy. So, we will be looking to execute some of the simple wins, the low hanging fruit, to be quite honest. We are one year old, and we have been finding our place, learning to walk.”

Bonza is experimenting with some services, though. For example, it offers a limited form of complimentary inflight entertainment (IFE) onboard its aircraft that allows passengers to stream some content on their digital devices, although for now there’s no internet connectivity. Jordan admits this is not yet a fully developed offering.

“I don’t think we’ll be competing with Emirates anytime soon in terms of onboard video choices,” he said.

He went on to explain that he sees this technology as a tool that allows the airline to assess consumer preferences with a view to offer more services through this digital channel at a later date, such as, for example, selling services that passengers can enjoy on the ground when they reach their destination.

The airline has also launched a holiday package business in partnership with specialized operators.

“We like holidays and believe there is an opportunity in the Australian market. When you look at the markets that we will be servicing, there is a lot of leisure focus. That’s growing, clearly, from a small base, but we are quite enthused about the opportunity to offer accommodation and flights together,” he said.

While Bonza is not yet profitable, Jordan is unambiguously optimistic about the road ahead.

“I don’t think there would be any airline in the world with six aircraft that is profitable and we’re not bucking that trend,” he said. “But what we can say is that our break-even point is a lot lower than what many people would have you believe.

“Another unique thing about us is that our overhead is incredibly low, and, with the exception of our flying team, we are all virtually based. We are one year old, and we have just gone through the fastest and broadest aviation ramp-up in Australian aviation history.

“The network growth that we have delivered, that the team has delivered over the past year, is extraordinary,” he concluded.

The post Building an airline for all Australians: Bonza CEO on the airline’s first year appeared first on AeroTime.

PLAY Airlines CEO on building a low-cost link between Europe and the US

Miquel Ros — Thu, 01 Feb 2024 04:00:00 +0000

If there’s one country that punches above its weight in the aviation world, then it is undoubtedly Iceland.

This sparsely populated island nation, with a population of just 375,000 living in an area the size of Colorado, has traditionally used its geographical position to its advantage. Located in the Atlantic Ocean’s far north and roughly halfway between Europe and North America, it has become an intercontinental transit point and developed a sizable homegrown airline industry.

Iceland has long had an established flag carrier. However, a country that is so focused on air travel could not ignore the low-cost airline boom.

Earlier attempts at developing an Icelandic low-cost carrier have not ended in success. The most recent case being that of WOW Airlines, which closed in 2019 after making a number of questionable strategic choices.

However, a seed was planted, with some of those involved in those earlier projects recognizing the potential of developing a transatlantic low-cost alternative to connect Europe with the United States via Iceland.

This resulted in PLAY Airlines, launched in 2021, a young low-cost airline spreading its wings in Europe and North America.

In the latest instalment of our Executive Spotlight series, AeroTime spoke to PLAY CEO Birgir Jónsson, an experienced executive whose career spans several industries, to find out more about the young carrier – which is immediately recognizable owing to its bright red aircraft – and learn more about its most recent achievements and plans for future growth.

Previously, Jónsson has held leadership roles at two other Icelandic airlines, Iceland Express and WOW, as well as a recent stint as Head of Iceland’s Post Office before joining PLAY.

PLAY Airlines

As of January 2024, PLAY connects some 40 destinations across Europe with five airports in the US and Canada, offering a classic no-frills low-cost product by way of its base in Keflavík (KEF), Iceland’s main international airport.

A proven model

But is there enough of a market for a new airline to use the Icelandic stopover model to capture a share of the North Atlantic market?

“Well, history just shows there’s a strong demand for it,” Jónsson explained. “There’s a lot of different connection opportunities. It’s not only London and New York that we’re connecting, but all kinds of secondary cities, smaller markets.”

“But what made us think that we could do this,” he continued. “Is the knowledge that the market is focused on price. That’s the only thing that we think we can do a lot better than the other airlines. If we can offer lower fares, we will have demand and that has proven to be correct. If you look at the US destinations, last year most of them were well over 90% load factor, so there’s a market for it.”

“A family, let’s say, traveling to Europe from the US, can save quite a few hundreds of dollars and that matters in our market,” he added. “The prices are dynamic, but you can fly return for, let’s say, $300, something like that. If you book in advance, you can get a very good deal.”

Jónsson admitted that average fares are possibly higher, but still typically lower than direct competitors.

Although PLAY models itself after major European low-cost carriers (LCCs), such as Ryanair and easyJet, Jónsson said he has no qualms about using the ultra-low-cost carrier (ULCC) label.

“In American terms we are an ultra-low-cost airline,” he said. “It’s interesting that when you speak to people and the media in the US, they have a different understanding of what a low-cost airline is and they differentiate a lot between low-cost and ultra-low-cost, which, for me, is the same.”

The Global Guy / Shutterstock.com

So, what type of experience does PLAY offer onboard its aircraft?

“It’s an all-economy product. You pay for a basic fare and then you build whatever product you want to use,” Jónsson explained. “If you want to book a seat or take luggage or eat something on board or whatever, you can do it for a fee. People basically create their own price.”

He continued: “We have three seat pitches and now, in the winter, we also have something that you call a ‘space seat’ on the first few rows on our A320s. We put a seat blocker between you and other passengers, so you can sit on your own and have a little bit of space in the middle seat. Basically, we reduce the seat count on the aircraft when it’s the low demand season.”

As expected from an airline with this market positioning, PLAY relies strongly on ancillaries, which, Jónsson explained, represent around 30% of its revenue (about $60 per passenger).

A low-cost North Atlantic hub

One area where PLAY deviates from the traditional low-cost airline playbook is in its attitude towards connecting flights.

Unlike other budget carriers, PLAY operates a hub-and-spoke network, and it sells itineraries involving two or more flights with a stopover in Keflavík.

But how much of a drag is this when you are attempting to keep costs as low as possible?

“It adds cost and complexity,” Jónsson said. “But then again, this is the model that has been done here in Iceland for decades [Iceland’s other airline, Icelandair, has a similar transatlantic hub model, although offering a full-service offering – ed. note]. So, we have a lot of knowledge of how to do it and the operational teams are very good.”

“But of course, on a snowy and windy day we can have problems if we run into delays,” he added. “But this is the business model.”

He continued: “However, when it comes to other parts of the network, let’s say, people going from Iceland to Barcelona, for example, then our product and operations are similar to the other low-cost carriers. Otherwise, without offering connectivity, we would not have seen an opportunity to start a new low-cost airline in Europe.”

Splitting its network between two continents allows the airline to play with different time zones and squeeze some high utilization rates out of its aircraft.

“Let’s say, an aircraft goes in the morning to London and returns to Iceland around two o’clock in the afternoon,” Jónsson said. “Then the same aircraft would go to, maybe, Boston at three o’clock and return to Iceland at about four or five in the morning. Our aircraft are, in general, flying maybe 12-13 hours per day.”

PLAY also counts on the charms of Iceland’s stunning natural beauty to boost its value proposition.

While a stopover is usually considered an encumbrance, the possibility of enjoying the island’s unique, rugged volcanic landscapes between flights can be a rather appealing proposition. This is why, in January 2024, the airline launched a stopover product to make it easier for people flying between Europe and America to set some days aside to explore the country.

Unlike its main competitor, Icelandair, which has run a similar stopover program for years, PLAY won’t be directly offering accommodation or activities on the ground in Iceland. Instead, this will be left to travelers to arrange. However, the carrier will offer advantageous prices and conditions to customers who wish to space out their flights so that they can spend a few days in Iceland.

PLAY Airlines

To put things into context, Jónsson explained that around 40% of the more than 1.5 million passengers carried by PLAY in 2023 were in transit. The rest were divided in nearly equal proportions between Icelanders traveling abroad and Europeans traveling to Iceland.

Seasonality remains an issue, though – something airlines that rely strongly on North Atlantic routes know well.

However, according to Jónsson, things are getting better on this front. This is not just because more people are traveling to Iceland during winter, but also because more Icelandic people are flying south during the coldest months of the year. He explained how PLAY has managed to capture a substantial share of the Icelandic outbound leisure travel market. Jónsson also pointed out that 45% of all Icelandic people that traveled abroad in 2023 flew with PLAY. Routes to sea and sun destinations, such as Tenerife (TFS) or Alicante (ALC), performed particularly well. In Jónsson’s opinion, this proves there truly was a need for a low-cost carrier in Iceland.

According to Jónsson, PLAY outshines the competition on leisure routes.

“This is also where the business model is working correctly,” he said, “because they are all economy and our CASK [Cost per Average Seat Kilometer – ed. note] is much lower than the competition, so we can make profit at a lower price point than our competition.”

“This is a very good example of how a low-cost airline should function,” he added, while dismissing concerns about European LCCs contesting those markets and pointing out that there are already around 30 foreign airlines flying into Iceland.

Being new to the market can be a challenge for any company with the aim of selling directly to consumers. This was indeed the case for PLAY, particularly in those markets where it enjoyed little to no brand awareness, such as North America. To counter that, PLAY doesn’t shy away from selling through intermediaries.

“Our website accounts for 65 to 70% of all bookings,” Jónsson said. “And, obviously, here in Iceland where we are very well known, we probably have 95% of direct bookings. But in the US, we have to use other means of being known.

“We use online travel agencies (OTAs), meta-search engines, Google Flights and stuff like that and we have invested a lot of expertise in general internet advertisement, basically finding people that are showing some kind of an interest.”

“We don’t do traditional advertising,” he added. “But we make sure that if you are, for example, in New York or Boston and Google ‘Flights to Berlin’, we will find you and you will begin to see advertisements from us. People often see these, and they go into these OTAs or go directly to the airline website.”

PLAY also uses the Dohop software platform to feed its network through other low-cost airlines, such as Ryanair in Europe and Spirit Airlines in the US. This piece of technology makes it possible for independent airlines that, unlike most full-service carriers, are not part of a formal alliance to sell combined itineraries. For example, someone can book a single itinerary to fly from Krakow (KRK) to London-Stansted (STN) on Ryanair and then connect to Iceland with PLAY and maybe continue on to North America from there.

“What this system does is that it secures the connection,” Jónsson said. “So, you pay a premium, but if you miss your flight, you are guaranteed to get onto another one.

“It’s working well for us, although it’s not game-changing yet. For me, it will be game-changing when it will be possible to also interline luggage at the airports,” he added, referring to the fact that passengers currently using this type of connection need to collect luggage and check it in again at the intermediate points.

Jónsson clarified that check-in luggage is only an issue when connecting with another airline, because PLAY already does luggage handling for connecting passengers within its own network.

“It’s important to note that if you do that in Iceland with PLAY, the luggage goes through,” he said. “You know that then you [can] just go to the transit area and have a beer or whatever. You don’t have to check your luggage again.”

While in Europe PLAY flies mostly to major airports, such as Paris- Charles de Gaulle (CDG), Amsterdam Schiphol (AMS) or Frankfurt (FRA), it has opted for out-of-town, secondary gateways in the US and Canada. For example, for PLAY New York means Stewart International (SWF), some 60 miles up the Hudson Valley from Manhattan, and Toronto means John C. Munro Hamilton International Airport (YHM), 50 miles south from downtown.

“We have now been flying for nearly two years [to Stewart] and it’s been going great. We have one of the highest load factors on the US side there,” Jónsson explained, before going on to highlight the differences between PLAY and other Nordic long-haul low-cost airlines, such as Norwegian and Norse Atlantic, which abandoned plans to make Stewart their New York gateway in recent years.

Network choices

He explained how the combination of easier-to-fill narrowbody aircraft and network connectivity are doing the trick for PLAY.

“We are connecting Stewart with maybe 15 European cities,” he said. “There are people that want to go to New York, but there are also millions living around that area in the Hudson Valley. This is where the connecting network is really functioning. Price is simply a factor. If you’re flying from, let’s say, Copenhagen to Stewart, it’s about the same amount of time to get into Manhattan than if you’d fly to JFK, because of the waiting time for passport control, then waiting for your baggage and so on.

“Stewart is like a country airport. You’re just in and out. It’s a different product. And it is also a cheaper product. If we want to offer a lower airfare, we cannot fly to the same airports. We have to get a cheaper airport and some discounts and some incentives and stuff like that. And I think that’s a great example of how we are the low-cost people.”

Jónsson also noted how, at Stewart, the airline can be a big fish in a small pond.

“Like with all airports, when you have a new route, a new airline comes with a new destination, everyone wants to do something to help with PR, with marketing. The local community, the local tourist authority. Whereas if a new, small low-cost airline from Iceland comes to JFK, no one would care. So, it’s a different approach,” he explained.

As of January 2024, PLAY has 10 aircraft in its fleet, comprising of six A320neo and four A321neo, all leases.

Jónsson expressed his satisfaction with the speed at which PLAY has been able to build a state-of-the-art fleet that is well into double digits, seemingly unaffected by the capacity constraints that have plagued other operators.

“We were really lucky, [we] started operations during COVID, so there were lots of very good aircraft available,” he said, adding that in January 2024 PLAY received the ch-aviation Europe´s youngest Aircraft Fleet Award for the second year in a row.

Also, we have CFM engines. So, we have not been affected by the price of any other issues. So far, everything has gone like clockwork,” he added proudly.

Jónsson also stated that PLAY may increase its geographical footprint with the addition of longer range A321LR and even XLR aircraft, though not yet.

“I think that in the next couple of years we will add [A321] LRs to the fleet. It fits beautifully in terms of commonality,” he explained. “And I think that will open up completely new and very exciting markets for us.”

He continued: “We are in discussions with lessors about both those types. You could go to LA with an XLR, while an LR would open up Seattle, Orlando, those kinds of places. So that’s very important, very interesting for us. On the other side you could go to Dubai, for example, on the XLR. That would be a very long flight, but we have seen that if the price is right, people take the flight.”

PLAY Airlines

Talking sustainability

But what about sustainability? It’s a topic that is becoming increasingly central to airlines.

“This is really a cultural thing within the company. We are very focused on company culture and doing a lot of initiatives within PLAY to make this both a great place to work and make sure that the right values are around us,” Jónsson said. “I’m one of the oldest employees here. There’s a lot of young people that work here and, for them, this is not a new thing. This is just the way they live their life and the way they decide how to spend their money or what they consume.”

Asked about specific initiatives in this field, Jónsson mentioned that PLAY makes use of fuel-efficient Airbus neo aircraft as well as the airline’s plans to start using sustainable aviation fuel (SAF) before 2025.

But the project that he really likes to highlight is the airline’s pioneering aluminum recycling program, since this a project in which, he claimed, PLAY has taken a leading role in convincing authorities of the need to recycle cans used onboard aircraft, not just on land.

“We became the first airline to recycle and collect the cans that are used onboard [our flights],” he explained. “Usually cans are not recycled, they’re thrown away. But we got special permission from the environmental agency in Iceland to take those cans and send them for recycling. We pay for this ourselves; this is not a money-making thing for us.”

“Because it’s strange, here in Iceland, if I buy a Coke or something in a can, I can take it to recycling and I get money back, but if you buy the same can on an aircraft, it then gets thrown away. So, we are collecting a hell of a lot of aluminum and putting it into the recycling process. And this is just a small example of what a small airline can do in a small country, fighting the environmental agencies and authorities to have the permission to do it.

“This is an example of how legislation can be counter to environmental goals. This was just a kind of a bureaucratic, idiotic thing, so this is a thing that we were able to do here and our staff and our passengers really, really like this.”

What’s next for PLAY?

Jónsson said his priority is consolidating what the airline has achieved in the last two and a half years of operations and setting up the basis for further growth in the longer term.

“We have announced everything we want to do this year,” he said. “There might be one or two new destinations, but not on the US side. We’ve just announced Split (SPU) in Croatia. There are always some changes in the network, but there will be no kind of drastic changes until we get new aircraft in.”

“We have completed the first full 12 months of operations with our full complement of 10 aircraft. If we had 1.5 million passengers last year, this year it’s going to be 1.8-2 million. We haven’t disclosed the actual numbers, but it’s clear that there will be growth,” he added.

What’s clear is that profitability is going to be the focus for PLAY, which ended 2023 with a total revenue of around $280 million.

Jónsson also mentioned that PLAY expected to break-even in 2023, but a worse than expected fourth quarter prevented this from happening. He attributed the results to the volcanic eruption that took place in Iceland in December 2023, and to the effects of war and geopolitical tensions on travel demand.

“We’re now selling our fourth summer season, entering the third operational year, and what we’ve seen is that revenue is growing a lot, ancillary revenue is growing a lot, and we have been able to keep our costs very competitive, quite low,” he said. “So, we’re seeing our operational losses decreasing quite rapidly and we need to keep that trend ongoing, and we will do that by being responsible in our business and in our decisions.”

Overall, Jónsson seems optimistic about the future.

“We will be adding aircraft and destinations in the next, I would say, three to five years,” he concluded. “There is going to be a lot of growth.”

The post PLAY Airlines CEO on building a low-cost link between Europe and the US appeared first on AeroTime.

President US at VistaJet Leona Qi on how the executive jet firm conquered the US

Miquel Ros — Wed, 27 Dec 2023 04:00:00 +0000

Founded in 2004 by Swiss entrepreneur and investor Thomas Flohr, Vista Global has emerged as one of the major players in the executive aviation scene during the last couple of decades.

Vista Global operates under two brands, VistaJet and XO, which, while complementing each other, also cater to different segments of private flyers.

VistaJet is the group’s executive jet operator, focusing on the super-mid to long-range segment of the market. It operates its own fleet of 360 aircraft and takes pride in its ability to provide on-demand service to its members anywhere in the world.

XO is a service that makes it possible to book private jet flights with a number of pre-approved third-party operators.

Unlike the large United States (US) fractional jet operators, which are its main competitors, Vista started up in Europe and expanded its geographical footprint one continent at a time. Quite remarkably, it waited for more than a decade before establishing itself in the US, the world’s largest and most mature executive jet market by far.

However, after gaining a foothold in the US, things moved pretty fast. Seven years later Vista’s US operation accounts for half of the group’s customers .

The person behind this rapid growth is Leona Qi, who took over the role of President US at VistaJet in 2018, after having previously led Vista’s equally fast Asian expansion.

A Princeton University graduate, Qi began her career on New York’s Wall Street. There, she became an expert in the structuring and sale of asset-back securities, that is financial securities backed by real assets, such as aircraft.

She then went on to found Global Jet Capital, together with two partners. The firm, which still exists today, helps executive jet operators structure the financing of new aircraft acquisition. It was during her time at Global Jet Capital that Qi became familiar with Vista, eventually joining the executive jet firm with the mission to develop its business in Asia.

After managing to grow that business, which tripled in size over a period of two-and-a-half years (a frantic period in which she was commuting twice a month between New York and Vista’s Hong Kong office), Qi accepted the challenge to oversee Vista’s expansion in the US.

What pitch did Qi use to carve market share for Vista in such a competitive market?

“One thing that is unique about VistaJet is that we are the only truly global executive jet operator,” Qi said. “It is very important for us to have a footprint in every corner of the world.”

She noted that while Vista has some formidable competitors in the US, such as fractional jet operator NetJets, they do not carry as much weight in other parts of the world.

“Large US operators have tried expanding outside America multiple times, only to fail, retreat, and try again later with the same results,” Qi said. “We did it the other way around. We consolidated first our position everywhere else and only then we went for the American market.”

VistaJet is the group’s flagship product, offering what Qi refers to as “ownership replication”. This means that instead of owning your own jet or a fraction of it as proposed by a fractional operator, when signing up for VistaJet’s subscription service, you get the benefits of ownership without the burdens.

But how does this work? When you sign up, you commit to contract a minimum number of hours on a specific type of aircraft over a period of three years. This gives you guaranteed access to the use of the Vista Members’ fleet anywhere in the world, 365 days a year (as long as you provide 24-hour advance notice).

Consistency in the customer experience is one of VistaJet’s core tenets, so this also takes away another element of uncertainty. VistaJet has a standard cabin design across its whole fleet, so clients know exactly what the plane will be like, wherever in the world they board it, even if the airframe and crew is different each time.

“Our American customers value this product consistency a lot when they travel around the world,” Qi explained. “If you are a member, you have the same experience and the same hourly rate everywhere, globally.”

Then, there is also the financial dimension, an area of expertise that Qi knows perfectly well from her years of experience dealing with asset-backed securities.

“We offer a truly asset free solution. Our clients are not buying an asset with a cash flow that is complicated to predict,” she said. “If you own an aircraft, an important factor is when are you going to be able to sell it and for how much.”

“With fractional ownership you don’t even have a choice, whether you exit within three to five years, your provider tells you how much the aircraft is worth. Most of the time that is around 50% of the value it had when you bought it and you then have to pay also a 7.5% remarketing fee,” she explained. “With VistaJet you are subscribing to a number of hours per year for a number of years. The overall cost is comparable, but you can accurately forecast how much you are going to spend annually. We provide a very transparent pricing model.”

Qi went on to compare VistaJet’s model with outright ownership of an aircraft.

“We offer a fixed hourly rate anywhere in the world 365 days a year, no blackout days. You have an aircraft available with as little as 24-hour call-out, with flexible cancellation,” she explained. “It is better than ownership in that we guarantee aircraft availability 365 days of the year. If you own one aircraft, there are going to be some down periods, for example, while it is being serviced.”

She continued: “There may be some missions that it cannot fulfill due to lack of range, let’s say, if you have a Challenger 350 it will not be able to take you from New York to London. Or you may have a long range Global 7500 but using it to fly from London to Saint Tropez can be excessive. With us you get the most mission effective aircraft at the most efficient rate, and it is always available.”

Not unexpectedly, service excellence also takes a prominent role in VistaJet’s value proposition.

“We pride ourselves in providing a premium solution, the best-in-class cabin experience, provided by highly trained cabin crew, that follow a specific training program by the British Butler Institute, MedAire and Norland College, in Britain,” Qi said. “We provide a wine program, a kid’s program, a pet’s program. We want to make sure that our experience forms the ground to the sky remains consistent.”

Qi said she sees Vista’s other product, XO, as complementary to VistaJet. XO is a private jet charter platform, which she referred to as an “open fleet solution”. This means that unlike VistaJet, which only operates its own aircraft, XO sources the aircraft from a number of third-party operators.

“We work with operators that we have safety-vetted , with a combined fleet of 2,400 safety-vetted aircraft, from light jets to large cabin aircraft,” she explained. “Unlike with VistaJet, XO pricing fluctuates depending on supply and demand at the time of the request.”

The required financial commitment is lower than with the VistaJet product, so XO is also a sort of steppingstone to introduce the VistaJet product to potential future customers. In addition to the partners’ aircraft, VistaJet’s own aircraft are sometimes also made available on XO when demand conditions permit. And it also works the other way around. VistaJet Members who, due to changing personal or professional circumstances have less need to fly, can move on to XO while still enjoying some of the benefits of being in the Vista community.

In addition to flights, Vista offers a number of activities and experiences to XO members that cannot always be purchased with money. For example, during art fairs like Art Basel Miami, XO may provide exclusive access to certain events or offer the chance to mingle with artists and creators. Likewise, Vista’s long-running partnership with Scuderia Ferrari allows it to offer its customers a limited number of opportunities to access the Formula One paddock.

One of Vista’s distinctive features is its focus on Bombardier aircraft. Recent acquisitions have introduced other types into its fleet, but aircraft made by the Canadian manufacturer, like the Bombardier Global 6000 and Global 7500, capable of carrying up to 19 passengers more than 10,000 miles nonstop, are the backbone of Vista’s fleet.

“It is very difficult to make money in the lighter jet categories. If some operators do it is because they have sold that asset risk to their clients. If you get people flying for 30 min or 60 min it is very difficult to be profitable,” Qi explained. “If someone commutes between New York City and Washinton DC, this is not our client. This is not a segment of the market we are interested in, but if we are talking New York to Los Angeles or New York to London, that’s our client. This is where we can shine! We are international and we focus on in-flight experience. It is difficult to demonstrate our service in a 50-minute flight.”

Qi also referred to the lower barriers of entry in the light jet segment of the market, a factor that often exerts a downward pressure on prices, particularly during downturns. She noted how the long-range missions Vista specializes in and the much higher capital requirements of operating a fleet of $70-80 million jets protects the company from a pricing race to the bottom.

During the COVID-19 pandemic, the executive jet industry was the object of renewed interest and not just out of health concerns. With most airlines grounded around the world, or operating limited schedules, many high-flyers turn to private charters for the first time.

“Health and safety became a main concern during the pandemic,” she explained. “There were also fewer routes commercially available, so many that could afford it switched to us. Some people have since gone back to commercial aviation, but some have remained after trying it.”

She also referred to the latest generations of long-range jets Vista has been investing in, noting that the company is now able to offer ever longer nonstop segments.

“People are focused on wellbeing and, in this regard, the VistaJet Global 7500 has ground-breaking tech in terms of lighting, oxygen flow, cabin pressure…all of this helps you feel refreshed and ready to go when you land on the other side of the world.

VistaJet

“Diet can also help fight jet lag and this is why we also provide dietary advice and top-notch food onboard,” she added. “But overall, the most valuable resource is time. This is something you cannot buy with money, but we can save you time, maybe even 20% sometimes.”

When talking about executive aviation it is impossible to avoid the growing concern about sustainability and environmental concerns. Executive aviation in particular has been the subject of criticism, especially among climate activists. What does Qi have to say about this?

“Sustainability is the biggest topic not just in private aviation, but everywhere,” she said. “The IATA [International Air Transport Association] requires all airlines to be carbon neutral by 2050 but at VistaJet we want to do so by 2025.”

She continued: “We have worked with South Pole [a provider of carbon offset solutions – ed. note] to launch a carbon offset program. 85% of our customers have opted in. We have also just launched a voluntary sustainable aviation fuel (SAF) program, allowing our customers to contribute this way too.”

While Vista is working on additional sources of SAF, it has also set its sights on future growth. The company completed two major acquisitions recently and it is now working to unify the fleet, paint the planes with its own branding and train and integrate the crews. Qi revealed that she expects most of the growth to continue to be organic.

“We will develop new programs and continue to work to understand our customers better and offering them the best possible product,” Qi said.

But, after years of growth, are there untapped reservoirs of premium travelers to tap? Is there a ceiling for executive aviation?

“There is a very long runway for private aviation to grow,” Qi said. “The US is the most mature market, with some 4,000 airports that can handle private jets, next is Europe with around 3,000. Compare that with around 400 commercial airports.

“And there are parts of the world that are still behind when it comes to executive aviation, also in infrastructure – the Middle East, Africa, India. In Asia-Pacific there is a very long runway for growth.”

There is no doubt that Qi expects Vista to play a major role in this growth story.

“We expect to become the world leader, both in terms of private aviation growth as well as in terms of being advocates for this industry,” she concluded. “We are connecting all the continents together.”

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The unstoppable rise of SunExpress: CEO interview with Max Kownatzki

Miquel Ros — Sat, 02 Dec 2023 04:00:00 +0000

At present, the Turkish airline industry is going through a period of vertiginous growth, with carriers such as Turkish Airlines and Pegasus Airlines racking up aircraft orders that run into the hundreds, while constantly adding new cities to their ever-expanding networks.

However, it was yet another carrier with Turkish roots that managed to grab the headlines on the first day of Dubai Airshow 2023 with an order for up to 90 Boeing 737 MAX aircraft (45 firm orders, five options and 40 purchase rights).

With this deal, Antalya and Frankfurt-based SunExpress has staked its claim to be considered one of the emerging stars of the European airline scene.

SunExpress is not exactly a newcomer to the market. However, for most of its three-decade long history, its activity had been mostly restricted to two very specific market niches: serving the Turkish diaspora market in Germany and flying Germans to resorts on the Turkish Riviera.

More recently, though, SunExpress has embarked on an ambitious program of expansion and diversification that is likely to open up its brand and value proposition to a much broader customer base across Europe and beyond.

At this point, it is important to highlight SunExpress’ unusual shareholding structure. The carrier is in fact a joint venture between two airline industry giants, Turkish Airlines and Lufthansa, each owning 50% of its capital.

However, this circumstance has not prevented SunExpress from operating with a remarkable degree of autonomy.

“We leverage the advantages of being agile and relatively small while also being part of two industry-leading airlines,” said Max Kownatzki, SunExpress CEO when explaining to AeroTime the relationship between SunExpress and its two parent companies.”

Kownatzki sat down with AeroTime as part of our Executive Spotlight series. The interview took place shortly after announcing, alongside Boeing, the largest aircraft order in the airline’s history.

In this wide-ranging interview, Kownatzki not only shared how SunExpress wants to use all those planes, but also talked more generally about the role he expects SunExpress to play in the always dynamic Turkish air travel market.

At present, SunExpress operates an all-Boeing fleet of 66 aircraft, a combination of 737-800 and 737-8 MAX planes. It is still awaiting the delivery of 33 aircraft from an order placed back in 2014 for 32 Boeing 737-8 MAX plus 10 options (all of which were turned into firm orders in 2019).

By 2029, when all aircraft from that previous order should come through, deliveries for the new batch of 90 aircraft signed for in Dubai will also be due to kick in.

“We have substitution rights from MAX 8 to MAX 10 in the old and new order. The 33 aircraft from the old order can also be converted to MAX 10. This means we will have our first Max 10 in 2027,” Kownatzki added.

Kownatzki confirmed that most of these aircraft are going to fuel additional growth all the way through to 2035, with only 23 being rollovers to replace aircraft currently in service.

If all goes according to plan, SunExpress expects to reach its 150 aircraft milestone in 2033 and to be operating at least 166 aircraft by 2035 – in effect, doubling in size within a decade.

But is the Turkish market able to absorb all this capacity at a time when other airlines also have their own ambitious growth plans?

“We have factored in all the standing aircraft orders from other carriers in the market, and we believe it is perfectly feasible to double in size within the next decade and remain profitable,” Kownatzki explained.

He also highlighted that the Turkish travel market has traditionally shown an amazing resilience and always bounced back, even in the face of major difficulties, not just the COVID-19 pandemic, but also other recent crises, such as the devastating earthquake that hit the country at the beginning of 2023 or long-running macro-economic woes.

“The fact is that Turkey simply offers a great value proposition compared to other competing destinations,” Kownatzki added.

Strengthening its sunny stronghold

SunExpress aircraft at Izmir Airport (ADB). Picture: Miquel Ros

The airline’s strategy is to use all these additional aircraft to reinforce the airline’s position in the markets where it is strongest.

In this regard, one remarkable aspect of SunExpress’ operations setting it apart from other Turkish scheduled carriers is that it avoids the country’s main air hub of Istanbul completely. Instead, it prefers to focus on providing connectivity to other Turkish cities and regions.

“Our stronghold is the Turkish Riviera, namely Izmir (ADB), Bodrum (BJV), Dalaman (DLM) and Antalya (AYT),” Kownatzki explained, adding that the airline is the market leader for the traffic between that region and the German-speaking countries.

SunExpress also operates in other areas of the country, including Ankara, the capital city, and central and eastern Anatolia, where its market share is even stronger.

“SunExpress is also the market leader for direct routes from Anatolia to Germany, Austria, and Switzerland,” Kownatzki noted.

When it comes to its product, SunExpress offers a single cabin, no frills, point-to-point model, although passengers can add some ancillaries, such as extra leg room seats and luggage.

Kownatzki explained how the ability to add these extras is particularly valued in markets like Izmir, a city that has a not insignificant share of business travelers who value the direct links that SunExpress offers to Europe and are ready to pay for a more premium experience.

When asked about the airline’s traffic profile, Kownatzki offered a detailed breakdown of its nearly 12 million annual passengers. “We have got three main markets: 45% of our traffic are leisure passengers, including charter flights for tour operators, another 45% is VFR (Visiting Friends and Relatives) mostly Turkish people living in Europe, and another 10% is domestic traffic,” he revealed.

Kownatzki, who has a background as a management consultant, joined SunExpress in early 2020 – not the most propitious of times, as the world was about to enter a prolonged lockdown. He explained that, after one of his first meetings at SunExpress, he had to rush back home to avoid getting stranded, just as airlines the world over were starting to ground their fleets.

The pandemic represented a major trial, but recovery arrived much faster than anticipated.

SunExpress returned to profitability in 2021 and was already offering more capacity, measured in average-seat-km (ASK), by the end of that year than in had in 2019. The airline has since kept growing and is expected to close 2023 with 146% of the capacity it offered back in 2019.

Expanding into new markets

Geographical diversification has played a major role in this growth story. While Germany, Switzerland and Austria remain its core markets outside Turkey, as of November 2023 SunExpress operates 175 routes and to 30 different countries.

When it comes to its network, SunExpress follows a three-pronged strategy.

“First, we are densifying our coverage of our main markets,” Kownatzki said. “We now fly seven times daily from Antalya to Düsseldorf (DUS), five times daily to Frankfurt (FRA). It is almost like a bus service.

“Second, we will also continue our expansion in the United Kingdom. We launched our first regular flights to Britain in the summer of 2022 and we are currently serving eight airports and seeing growth rates of 70 to 80%.”

“And third, we are taking advantage of opportunistic growth opportunities,” he added.

Kownatzki highlighted Spain as a country that may see more routes added following the launch of SunExpress’ first scheduled route to Barcelona earlier in 2023. The airline is also looking east, with the launch of flights to destinations such as Dubai (DXB), Abu Dhabi (AUH) and Sharm El Sheikh (SSH).

SunExpress even looked at Pakistan and India as possible growth markets, taking advantage of the fact that they are within range of its Boeing 737 MAX aircraft. However, Kownatzki said the airline had given up on the idea because traffic rights are extremely restricted in these markets.

While the absence of night curfews at Turkish airports makes it possible to schedule flights pretty much around the clock (with aircraft spending an average of 16.5 hours in the air every day, one of the highest utilization rates in the world), SunExpress faces a major limiting factor: seasonality.

Kownatzki explained that SunExpress has also been using several strategies to counter the effects of a winter trough, which could see demand falling by as much as 35% compared to the peak months of the year.

One of these strategies aims to develop partnerships that allow the airline to leverage its strong European commercial network.

“90% of our revenue is in Europe,” explained Kownatzki. “We are leveraging these commercial channels.”

For example, SunExpress takes care of sales, distribution and commercial steering in Europe for Air Cairo, an Egyptian low-cost airline, offering 87 weekly frequencies that Air Cairo operates between Germany, Austria, Switzerland, and Egypt.

In parallel to that, interline agreements with Lufthansa, United Airlines and Air Canada help channel traffic into each other’s networks.

SunExpress has also found alternative solutions to keep its aircraft busy during the quiet periods of the year.

Two Boeing 737s have been temporarily leased to South African Airways, which uses them to operate trunk domestic routes such as those between Johannesburg (JNB) and Capetown (CPT). The aircraft are on a damp lease arrangement, by which SunExpress provides the aircraft, the pilots, and the technical service, while the cabin crew is South African.

At the same time, SunExpress has partnered with MSC Cruises to make it possible for dozens of its crew members to work on cruise ships during the airline’s low season, transferring their place of work from the air to the high seas.

Kownatzki talked proudly about the airline’s crews and their flexibility and professionalism. He explained that during the COVID-19 crisis the crew’s compensation scheme was changed from a structure in which 90% of their salary was fixed and 10% flexible based on the number of duty hours, to another with a 50-50% split. This formula has since become permanent and, interestingly, with a broad endorsement among the staff.

“When we proposed this measure, everyone signed without any objections for the survival of the company during pandemic,” Kownatzki explained. “After the pandemic, as we are flying a lot more – our crew utilization rate in October 2023 was 97% – crews are earning more with this salary structure. This shows their flexibility, professionalism, and spirit.”

The post The unstoppable rise of SunExpress: CEO interview with Max Kownatzki appeared first on AeroTime.

How Air Serbia’s CEO aims to position the carrier as a leader in its region

Miquel Ros — Wed, 22 Nov 2023 04:00:00 +0000

On October 26, 2023, Air Serbia celebrated its 10th anniversary, marking a decade of the airline in its current incarnation. But the Serbian flag carrier has a much longer history, dating back to its start in 1927.

Although the airline has operated for decades under different names, such as Aeroput and later JAT Airways, Air Serbia has a strong claim to being one of the world’s oldest airlines and, judging by the hardships experienced by its home country during the 20th century, possibly also one of the most resilient.

If its 2013 rebranding represented a break with that difficult past in some way and the entry of Air Serbia into the Etihad Airways orbit, then 2023 has seen Air Serbia emerging as one of the few growing independent and profitable carriers in Europe.

At the helm of Air Serbia throughout this period of transformation is Jiří Marek.

A seasoned airline executive, who has held senior managerial roles at airlines such as CSA, LOT and Alitalia, Czech-born Marek joined Air Serbia in July 2019 as General Manager Commercial and Strategy before becoming the airline’s CEO in January 2022.

During Marek’s tenure, Air Serbia has survived a pandemic, recovered its profitability and witnessed a major shareholding restructure. The latter has seen Etihad progressively exiting the company and the Serbian state recovering its full ownership of the airline.

Meanwhile, Air Serbia has managed to bring passenger numbers back up, expand its fleet and network, including to new long-haul destinations in the United States and Asia, and develop its Belgrade base as a hub for the whole Balkan region.

In an exclusive in-depth interview with AeroTime, Marek shared details about Air Serbia’s fleet strategy, its network development, and its alliance and partnerships policy.

Marek also shared his plans to accelerate Air Serbia’s growth momentum and position the historical airline as a leader in its region.

Following the interview, on November 13, 2023, it was announced that the Serbian state would once again control 100% of Air Serbia after Etihad sold its remaining 16.4% stake in the airline.

WATCH THE FULL INTERVIEW HERE:

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How Abra Group’s chief strategist aims to make flying accessible for 1 billion people

Miquel Ros — Sun, 15 Oct 2023 03:00:00 +0000

According to the World Health Organization, around 15% of the world’s population lives with some form of disability. While passengers with a disability or reduced mobility are legally entitled to support when travelling by air, campaigners are still having to fight for changes in the aviation sector for better service.

This is a topic close to the heart of Michael Swiatek, chief strategy officer at Abra Group, the parent company of two of Latin America’s largest airlines, Avianca and GOL.

Swiatek has been legally blind since a young age and suffers from a condition that seriously impairs his eyesight, drastically restricting his vision in daylight conditions and causing complete blindness in the dark.

An experienced airline executive, having held positions at carriers as diverse as United Airlines, Alitalia, Air New Zealand, LATAM, Qatar Airways and IndiGo, Swiatek is also a prominent advocate for the rights and needs of travelers with disabilities.

In an exclusive in-depth interview, Swiatek shared with AeroTime how through his role he is working to make the Abra Group airlines the most disability-friendly in the world.

Swiatek has been fascinated with aviation since early childhood when his father worked at an airline. He would often read timetables and play with aircraft models. However, he was also aware that his vision issues would prevent him from becoming a pilot and had never considered the possibility of working in the airline industry.

After finishing secondary school, Swiatek studied finance at the University of Chicago with the idea that he would end up working on Wall Street.

However, things turned out to be quite different.

From hiding his blindness to a meteoric career in the airline industry

In 1992 he jumped at the opportunity to join the airline industry as a planning analyst for United Airlines, where he soon turned his visual impairment into a source of strength.

“I hid my blindness from my first employer, because, quite frankly, I felt, at the time, they weren’t ready for a blind person. That was a long time ago and I know things have changed.” he recalled. “They could not understand why I didn’t have a driver’s license, but I told them that getting to work on time was my problem. I promised I would get to work on time, and I did.”

He continued: “I had to use public transportation that took two hours a day in each direction but that opened up an opportunity. In those four hours I would take every data report I could get my hands on. I would use a magnifying glass to read every number. I became an expert on the numbers of United and that was very valuable in meetings.”

Swiatek’s analytical capabilities soon made up for the limitation of his vision.

“My strength as a young person was great analysis, great performance in terms of putting numbers together great performance and understanding how this industry worked in terms of cost and network and product and branding and culture,” he explained.

His visual impairment also helped sharpen other abilities.

“When I’m in a meeting, I don’t look at presentations. I listen to what the speaker is saying and often ask some of the smartest and most incisive questions because I’m listening to what’s being said, rather than jumping ahead and trying to figure out what the person wants to show,” he said. “That adds a perspective to my company that’s been highly valuable. By not being able to see PowerPoint, it makes me a better listener. It makes me engaged in a different way. It’s actually like a superpower.”

Swiatek shared some details about those early years in the industry.

“Yes, there were things I couldn’t do,” he said. “I would never go out to a dark bar with my colleagues. I would never go golfing with my colleagues because there was only one or two close friends at United that I could confide in and say, ‘Look, I need help.’ Sometimes, if we got into a meeting and someone turned out the lights, I was not able to see anything. So, I had people who had my back, who knew.”

“Quite frankly, I’m not proud that I had to hide my blindness,” he admitted. “But the world was not ready.”

“But I don’t feel any disadvantage,” he continued. “I don’t feel like there’s been a huge amount of discrimination applied towards me. Yes, in the 80s and 90s, it was much harder, which is why I think we’re in a golden age of accessibility, because more and more people are becoming aware of persons with disability and not treating us like monsters or like we are unintelligent, but just recognizing that’s one of many senses, that that we have in a different way. I’m very optimistic about the future for accessibility.”

Swiatek’s years at United Airlines marked the beginning of a career that would take him onto the global airline scene. Next, he went to work for Continental Airlines during the airline’s major transformation in the mid-90s, then to Alitalia, where he was a director of network and schedule planning.

He spent the next six years at Air New Zealand in various functions. That was in the late 90s, right around the time when the airline was joining Star Alliance and acquiring a 100% control of Ansett Australia, the second largest Australian airline at the time.

After a short stint in the consultancy business, Swiatek joined Qatar Airways in 2010 and spent three years responsible for strategy and planning and reporting directly to the airline’s CEO, Akbar Al Baker.

Turning around one of the largest airlines in the Americas

The next airlines on his resumé were LATAM and Indian low-cost carrier IndiGo before joining Avianca in November 2019 to take care of the airline’s strategy.

The last few years have not been easy for the Latin American carrier, but Swiatek proudly noted the five pillars (or “chapters” as he referred to them) that have allowed the airline to turn itself around.

“Chapters one and two were surviving COVID and going through a chapter 11 financial reorganization, which we entered in May 2020 and exited in December 2021,” he explained. “I believe we were the first ones to enter into that sort of reorganization during COVID and also the first ones out.

“I think our timing was nearly perfect and we took advantage of that in terms of reducing our cost base. That led to chapter three, which was a re-structuring of Avianca’s strategy where we basically went from an airline that was more focused on product than cost to one more focused on cost than on product. Of course, with safety always remaining our number one priority.”

When referring to chapter four, Swiatek quoted management guru Peter Drucker, who famously coined the phrase “culture eats strategy for breakfast”, meaning that regardless of how brilliant a strategy may be, it is bound to fail unless you develop the corporate culture that will make it possible to implement it.

“We believed we had a great strategy to reposition the company on cost, which we did because our Pan-American customer base is a population of 150-ish million people,” he explained. “But with an economic level, the gross domestic product per capita that is a fifth or less of the US or Europe. So, we believe that cost and affordability is fundamental to bring air travel to our region.”

But how can a company encourage 12,000 employees to get behind a new strategy? This is when culture comes into play, Swiatek explained.

“We put that down as a three-year project and we’re about two thirds done,” he added. “I think it is on track.”

And finally, the fifth chapter of Avianca’s strategy is its relation to the holding company, Abra Group, which is made up of different airlines working together without fully integrating.

In July 2023, Swiatek moved from his role at Avianca to a pretty much analogous position at group level while also retaining his corporate culture responsibilities at Avianca.

Abra Group is similar in structure to International Airlines Group (IAG), the parent company of British Airways, Iberia, Aer Lingus, Vueling and LEVEL, but with two airlines, Avianca and GOL, as well as a minority stake in Chilean airline, SKY. But unlike in the case of IAG, where the objective was to align networks that were in competition with each other -especially in transatlantic flying- the goal of Abra Group is to join together networks that are complementary to each other, and build the largest low-cost platform in the Americas, with Avianca stretching from Guatemala to Ecuador and GOL keeping its large footprint in Brazil.

Each of the Abra airlines remains a separate company operationally and keeps its own brand, management team, etc., while the holding company looks for ways to foster cooperation between them and drive more customer satisfaction, profitability, and employee engagement.

The main principle behind Abra Group is to build the largest low-cost platform in the Americas, with Avianca stretching from Guatemala to Ecuador and GOL keeping its large footprint in Brazil.

“Our main competitor in this region [LATAM – ed. note] was about x2.5 our size, now it’s more like x1-1.25 (in number of passengers) and, in fact, we can become the largest airline group in Latin America in the near future,” Swiatek said.

How Avianca became a leader in accessibility

Besides the growth of the business, Swiatek is also particularly proud of his tireless work to make Avianca and the Abra Group airlines more welcoming to passengers with disabilities.

Swiatek said: “Avianca’s CEO, Adrian Neuhauser, told me, “You know, you’ve proven to me that you can function just like anyone else in society despite your loss of vision, you have some extraordinary strengths. So, I’m completely sold on this diversity in terms of the workforce and having more people with disabilities. Mike, should we be doing something different for our customers?’ And I said, ‘Absolutely!’.”

He continued: “I think we’re one of the few airlines in the world where accessibility is not just something that the regulatory affairs function takes care of just because they have to comply with. We’ve actually come up with a strategy for it. We’ve put all of that under the same umbrella and defined what are the outcomes we want to see in the future in terms of becoming the most accessible airline in the world. We are turning that into a core strength for Avianca. Nevertheless, I believe accessibility should be cooperative rather than a competitive advantage.”

Swiatek also noted that he would love for other airlines to copy Avianca -and would be available to help them learn from Avianca- drawing a parallel with safety. If airlines copy each other’s best safety practices and the industry as a whole becomes a lot safer as a result, this is a winning scenario for everyone.

Swiatek highlighted four major categories of disabilities, each requiring its own approach: visual, auditory, mobility (which includes wheelchair users or those who require the use of mobility scooters, as well as people temporarily using crutches) and neurodiversity (which includes, for example, people with conditions such as autism and attention deficit disorder).

Avianca has identified up to 27 touchpoints along the travel journey where passengers with disabilities may face challenges that can be sorted or mitigated by the airline, from booking and check-in to passing through security and collecting baggage.

Providing an adequate response to each of these areas becomes even more complex when we factor in that each touchpoint presents a different problem to different groups of passengers. For example, the booking process is a challenge for blind people, while airport announcements are problematic for a passenger with auditory difficulties.

“Getting through the security line is a huge challenge. Can you imagine the anxiety you feel?” Swiatek said, reflecting on his own personal experience. “Am I going to lose my wallet or my shoes after taking them off? Imagine when you can’t even see where your wallet went, and you have to trust that somebody else is handling that for you and it’s magically going to pop into your hand at the other end. That’s a very anxious moment!”

Passengers with disabilities can submit a special service request (SSR) to the airline. There are at least 26 different SSR categories available by law to all persons with disabilities when they travel. At Avianca about 4% of passengers use special service requests, although this figure may understate the real number of passengers with disabilities, since not everyone fills in a request, for example, if they travel accompanied.

“When I fly with my wife, I genuinely will not do special service requests because she will be my aide and tell me everything that’s going on,” Swiatek explained. “But SSRs are one of the main tools we have.

“One of the biggest pain points is using a lavatory, more at the airport than on the plane. Lavatories are very difficult to navigate. There’s no standard design and it’s not a place where you just want to be reaching out your hands and touching things.”

He continued: “You can envision this as a 2×2 matrix with customer journey represented along the horizontal axis, from booking to getting off the plane, and on the vertical axis, you have the different types of persons with disability. There are different pain points along the way, probably thousands of individual pain points. So, how do we solve them? This is a really important part and one where I’m proud to say that, together with my small team at Avianca, we have put a lot of thought into and come up with a pretty good framework to think about it.”

A framework every airline could use to become more accessible

Swiatek mentioned five main tools available to airlines.

The first is simply awareness. The more the airline builds awareness among its staff, the more likely it is that they will not be afraid to approach passengers with disabilities and treat them with empathy, kindness, and common sense. That already makes a huge difference.

“This happens with many people along the way. They don’t know what to say to me because they are afraid of embarrassment or of the legal risks if they say something that may upset the person with disabilities,” Swiatek said. “So, people don’t even dare to say anything. That’s awareness and it is a pretty inexpensive tool.”

Avianca has produced a series of 45-second videos for all its employees in a bid to help spread awareness. Swiatek appears in the videos, sharing the main pain points from the perspective of a blind or low vision traveler. For example, in one video he explained what a mobility cane is and how to handle it.

“I can tell you a great story that happened this weekend,” he said. “I flew to Los Angeles and an Avianca person met me and said, ‘Mike, your mobility cane. I remember watching your video, and I know how you use that!’ and I said, ‘this is the solution’, because it is not only about when an employee sees me. If they see anybody at the airport with a mobility cane, they know why they’re using it and how they’re using it.”

Swiatek said he considered training to be his next tool.

The airline has started to provide customer-facing employees a laminated card to place on their lanyard detailing the four major categories of disability and explaining the do’s and don’ts.

So, for example, if they spot somebody in a wheelchair, don’t go to that person and start pushing their wheelchair without their permission. Or if there’s a blind person, don’t grab the mobility cane and think that’s how to guide that person through the airport. If a deaf person has an interpreter, you don’t look at the interpreter and talk to them, rather you face the deaf person and listen to what the interpreter is saying.

Third is process engineering. He explained how this can be as simple as allowing enough time at the boarding gate for travelers with disabilities to get into place or, as they do at Avianca’s hub in Bogota (BOG), prioritize jet bridge access for flights with a larger number of passengers with disabilities on board (as opposed to disembarking passengers via the stairs).

“We’re also working with special service providers to pair a male service provider with a male customer and a female with a female. Why? If a female is escorting me through the airport and asks if I would like to go to the bathroom, she can’t come into the bathroom with me. If I don’t come out in 20 minutes, a male escort can come in and look for me, while a female one can’t. As simple and common sense as it seems, this is revolutionary for people who never thought about the fact that we should pair male with male and female with female to escort people,” Swiatek continued. “I can’t speak for everybody, but I know those pain points so close to my heart that I can influence the airline to make changes in a way that few other people can.”

The fourth tool is digital technology. Most people now carry a smartphone, helping to facilitate communication. Swiatek revealed how he became used to using voice functions on his phone to perform a variety of tasks.

Additionally, when communicating with passengers that are deaf or hard of hearing Avianca airport agents can access an application allowing them to speak with someone who understands sign language and relay to the check-in agent what that customer is saying.

Swiatek also highlighted how much public discussion about accessibility is focused on what he calls the fifth tool, hardware. This includes things like elevators, ramps for wheelchairs or any physical infrastructure. Despite the focus on this area, Swiatek insisted that it is only a fifth of the solution.

“Let me give you a simple example of accessibility hardware that Avianca – and United Airlines as well – has implemented recently,” Swiatek said. “We have fitted three aircraft with Braille seat numbering. We’ve also put bigger fonts on these three aircraft. We’re testing it now and we’re working with the blind communities in Colombia to get their feedback.

“So far, it’s very positive, but also makes it easier for sighted people to find their seats, because I can tell you, there are many sighted people that can’t find the seat numbering. My sighted wife has put me in the wrong row on a plane occasionally. And when you think about it, a passenger who sits in the wrong seat and can lead to the disruption time of a flight, it’s also beneficial to the airline and our on-time performance.”

Calling on the travel industry to act

Swiatek also had some pointers for other players in the broader aviation ecosystem.

“I think the government can help manufacturers of aircraft, of seats. I’m speaking very loudly to Boeing and Airbus. I don’t want them to charge me to recertify the aircraft, I think that should be their contribution to solving the accessibility issue in travel,” he noted. “The airlines shouldn’t bear all the costs. It’s never going to be perfect. We’re never going to be able to achieve everything everybody wants. But I’m 100% convinced that we can make travel more accessible for the majority of people with disabilities.”

Swiatek also called for the sort of training being implemented at Avianca to become commonplace for other companies in the travel sector, including hotels, cruises, taxis, and land transportation operators such as Uber and Lyft.

“Just don’t leave it all to airlines because we tend to be the industry with the highest regulation and one of my issues with regulation is you cannot regulate awareness,” he explained. “You cannot regulate human kindness. You cannot regulate common sense. You cannot regulate people to be empathetic. There’s actually a systematic way to approach it and that systematic way will lead to better results.”

He continued: “What we’re doing on accessibility is behavioral change, which is why the tools of awareness and training become so important. We, at Avianca, brainstormed a list of actions that we’d like to accomplish, and we said, ‘Look, in the first 12 months, we want to at least accomplish 20 of them, right?’ We don’t know which ones: putting Braille on planes is an action, getting assistive technology at the check-in is too, building those laminated lanyard cards is another one.”

“I’m getting 12,000 people to behave very differently on accessibility, but in fact, I’m trying to get 8 billion people to act a little bit differently,” Swiatek concluded.

The post How Abra Group’s chief strategist aims to make flying accessible for 1 billion people appeared first on AeroTime.

How the Airbus A220 propelled airBaltic into a league of its own

Rytis Beresnevicius — Fri, 15 Sep 2023 13:00:00 +0000

For the latest edition of Executive Spotlight, AeroTime spoke to Martin Gauss, the President and Chief Executive Officer (CEO) of airBaltic. Having been the man at the helm of the Latvian flag carrier for nearly 12 years, Gauss has led the airline through some turbulent times, made decisions with a long-lasting impact, and perhaps most importantly, returned airBaltic to profitability.

One of those impactful decisions was for the airline to become a single-fleet operator, with airBaltic finalizing the order for the then-Bombardier CSeries CS300 as far back as December 2012. Throughout the years, the airline has continued to expand its order book, with its fleet of Airbus A220s, as they are now known, set to grow by up to 50 aircraft, and the potential to double in size within the decade.

Now, having taken delivery of its 43rd and 44th Airbus A220 on September 2 and September 9, 2023, respectively, the Latvian airline is at a crossroads: how many more aircraft should it operate in the coming years?

You can watch the full conversation with Martin Gauss, President and CEO of airBaltic, here:

Important profit timing

airBaltic’s return to profitability in H1 2023 has come at an important time for the airline.

Gauss described the airline’s performance in the first half of the year as “record-breaking – in 27 years [of the airline], we did not have such a net result.” Revenues have not been as large as during the same period, and most importantly, this was achieved after the pandemic and while the war in Ukraine is still raging on.

“And that makes it special,” the CEO noted. “If we look at our [earnings before interest, taxes, depreciation, and amortization (EBITDA)] margin, we are at the top in Europe now also.”

Most importantly, the H1 2023 net profit of €14.6 million ($15.6 million) has come just as the airline gears up to list publicly via an Initial Public Offering (IPO) in 2024.

“So, we are forecasting this kind of performance and we are delivering, and that is the most important [part] of how we read the result,” Gauss continued, adding that he was happy with the outcome.

Still, the airline’s first six months of the year were not all rosy. With the war in Ukraine still ongoing, forcing the carrier to readjust its network, airBaltic also had to wet lease-in aircraft to cover for the delays in getting back its Pratt & Whitney PW1500G engines, exclusively powering the Airbus A220, from maintenance facilities.

At the peak, 13 of airBaltic’s aircraft were grounded, whereas during Q2 2023, the figure stood at 12. Though the number has been decreasing recently, Gauss mentioned that the main problem was that the airline had those engines in its hangars, but “they did not have the spots to go to the [Maintenance and Repair Organizations (MRO)] where they would have been maintained”.

At the time of the interview in August 2023, the number of grounded airBaltic Airbus A220s was seven.

Affecting airBaltic’s passenger experience

Though the number of grounded jets is continually going down, it has negatively impacted airBaltic’s peak season, not least the experience of passengers.

Initially, airBaltic planned to have only four aircraft grounded, but when the situation changed, the airline had a larger number of aircraft wet leased in on an ad-hoc basis. In the short term, it proved “very expensive” to take them in, Gauss explained.

“We could not afford to cancel flights, we had very good forward bookings. And especially here from the Baltics, there are very limited alternative offers,” the CEO continued. “So, if we would have canceled the flights, the passengers would not have had their holidays, therefore, we decided to take in other airlines‘ [aircraft], which was very painful.”

Gauss explained that this was because passengers had bought tickets for the most modern aircraft, namely the Airbus A220, but instead, flew on a wet leased-in aircraft, “which is never the same quality,” and therefore airBaltic “cannot deliver the same service”.

“Operationally, that is also an issue, because an airline that is flying temporarily for you does not normally deliver the same consistent operation,” he added, noting that despite all of these issues, airBaltic successfully delivered positive results.

Gauss said that the airline and Pratt & Whitney are in “constant discussions” over the engine issues, having discussed the commercial agreement in 2022 and again in 2023. “We expect the situation to go well into 2024,” Gauss said, adding that it might not be resolved until the end of next year.

But how did airBaltic manage to achieve its positive results, despite these factors?

“If we analyze what led to the success, it is a combination of selling the right amount of tickets at the right price, but also having a unified fleet with efficiency because we need to see that the aircraft is completely different compared to other aircraft in this category,” Gauss said.

The Airbus A220 not only has a fuel cost advantage but is also cheaper to maintain and can still connect two distant cities, such as Vilnius, Lithuania, and Riga, Latvia, with Dubai, the United Arab Emirates (UAE). “We could also fly to Tallinn,” Gauss noted.

Passengers also seem happy, with the CEO mentioning that, when the carrier wet leases out its A220s, passengers on the airlines in question have been positive about their experience of the type.

Wet leasing aircraft has become an important part of airBaltic’s business, with Gauss saying that the airline has wet leased 14 aircraft to others in Europe. This revenue stream developed after the pandemic hit, with airBaltic not delaying any Airbus A220 deliveries.

“We found a way to place the aircraft while the Russian, Ukrainian and Belarussian air space was closed,” Gauss continued, adding that while at first, the airline thought it would be a temporary revenue stream, but that it has now became a crucial part of airBaltic’s business, with the company only expanding its wet lease services.

“What we are offering is very different to a normal wet lease operation,” Gauss said. According to the executive, the main advantage that airBaltic has, coupled with the airline’s cabin crew members delivering a premium service in business and economy, is that the 150-seat A220-300 offers something that is not available in Europe.

“The demand for our product in wet lease is very high,” Gauss observed. Yet the airline will limit the number of aircraft it will dedicate to wet leasing, as the backbone of airBaltic’s business model is “the connectivity of the Baltics and beyond”.

Expanding beyond the Baltics

These intentions can be traced in airBaltic’s route map, with the airline opening bases in Tampere, Finland (opened in May 2022), and Gran Canaria, Spain (first flights in December 2023).

airBaltic’s passengers will be able to travel to Gran Canaria Airport (LPA) from several points in the Baltics, Scandinavia, as well as the Tampere, Finland base. The airline will station two Airbus A220s there, which is a “seasonal basing of two aircraft,” Gauss explained. As such, airBaltic is looking to open up new markets with regular flights.

However, Gauss does not see this as a year-round base, because of the capacity limitations associated with the Airbus A220. “Larger equipment is much better suited for that kind of operation [in the summer],” Gauss said. Nevertheless, the 150-seater aircraft has provided airBaltic with an opportunity, particularly in the Nordic countries of Norway and Denmark, where the airline already sees “promising numbers” in pre-bookings.

“I think we will see more of these things in the future,” Gauss said, but once again he emphasized that the backbone of the airline’s business is expanding within the Baltics and Scandinavia.

As for competition on flights from LPA during the winter, “the 150-seaters are easier to fill than [competing airlines’] 180-seaters or 200-seaters”. The single-fleet type, composed of the Airbus A220, offers a cost advantage too, which results in “good ticket prices”. What’s more, airBaltic’s cabin configuration with a business class and an economy class means that the airline can offer a dual service with “a different passenger mix and different yield”.

What about flights to the United States (US)? After all, the Federal Aviation Administration (FAA) bumped Latvia’s status to Category 1, allowing the country’s airlines to operate direct flights to the US.

Gauss replied that airBaltic has a codeshare with Delta Air Lines, which has gone into effect, with the US carrier “serving 35 points in Europe from where the codeshare goes then to the Baltic States”.

“A US carrier coming direct to Riga would make a lot of sense for the Baltic States, we could fill an aircraft just with our fleet today,” the executive noted. But according to Gauss, the US-based airlines to which airBaltic has spoken always compare the economics of flying to Riga Airport (RIX) with putting more frequencies to larger airports within Europe.

“But it is a matter of time for us, as we could also serve the US directly but that does not fit our current business model,” Gauss noted. He added that, if in the future there is an aircraft that could connect the Baltic States with the US like the Airbus A321XLR, airBaltic could theoretically do so, but it would break the “simplicity” of the business model, which is why the Latvian airline is “not focusing on it”.

In terms of performance of the base in Tampere–Pirkkala Airport (TMP), it was “okay” during the first summer in 2022, followed up by a winter that was “not okay,” according to Gauss. “This summer, [the base performed] very well and we are looking into the winter and how it is developing.”

But the airline is also analyzing what works and what does not, with its primary goal at TMP being to offer connectivity with the major hubs in Europe. “That is our unique model and therefore [at] Tampere, a business city with a catchment area of one million people, there is a lot of demand for connectivity,” Gauss said.

However, Gauss argued that the “bread and butter” in Europe today is leisure traffic, so “you have to offer both”, which is why the airline is still adjusting summer and winter schedules accordingly.

Currently, airBaltic has one Airbus A220-300 based there, with an option to add another if demand justifies it.

Airbus A220 versus Airbus A319/A320neo versus Boeing 737 MAX 7

But while the Airbus A220 has now become a game changer for airBaltic, despite the current engine issues it is facing, it was not always the airline’s first choice.

Gauss explained that the decision had already been made to renew the jet-engine fleet, with only Airbus offering the A320s to airBaltic. However, when the executive arrived in Riga, Latvia, he reopened the tender process, also inviting Boeing and later on, Bombardier.

“We then had, in the final round, the A319neo, the 737 7 MAX, and the [CSeries] CS300,” Gauss stated, with all three aircraft manufacturers presenting their final offers. Bombardier went first, and neither of the two could match what the CSeries had offered.

“The comparison between the three aircraft showed that the performance of the CS300 was better than the performance of the other two,” Gauss explained, adding that none of the aircraft were yet flying at that time. “The other two can’t compete with [the A220] because it is lighter. Mainly it is lighter with the same engine technology, so it is performing better,” the CEO said.

The decision was made “purely based on economics in combination with the price, and we took the right decision”, with airBaltic later becoming the launch operator of the CSeries CS300. At the time, the airline’s leadership did not know that they would become an all-Airbus A220 operator, a decision that was eventually made at the time of the COVID-19 pandemic.

According to Gauss, they made this decision to accelerate the retirement of the De Havilland Canada Dash 8 Q400 turboprops, which were grounded for two years during the pandemic. “2023 was the first year when we would have flown only with the Airbus A220,” Gauss remarked, adding that the engine problem threw a spanner in the works.

“Once we are out of wet leasing-in, we will see the full effect of the A220 single fleet operation and that is very powerful,” the executive said, adding that the effect will be “so powerful that we [will] play in our own league”.

“If you analyze us and all the details, then you come to the conclusion that we have a unique positioning because of that single fleet operation [with] an aircraft with 150 seats,” Gauss explained.

And as for the decision to become an all-Airbus A220 operator?

“Purely the performance,” Gauss replied, noting that even today, passengers tell the airline through various channels about the positively different experience on the A220. “Our seat pitch is significantly larger than on traditional low-cost carriers.”

“The aircraft performance, the fuel burn, the CO2 emissions, the noise, all of that on that aircraft, in combination with the range that it offers, is unique,” Gauss said. “Being able to only have to fill 150 seats gives us an advantage to fly on smaller routes against competition.” Indeed, this was very successful when airBaltic began operating the A220s.

Growing the fleet to 100 aircraft?

airBaltic’s current order book stands at 50 Airbus A220s, 44 of which have already been delivered by Airbus. However, the airline is currently discussing future options for its fleet.

“We are discussing with Airbus [the possibility to] exercise the 30 options and add 20 options. We have developed a business plan until 2030 where we have two scenarios: one is 80 aircraft [and] one was 100 aircraft,” Gauss explained. Both scenarios will be used for the upcoming IPO, showcasing the airline’s planned growth with the planned fleet expansion.

There are two factors in play for the airline. One is the demand for wet lease services, where there is a dedicated number of aircraft to lease to other carriers. The other is how well airBaltic can expand over the course of the next few years.

“It is a seven-year horizon,” Gauss noted, adding that, within in that timeframe, “we all know a lot of things can happen”.

During the same timeframe, it could be that Airbus will release a stretched A220, rumored to become the A220-500. In a separate statement to AeroTime in May 2023, an Airbus spokesperson said that the stretch is a “matter of when and not if, though we are not able to give a timeline”, adding that the current priority is to ramp up the current production rates of the A220-100 and A220-300.

Nevertheless, for airBaltic the ideal stretch variant would be simple: same range but more capacity. “It is a bit difficult because that means you need to change the engine as well as the wing, but we would go for a stretched version,” Gauss said. According to the executive, such a stretch would provide airBaltic with the ability to utilize routes during the peak summer season, including flights to Dubai, “where you can sell more seats and then you would have an economic advantage”.

Looking forward, Gauss warned that the airline can already see that it will be short of aircraft next summer and is currently discussing whether to wet lease-in aircraft or reduce its Summer 2024 flying program.

If Airbus were to introduce another engine type to the A220 family with the stretch, airBaltic would take a pragmatic approach and “would look at the economics”.

“We are not married to one engine manufacturer,” Gauss commented.

Ever-changing and consolidating market

Over the years, not least since Gauss has been in charge of airBaltic, several airlines have failed, even within the Baltic states. Meanwhile, the European airline market has become more and more consolidated.

“I think we will see more consolidation because, at the end of the day, we are following the US market,” Gauss explained, adding that the current landscape of airlines within Europe will shrink. “There will still be more than people think, it will not just be five big airlines, but consolidation will continue.”

Looking at airBaltic specifically, Gauss mentioned that it currently stands on its own. “If we do the IPO, then we will grow on our own but that does not mean that we will not be a part of a larger group one day,” he added. He also noted that many competitors around the Baltic Sea, including Finnair, Norwegian, Estonia’s Nordica, and SAS, are having to adapt to a new reality in one form or another.

“We have many airlines in Europe that were doing a good job, especially this year”, but where there is potential to merge, they will merge together. Gauss suggested that the large groups will either grow on their own and outgrow the competition, or they might acquire the smaller airlines, adding that “but then, you never know what is going to happen next year”.

In terms of the Baltic States market, “there is room for growth,” according to Gauss. While at RIX the airline is restricted by the airport and its infrastructure, including the lack of working jet bridges, the major growth push could come from Vilnius Airport (VNO) and Kaunas Airport (KUN). “There, the strategy is different, with the Lithuanian airports [VNO and KUN] being focused on low-cost carrier flights rather than connectivity,” Gauss explained.

“Looking at the three Baltic States, all of them can still grow,” he said.

Gauss has viewed the growth from the inside, too, arriving in Latvia in November 2011. Latvia “has changed more towards Europe,” according to Gauss, mentioning the fact that there has been a lot of innovation in the three Baltic States. “They are now seen as serious European countries [and they] are playing an important role,” he continued, adding that with the war in Ukraine, the Baltic States’ leadership has showcased an impressive level of maturity.

“I have to say, working here [while] coming from Germany, I am proud of the development of the Baltic States,” Gauss said. However, one thing that the executive would like is more inbound tourism, as there is seemingly a lack of advertising throughout Europe. “That is something where I think the three Baltic States can still improve.”

For the airline market within the three states, many airlines have disappeared around airBaltic. “We are here [and] we are strong,” the CEO said.

Innovative spirit at airBaltic

“That is also because we take an innovative [approach], the spirit of the company is very innovative. I think we are one of the innovation leaders, depending on how you define innovation,” Gauss continued. By way of example he mentioned the introduction of Bitcoin as a form of payment in 2014, as well as the development of the non-fungible token (NFT) collection.

The NFT collection even helps airBaltic to make money, but on top of that, it is also a loyalty program, which is “upgraded to a level which [was not seen] in the world yet,” Gauss added.

So, what about the long-term future?

“The ultimate game for us, as airlines, needs to be in the long-term future,” the executive noted, adding that airBaltic is looking toward the next technology that will reduce the use of fossil fuels. “Can we fly with something which does not burn fuel?” he asked rhetorically.

“But we will not be jumping on any trend because there is just no jet today which can be powered without sustainable aviation fuel [SAF] or fossil fuels,” Gauss continued, adding that this change is not likely to happen within the next five years. At the same time, it is vital to be open to innovation, because the technology which might prove to be the solution, “be it hydrogen or whatever”, needs to be supported, which is why the innovative spirit within a company can make it more accepting of a new technology.

Lastly, AeroTime asked Gauss a hypothetical question: What if a billionaire approached him and told him that they would fund any aircraft purchase for airBaltic: which aircraft would it be?

“We would buy more A220s,” airBaltic’s CEO answered.

The post How the Airbus A220 propelled airBaltic into a league of its own appeared first on AeroTime.

Running an airline at the edge of the world: Jacob Nitter Sørensen, CEO Air Greenland

Miquel Ros — Tue, 15 Aug 2023 03:00:00 +0000

The most recent installment of Executive Spotlight showed what it takes to run an airline in the middle of a war, and this time we are literally traveling to the edge of the world, to learn how an airline can thrive in one of the planet’s most unforgiving environments.

Air Greenland is the national carrier of the world’s second largest island (after Australia), a huge territory which, despite its name, is mostly, permanently covered in ice.

It’s not just that the weather conditions are extreme for most of the year. Air Greenland needs to provide basic services to a population of under 60,000 scattered over a landmass that, if it was overlaid onto a map of mainland Europe, would stretch all the way from Norway to North Africa.

To do this, Air Greenland relies on what is one of the most eclectic fleets operated by a flag carrier anywhere in the world, including a rather rare type of long-haul, wide-body aircraft, a fleet of regional turboprops, some helicopters – and soon, perhaps eVTOLs too.

AeroTime has spoken with Jacob Nitter Sørensen, CEO of Air Greenland, in order to learn more about this unique airline and the essential role it plays in the economy of this autonomous Danish territory.

A unique operational profile

Our conversation with Nitter Sørensen started with us talking, inevitably, about the large diversity of aircraft types Air Greenland operates and the different roles they fulfill, in a community that is totally dependent on air travel to be able to function normally.

Nitter Sørensen said: “The low-cost carriers always say you need to keep a single-type fleet, but we operate with a different model. Why do we do that? It is due to the geography, the environment and the demographics we serve. We are the bus service, the train service, the ambulance service, the mail service… we provide most of the infrastructure necessary to keep the country going. In order to fulfill all these tasks, you need different equipment. This is why we have such a diversified fleet.”

In addition to guaranteeing a regular air link to Denmark more than 2,000 miles away, Air Greenland is also a provider of regional mobility between Greenland’s different towns. It performs a whole range of on-demand missions, as diverse as tourist and panoramic flights, medical evacuation and search and rescue services.

But it is not just the diversity of fleet and missions that makes for the complexity of Air Greenland’s operations. They are also shaped by notorious constraints in airport infrastructure. Almost all civilian airports in Greenland have runways that are under 1,000 meters in length and the island’s main international gateway, Kangerlussuaq Airport (SFJ), a former US Air Force base, is located nowhere near the island’s main population centers.

Kangerlussuaq Airport is in fact nearly 200 miles north of Nuuk, the island’s main town, and there is no land transportation whatsoever between them.

In addition to its fleet of ten fixed winged aircraft, which includes one Airbus A330-800neo, eight De Havilland Canada Dash-8 Q200 and one Beechcraft B2250 King Air which is used mainly in medical services, Air Greenland also operates helicopters. Its rotorcraft fleet includes seven H155s, two Airbus H225s, which are used mainly for search and rescue missions, and nine Eurocopter AS350s – a model now rebranded as Airbus Helicopters H125. Another nine H125 are on order with Airbus.

“I used to tell people that we operate nine Airbus 350s and only when seeing their faces of disbelief did I clarify that I was talking about the single-engine helicopter, not the long-haul jet!” Nitter Sørensen laughed.

Air Greenland does indeed have a long-haul wide-body aircraft, and a rather special one, since the airline is one of only three current operators of the Airbus A330-800neo. Only seven aircraft of this type have been delivered by Airbus, the other two operators being Kuwait Airways and Uganda Airlines.

Talking about the reasons for this choice, Nitter Sørensen explained that, when they started to look for a replacement for the A330-200, very few aircraft types fitted the very specific commercial and operational profile of Air Greenland. In the end, the available choices were reduced to the Boeing 787-8 and the Airbus A330-800neo, with the final decision coming down to the minutiae of negotiations with both aircraft makers.

Since Air Greenland uses the A330 on the 5-6 hour-long flight to Copenhagen, relatively briefer than the typical long-haul route for which the aircraft was designed, it can take off from fairly short runways by flying lighter, a few tons below maximum take-off weight.

The airline’s brand-new A330-800neo, which arrived in December 2022, replaced an Airbus A330-200 (registration OY-GRN), which had been plying the Kangerlussuaq to Copenhagen (CPH) route for twenty years.

Nitter Sørensen was full of praise for this new arrival to the fleet. “The A330-800neo is performing really, really well in terms of technical reliability, customer satisfaction, and especially on the fuel side. It has really reduced our fuel burn a lot. It is very noticeable,” he remarked.

“This aircraft is the link between Greenland and Europe and it transports all sorts of passengers, cargo and mail,” Nitter Sørensen elaborated. “Once in Greenland, we distribute them with our Dash-8 fleet. Sometimes you may even need to take a helicopter ride to get to your final destination. We fly to 46 heliports and 15 airports. It’s a very complex network, but one without much volume.”

The only other regular air link to the outside world is via Iceland, with Air Greenland and Icelandair cooperating on routes between Keflavik and four smaller airports in Greenland: Nuuk (GOH), Ilulissat (JAV), Kulusuk (KUS) and Narsarsuaq (UAK).

Betting on sustainable tourism

In fact, the last decade has seen a surge of interest in the far north and the Arctic as tourist destinations. Places like Iceland and the Faroe Islands have seen visitor numbers rocket over recent years. A similar phenomenon has been experienced by Greenland, with 2022 being a record year in terms of tourist arrivals.

Nitter Sørensen explained that this is the result of the country’s strategic choices: “15 years ago, the oil industry was very interested in Greenland. There was even some drilling going on, but the local government decided against it and opted to develop sustainable tourism as an avenue for economic growth instead.”

Air Greenland is not a passive beneficiary of this trend, but an active player throughout the tourism value chain in Greenland. It even operates its own hotels and tour operators.

“When the strategic decision was made to develop the tourism industry, we went all-in in this direction,” Nitter Sørensen explained. “Air Greenland owns a travel agency and a hotel, and we offer also lodges and activities. We are involved in the whole value chain, and this is also to offer quality products, to have control over the product, and to maximize value for the customers and for the company. We operate throughout the value chain. You can book a plane ticket, a hotel room and even rent a kayak with us.”

As for the hard limits of this growth, Nitter Sørensen said: “The main constraint we have now is receptive capacity. The hotels are pretty much fully booked in the high season, so we need to increase hotel capacity in order to develop the tourism economy further.”

Air Greenland has already its own 110-room four star hotel, but now it is already planning to open another one to cater for growing demand.

The figures involved in the Greenlandic tourism boom may sound modest compared to those handled by other tourist destinations, but they are significant for a territory with less than 60,000 inhabitants.

While Air Greenland carried a total of 430,000 passengers in 2022 (two thirds of them domestic), the number of international visitors was around 90,000. Of these, 85% arrived on the airline’s A330 flight from Copenhagen, with the remainder flying in from Iceland.

In fact, the Icelandic connection may hold the key to a huge untapped market: the US.

Despite technically being part of North America (during his presidency, Donald Trump even toyed with the idea of ‘bidding’ to acquire Greenland), the island receives only around 3,000 American visitors per year.

Nitter Sørensen explained that Air Greenland had done some testing of responses from the American market in the past, and it didn’t work out as expected. One of the main issues that came up was the infrastructure in Greenland.

“There is interest for Greenland in the North American market, but we still have the accommodation constraints. We could possibly fill a plane or two a week, but this would cannibalize traffic from our European operation, because of a lack of capacity. So, it is a step-by-step process, with a long-term perspective.”

Air Greenland signed a letter of intent with Icelandair, an airline that already has a significant presence in the North American market, with the aim of supporting further tourism development and improving the connectivity via that airline’s Transatlantic hub at Keflavik (KEF).

“Keflavik is very well located to serve the US market. A ticket to Keflavik and then onto Greenland on a single ticket is something customers demand,” Nitter Sørensen admitted. “By working with Icelandair we can build this market over time, and hopefully, if numbers grow, there will be potential to open a new direct route to either to New York – JFK, or some other destination where you have lots of connections to the rest of North America.”

Either way, a stopover is currently necessary, because Greenland’s main international airport is nowhere near Greenland’s main tourist attractions. This is due to change before long, as two major airport expansion projects are due to be completed within the next couple of years.

Extending the runways

Work is under way to expand the runways of two airports, Nuuk and Ilulissat, to a length of 2,200 meters (from the current 945 meters). A new ILS system will also be installed. When the extended runways become operational, the airports will be able to receive nonstop flights from Europe or North America.

At the same time, a new 1,500 meter runway is being built at Qaqortoq (JJU), which is currently a heliport. When the work is completed in 2025, the south of Greenland will also have enhanced air connectivity.

These projects will significantly expand Greenland’s capacity to receive international flights. In this regard, Nitter Sørensen confirmed the airline is looking at a potential fleet and network expansion. This may include the addition of narrowbody aircraft able to reach both mainland Europe and the US nonstop from Greenland, although no decisions have yet been made.

However, the new airports could also bring in foreign competitors.

“I am sure that with the improved accessibility we will see competition as well. This is something we are expecting to happen from the summer season of 2025, when the new airports will be open,” Nitter Sørensen said. He added that Air Greenland may also benefit from this, by channeling the incoming visitors through its domestic network.

“When our parliament greenlighted investment in airport infrastructure, it did so on the basis that it should not just benefit the town where the new infrastructure is built, but all of Greenland. Visitors can then visit other parts of Greenland as well. There are lots of magnificent places that have a lot to offer,” he suggested.

If all goes according to plan, towards the end of this decade tourists may be traveling in Air Greenland’s eVTOLs, since the airline signed a Memorandum of Understanding (MoU) with Dublin-based lessor Avolon, to get access to Vertical Aerospace’s VX4 eVTOL aircraft.

Vertical Aerospace’s VX4 is not certified yet – it completed it first untethered test flight in July 2023 – but Nitter Sørensen was optimistic: “We are possibly going to start with one or two as a proof of concept, then there is potential for a lot more.”

Neither did he appear worried about the performance of battery-powered eVTOLs in the extreme Arctic conditions.

“This is something we have discussed extensively and the thing is, we are going to be using eVTOLs for tourism flights, which means we are going to use them in nice weather. Battery technology is also performing well in low temperatures, so from an operational and technical perspective, the applications we are seeking of eVTOLs are perfectly feasible.” he claimed.

Nitter Sørensen thinks eVTOL technology is also interesting from an environmental angle:

“This is a very interesting project, because many airlines have signed orders or pre-orders for eVTOLs to use them in an urban environment, as city taxis to avoid congestion in major cities, but we have a different approach.” he explained. “We operate a CO2 neutral four-star hotel up north [Hotel Arctic in Ilulissat Icefjord, a UNESCO World Heritage Site – Ed. Note] as well as several luxury lodges located next to natural attractions – for example, in places where you can see huge icebergs. These places are within the realistic range of eVTOLs and they are all powered by hydroelectric power. This means we can offer emission-free touristic flights and a very sustainable experience from the beginning and all the way through. This is something that we believe customers will be demanding more and more.”

Sustainability is a particularly important aspect of any airline operation right now, even more so in the fragile environment of the Arctic, which is likely to be one of the areas most heavily impacted by any change in global temperatures.

“If we are to bring people to Greenland, to a fragile environment, we need to be serious about sustainability. Air travel connects people, it brings peace and prosperity. We should strive to fix the issues and make it sustainable. One of the things we are doing at Air Greenland is renewing our fleet,” Nitter Sørensen said.

He also shared some figures about the airline’s initiatives to reduce emissions.

“The new Airbus Helicopters H155 [with which Air Greenland replaced its 40-year-old Bell 212 fleet – ed. Note] burn less fuel, fly faster and carry more payload than their predecessors, so in practical terms we achieved about a 50% reduction in emissions. The A330-800neo burns 15% less fuel and has 10% more seats that the A330-200, so in practice we got a 25% reduction [per person]. To this one should add the reduction from the use of SAF. The board of directors made the decision, which we are already implementing, to use 5% SAF, a figure that we will hopefully be increasing.” he said with some pride, pointing out that Air Greenland was the first airline at Copenhagen airport to use SAF. “This is something we are very proud of. It is a big investment and it is part of the branding of Greenland as a sustainable destination!”

Untamed nature

The force and unpredictability of nature is always present in the minds of Air Greenland’s managers and it’s also something that any visitor should plan for. Regularity of operations is a less-than-optimal 90% and, of this, 85-90% is weather related.

“Weather conditions are very much our main challenge,” emphasized Nitter Sørensen. “We do have a lot of bad weather and very difficult operating conditions. Our pilots are well trained to handle the weather, but we are very conservative in our approach to flight safety and if the weather is bad or there is any doubt about the weather conditions, we cancel the flight. When the weather is good, everything works like clockwork, but on bad weather weeks we are maybe able to operate only 35% of our schedule.”

This means, inevitably, that Air Greenland spends a lot of money on compensation, hotels and food for passengers who get stranded, and the problem just grows with the increasing number of passengers.

“Locals are used to this weather and know what to expect, but we understand it can be frustrating for those visitors who are used to a more seamless travel experience. If you come to Greenland, you need to know that there is a large probability of experiencing some schedule irregularities. But we are taking care of our passengers all the way, we are not leaving anyone behind,” Nitter Sørensen emphasized. He added that the airline spends about 100 million Danish Crowns per year (around US$15 / €13.5 million) to address these incidents, a rather hefty sum for such a small airline.

Due to the remote location and weather unreliability, Air Greenland also needs to keep a large inventory of spare parts and supplies. “Maintenance costs are high, but we do also a lot of preemptive maintenance. When you have such regularity issues, it is actually quite cost-effective. This is of course reflected in the ticket prices,” Nitter Sørensen added.

“We are owned by the government, by the people of Greenland, so everything we do is for the benefit of the people of Greenland. We are looking forward to many more people coming from all over the world to enjoy a great experience in Greenland,” he concluded.

The post Running an airline at the edge of the world: Jacob Nitter Sørensen, CEO Air Greenland appeared first on AeroTime.

An airline at war: how Ukrainian airline SkyUp reinvented itself

Miquel Ros — Sat, 15 Jul 2023 07:38:39 +0000

When Ukrainian startup airline SkyUp launched in 2018, few could suspect the challenges it would have to face over the span of fewer than five years.

If the pandemic proved to be the first serious test of the company’s resilience and adaptability, the Russian invasion of Ukraine on February 24, 2022, was to have considerably more far-reaching consequences.

And yet, SkyUp has not just managed to pull through. After rebuilding its business operating out of foreign lands, the Ukrainian carrier is preparing to resume growth, and for the day circumstances allow it to return to its home country.

In an exclusive in-depth conversation with AeroTime, SkyUp’s CEO, Dmytro Seroukhov, reflected on eighteen months that have changed the history of Europe.

He shared details about the decisions that helped to save the airline just in time, and the way the SkyUp team has quickly adapted to the new operational environment in order to carry on, no matter what.

A return to the Ukrainian skies remains, of course, the ultimate wish for Seroukhov who shared with AeroTime some invaluable insights on what it takes to lead an airline in wartime.

SkyUp before the war

SkyUp, a private, family-owned airline, launched in 2018 as part of the UPfamily of brands, which also includes Join UP!, one of the country’s largest tour operators before the war.

At the time the Ukrainian air travel market was experiencing a period of growth and what originally began as a charter operator supporting the group’s tour operator soon evolved to become a fully-fledged low-cost airline with a scheduled flight program.

Soon after its launch, SkyUp became the second largest airline in the country and one of the fastest growing airlines in Europe, carrying more than 2.5 million passengers in 2022.

On the eve of the Russian invasion, SkyUp was operating a fleet of 15 Boeing 737 aircraft.

“We were the number two airline in Ukraine, just a few tens of thousands [of passengers] separating us from first place,” Seroukhov explained. “Had the war not started we are sure we would have been number one by the end of 2022.”

Plans had been afoot to reach a fleet of 22 aircraft by summer 2022 and to cover a network of 120 destinations.

Surviving a succession of enormous shocks in such a short history has given SkyUp a resilience that is unparalleled in the airline industry.

“Each year we’ve had to face new challenges. Two of them were massive: COVID, then the war,” Seroukhov said. “Which other airline in the world has faced, in a span of five years, such huge turbulence? I think nobody!”

These circumstances have made the airline resistant. “We can say we are ‘sustainable,’ not in terms of emissions,” he added, “but in terms of how we managed all these troubles.”

Saving the airline while under fire

But to be able to bounce back from adversity, first it was necessary to physically save the airline and make sure staff and aircraft were out of harm’s way.

While many other airlines found their aircraft stuck at Ukrainian airports when the country’s airspace closed, SkyUp managed to get its fleet out of the country before the first missiles were fired.

As soon as talk of hostilities heated up in late 2021 and a Russian invasion started to look like a real possibility in early 2022, SkyUp’s team started to take precautions.

While continuing to service the Ukrainian market, SkyUp positioned its aircraft abroad, minimizing the chance of them becoming caught in line of fire if things went awry.

A case in point is one of its aircraft was actually en route to Ukraine when the first shots were fired but managed to turn around quickly.

“It was not a matter of luck. It was our decision,” Seroukhov affirmed.

Another key decision was to retain all of the airline’s staff even through the most uncertain moments at the start of the war.

From early in the conflict, SkyUp’s fleet took an active role in relief operations, flying

Ukrainian refugees elsewhere and carrying Ukraine-bound cargo to airports in neighboring countries. By June 2022, the whole fleet was engaged in those missions.

As a third country operator within the EU, SkyUp found itself restricted to ACMI operations when the war began, supplying aircraft and crews via wet lease to other airlines.

At the time, SkyUp’s team knew little about the ACMI market.

“It was something totally new to us,” Seroukhov admitted. “We were not in this market. We didn’t know anything about this market, just a general idea of how it works.”

However, there was no other choice if he wanted to keep the airline running and, by the end of May 2022, the whole fleet was engaged in this activity.

First, the airline had to overcome the reluctance of European regulators.

“Their first words were, ‘You are from Ukraine? It’s impossible to operate, you cannot operate’,” Seroukhov revealed, adding that the airline worked to convince regulators that it was ready.

SkyUp underwent some 20 different inspections, including from the European Union Aviation Safety Agency (EASA), in order to secure the authorizations that would allow it to continue operating out of airports within the European Union (EU).

Although some operational restrictions remain in place, some EU countries, such as the Baltics, Poland, and Romania, granted SkyUp permission to operate charter flights, mainly to leisure destinations in the Mediterranean, North Africa, and the Middle East.

SkyUp has since become an EU carrier, obtaining a Maltese Air Operator Certificate (AOC) in May 2023.

Becoming an EU airline

An aircraft was swiftly transferred to the new registry, but it is likely that several more will follow.

“The plan is very simple. We intend to develop it,” Seroukhov said, referring to the new AOC.

Interestingly, Seroukhov remarked that the growth of its Malta-registered fleet could come through organic growth rather than the transfer of aircraft from the current Ukrainian-registered fleet.

He said: “I am not thinking about transfers, I am thinking about new deliveries.”

SkyUp still has Boeing 737 MAX on order. Their delivery was postponed due to the COVID-19 pandemic, but they are still in the books.

Despite reactivating the delivery of the Boeing 737 MAX aircraft, Seroukhov did not rule out taking in other types of aircraft when the time comes to expand SkyUp’s fleet again.

Relaunching scheduled flights

The next step in SkyUp’s growth will be the launch of regular flights.

“I can say that we plan to start regular flights from next April [2024] and that we plan to open sales by Autumn [2023],” Seroukhov said.

While Seroukhov did not disclose which markets SkyUp is looking at, he remarked that “the team is working”.

“We are cooking,” he added, jokingly.

Another war

As of summer 2023, Seroukhov explained, more than 70% of SkyUp’s operations are in Europe. Though the airline operates a fair share of flights to destinations in North Africa or the Middle East, these often involve European routes.

However, this did not prevent two of SkyUp’s aircraft, with their respective crews, from finding themselves in the middle of yet another war, this time in Sudan. In April 2023, two SkyUp Boeing 737 aircraft were destroyed on the ground at Khartoum International Airport (KRT), as government forces and rebel militias fought for the control of the strategic facility.

Once again, Seroukhov and his team had to act fast to ensure the safety of the airline’s staff, this time in a far more distant land.

“Those days they were stuck in Sudan, we didn’t sleep even one night worrying about them,” he explained, before thanking the people and organizations that helped the airline to get the crew out of the embattled African country.

A decentralized structure

The war in Ukraine also led to a thorough reorganization of the way SkyUp worked internally.

A significant part of the airline’s operations is now being conducted remotely, with the team scattered through various locations.

“Challenge accepted!” Seroukhov remarked about the change. “This is our way of life.” However, he also admitted that the circumstances have taken a toll on the workforce.

Seroukhov explained that as soon as the war started many people throughout the international aviation community reached out to the SkyUp team to express their support and help, something he is extremely thankful for.

Despite everything the airline has been through over the past year-and-a-half, Seroukhov is looking to the future with optimism, with the conviction that the darkest moments have already been left behind.

It is now time for SkyUp to look ahead and continue developing its business as an active member of the European airline community, and one that is already operationally profitable today.

Operational efficiency is one of the tenets of SkyUp’s operations and Seroukhov can take pride in some rather impressive metrics.

For example, he highlighted that before the war SkyUp was one of the airlines in Europe with the highest aircraft utilization rates, with its aircraft flying an average of 13.3 hours per day.

Seroukhov explained how it was not unusual to see SkyUp’s aircraft operating pretty much around the clock.

“We know how to fly 18 or 19 hours per day,” he proudly revealed. “And we are getting very close to these figures this summer season.”

Seroukhov remarked how this intensity has somehow become one of the airline’s defining traits.

“It’s our style. We don’t know how to fly just 300 hours [per aircraft – editor’s note] per month”, he said, before adding that while the flying program for next season is not yet known, it will not be less than 400 hours per aircraft and per month.

Preparing for growth

Seroukhov confirmed that the fleet will increase in 2024, from its current fleet of 10 aircraft. As of July 2023, SkyUp operates eight B737-800 and two B737-700.

With more than half of the fleet’s capacity already sold for next winter, Seroukhov commented on his vision of a bright future for SkyUp.

Besides the war, Seroukhov is concerned about what he perceives as a “lack of capacity”, both for the company and the airline industry, something that may hamper growth plans for SkyUp.

The new European dimension of SkyUp’s operation has not prevented Seroukhov from keeping an eye on his own country. SkyUp wants to be the first in the Ukrainian market the moment the war ends and Seroukhov is clear that this would not be at the expense of its new European operation, but by adding new capacity.

“Imagine, one day, tomorrow or after tomorrow, as soon as possible, the war will be finished and we need to be the first in Ukraine, and we will be. Because we are a Ukrainian carrier,” Seroukhov said.

The post An airline at war: how Ukrainian airline SkyUp reinvented itself appeared first on AeroTime.

How the founder of Fly Atlantic plans to turn Belfast into a transatlantic hub

Miquel Ros — Thu, 15 Jun 2023 03:14:00 +0000

Andrew Pyne is not just a prolific airline entrepreneur, but someone who has made enormous contributions to the development of the low-cost airline model in a diverse range of countries and regions.

He is currently busy with his latest project, a low-cost, long-haul startup airline that will connect Europe and North America through a hub in Belfast, Northern Ireland.

In the latest instalment of our Executive Spotlight series, Pyne revealed some interesting details about this new carrier, and shared some fascinating insights about his long international career as an airline executive, consultant and entrepreneur in places as diverse as China, Russia, Vietnam, Cyprus, Iceland, the Maldives, Cambodia, Laos and the United Kingdom.

Although some of these projects were relatively short-lived, they were transformational in their respective markets, often giving people in those countries their first taste of low-cost air travel.

But it has not always been plain sailing, with shareholder feuds, a global pandemic, and even political revolutions sometimes getting in the way.

In a wide-ranging and frank conversation, Pyne dissected successes and failures, and shared how he is applying what he has learned to his new venture.

From pilot dreams to airline entrepreneur

Pyne has long had a personal connection to the world of aviation. His father was an airman, a Second World War Royal Air Force veteran who later worked for British European Airlines (BEA), and Pyne has always had a strong interest in flying. He even dreamed of becoming a helicopter pilot at one point.

But this was not to be. Pyne joined British Airways as a graduate and stayed there for several years, before moving to Hong Kong to work for the administration of the former British overseas territory. After Hong Kong was handed back to China in 1997, he rejoined the aviation industry by joining local carrier, Cathay Pacific.

Those were the early years of the low-cost airline industry and Pyne saw an opportunity to bring the model to the region. However, this was not without difficulties, since there were powerful and well-entrenched incumbents ready to defend their turf.

Nevertheless, Pyne managed to launch what would become his first airline, Viva Macau, in the special autonomous region and former Portuguese colony of Macau, just across the bay from Hong Kong.

He said: “In 2004 I had the crazy idea of starting a new airline because I could see that low-cost airlines were coming to Asia. My first approach was to suggest to Cathay Pacific that we set up a low-cost airline, but the idea didn’t get much traction, so I left Cathay to do it on my own.

“I think I can claim to be the founder of Viva Macao. I had the idea and I put in my own money initially to get it rolled out. It finally launched in 2007, so it took quite a long time to get it flying. That was quite an education for me.”

At one point Pyne had 100% ownership of Viva Macau, although he progressively diluted his stake as new shareholders came in and he eventually ended up exiting the company.

“Viva Macau is a rare occasion in which I managed to sell at the right time!” he joked, before adding that “it was a great learning experience and I look back to my Viva Macau time with great affection.”

Bringing the low-cost airline concept to Russia

Pyne then received a call from one of the most prominent players in the global low-cost airline scene, US-based Indigo Partners, a private equity firm with a portfolio of low-cost carriers which includes Wizz Air in Europe, Frontier Airlines in the United States, Volaris in Mexico, and JetSmart in Latin America.

Indigo Partners had partnered with Alfa Bank, one of Russia’s largest banks, to replicate the firm’s successful business model in the Russian market with a brand-new low-cost carrier called Avianova.

“Doing business in Russia has never been easy, even before recent events, but I think we inspired something revolutionary in Russian aviation,” Pyne said. “I am very proud of what we achieved.”

He explained how Avianova introduced many practices to Russia that are now standard procedure for low-cost airlines everywhere.

While segments of the Russian aviation establishment were not keen to see disruption, Avianova soon became popular among passengers that had previously endured long journeys by train across the width and length of Russia.

Bitter disputes between Russian and American shareholders put an end to the Avianova project. Pyne and his management team were forcefully evicted from their offices and a new management team reporting to the Russian shareholders was established.

He explained how shaking things up made them quite a few enemies in the country. “We certainly upset a lot of people,” he said, adding that he did not want to “speculate about what happened”.

However, he said that these developments were not welcomed by the Western aircraft lessors, which pulled their assets out of the country. This led Avianova to suspend operations and, ultimately, sparked the demise of the carrier.

Setting up new airlines in Asia and Europe

Pyne remained in Russia for another two years as a consultant, providing advice to airlines such as VietJet, a Vietnamese low-cost carrier (LCC), which it helped set up a subsidiary in neighboring Thailand.

Then the opportunity arrived to move back west again.

Several investors were intent on relaunching Cyprus Airways, the flag carrier of the Mediterranean island, which ceased operations after going bankrupt in 2015. This project would eventually become Colbalt Air, a brand-new carrier that launched in 2016, but within what Pyne referred to as “a few weeks after starting operations” he resigned.

Pyne’s next project was on another island, but in a far more northerly latitude, as he joined WOW Air, the Icelandic low-cost airline in early 2017.

He said: “I was officially the strategic advisor to the board, which meant doing many different things, such as looking for new potential overseas bases, evaluating the possibility of launching new routes to Asia, [and] looking at the strategic direction of the airline.

“I really enjoyed my time there, although it got to a point where I had one vision and Skúli [Mogensen], the CEO, had a different vision, and he was the boss, so we parted ways in good terms after a year or so.”

The Icelandic experience was to play a major role in inspiring Pyne’s latest Northern Irish project. But before that, the airline executive headed back to warmer climates.

In September 2017 Pyne left WOW Air to become an advisor to Mega Maldives, with the mission of raising capital to restructure the ailing airline, which was mainly focused on carrying leisure traffic from China.

Pyne also noted how this was a market that he had been instrumental in helping develop through his first airline venture, Viva Macau. “I had gone full circle,” he said.

As in the case of Cobalt Air, he found capital for Mega Maldives in China, although this time it was not internal disputes, but politics that got in the way. Before the deal could be formalized, a serious political crisis and a series of riots engulfed the Indian Ocean archipelago and the prospective investors got cold feet.

Despite Pyne’s best efforts, the funds did not arrive on time to save the airline and Mega Maldives was wound down.

Pyne remained in Asia, working next on two simultaneous new airline projects in Cambodia (MJ Airlines) and Laos (Lao Central Airlines) and soon found himself commuting between the respective capital cities, Vientiane and Phnom Penh. While Pyne said that these were “two pleasant countries to work in” each project faced its own set of challenges.

In 2018, a new opportunity knocked on Pyne’s door. He was offered the chance to move back to Cyprus and work on an entirely new project: restructuring a regional airline called TUS Airways, which had been in dire straits for quite some time. During the following two years Pyne worked to stabilize and turn around TUS Airways.

Then, just as things were beginning to head in the right direction, Pyne found himself facing the harsh effects of an external, unexpected shock and the COVID-19 pandemic brought the airline to a halt.

However, against all odds TUS Airways survived. But Pyne had already set his sights on his next airline venture, Fly Atlantic.

Establishing Fly Atlantic

Fly Atlantic is a startup airline that aims to link Europe and North America using Belfast as an intermediate hub.

While Pyne acknowledged both the highly competitive nature of the North Atlantic market and the similarities with the business model traditionally deployed by Icelandic carriers, he said he sees an opportunity for a new entrant to do things a bit differently.

He added: “Iceland has a long history as an intermediate harbor across the Atlantic and we’ve kind of consciously borrowed from that model but tweaked it to give it a Northern Irish flavor.”

Not only did his experience at WOW Air play a role in the conception of Fly Atlantic, but so did the COVID-19 pandemic, which served as a springboard for the new project.

“Fly Atlantic started to take shape during the period of enforced inactivity that was the pandemic. It gave me the opportunity to think about new ideas,” Pyne explained.

He started thinking about this new project in the summer of 2020 and by 2021 he was already building a team, talking to airports and other players in the industry, as well as scouting locations for the airline’s future base.

Although WOW Air ceased operations in 2019, Pyne said he believed its basic business model based on transatlantic low-cost travel remained valid. The proof can be seen in how the Icelandic LCC remained profitable for a number of years before it had to close down.

So, what does Pyne think went wrong? While the idea was sound, he noted, the execution may have been more problematic.

But he said he has learned from what happened to WOW and believes Fly Atlantic will be in a much better position to avoid the same issues.

Pyne highlighted the fact that Belfast’s catchment area, including the northern counties of Ireland, is over three million people, which makes it 10 times the size of Iceland’s.

He added that Northern Ireland is currently leaking 900,000 passengers a year that travel to and from North America through other airports, such as Dublin, London, and Amsterdam. Capturing some of this traffic can, on its own, be a solid foundation for Fly Atlantic’s business. But the startup also aims to have a feeder service bringing in passengers from other parts of Europe. Pyne mentioned cities like Lyon, Hamburg, Bilbao, or Bologna, which currently have no (or limited) North Atlantic services.

Pyne hinted at the possibility of opening other bases if everything goes according to plan, although for now Fly Atlantic’s deal with Belfast International is, he said, the startup’s “secret weapon”.

He added: “In this battle for the North Atlantic they are a very supportive airport, with very attractive charges.”

Pyne did not rule out the idea of supplementing Fly Atlantic’s own feeder operation through partnerships. He added that he was currently involved in ongoing discussions with another startup in the UK called Lakeland Airways about providing ATR services into Belfast International from a potential network of about 20 points in the UK and Ireland.

Lakeland’s turboprops could fly into airports such as London City (LCY), where the 737 MAX or Airbus A321s cannot land, and provide connectivity to and from points like Jersey, in the Channel Islands, and the Isle of Man, which have significant traffic flows across the Atlantic due to business and financial services links.

Even easyJet, which already has a significant presence at Belfast International Airport, could potentially become a partner. Pyne also mentioned digital booking platforms such as Kiwi.com or Dohop, where technology facilitates flight connections between independent low-cost carriers.

Although Pyne noted that “ultimately, you need your own feeder network tailored to your transatlantic flights in terms of time, connectivity, pricing, and so on.”

“I think partnerships are great,” he added, “but they don’t obviate the need to provide your own feeder network.”

So, what sort of numbers are we talking about when it comes to the fleet and the expected volume of passengers? Pyne shared some of his projections.

And when it comes to aircraft choice, matters seem clear. “It will be either the A321 neo or the [Boeing 737- ed. note] MAX 8, we have prepared business plans catering to both aircraft types,” Pyne revealed before sharing some additional details about his fleet growth strategy.

The airline entrepreneur said he also counts on the attractive economics of narrow-body aircraft to defy the competition from legacy carriers.

“Aircraft like the A321neo or the 737 MAX will give us a significant unit cost advantage over the widebodies currently flying on the main North Atlantic routes, like the 787s or 777s,” he explained.

It is not just about lower fuel consumption. The versatility of narrow-body aircraft for both transatlantic and European operations is one of the reasons Pyne said he envisages one of the highest aircraft utilization rates anywhere in the industry for his future fleet.

He said: “We’d be looking at around 17-something block hours a day […] that kind of utilization, which, of course, will be industry-leading for the aircraft types we’re considering.”

Pyne revealed that at the time of our interview he was already in conversation with investors to fund the launch of Fly Atlantic. However, he admitted that it is probably not the best time to try to raise funds.

Pricing would remain the main draw to fly transatlantic via Belfast, particularly when Fly Atlantic faces competition from airlines offering a similar proposition. These include PLAY, another low-cost carrier based in Iceland, and Aer Lingus, based just a couple of hours drive south of Belfast and across the border in Dublin.

“I was going to say there’s room for everybody in the market, but I’m not sure that’s true,” Pyne said. “What determines ultimately whether or not you win that particular struggle is your underlying cost. So, we’re rigorously focused on getting our CASK [cost per average seat kilometer, a measure of how much it costs to fly one passenger over one mile – editor’s note] down!”

Pyne said he is confident that Fly Atlantic will be able to deliver the lowest cost in the North Atlantic market, but he appeared rather more concerned about the effects of seasonality.

Demand falls significantly during the winter months in the North Atlantic market, and airlines often struggle to fill capacity. This is a concern that was also raised by Norse Atlantic Airways president, Charles Duncan, in a recent Executive Spotlight interview with AeroTime. Shortly after the interview, the Norwegian carrier announced a number of winter routes to leisure destinations in the Caribbean and Thailand.

Pyne explained that Fly Atlantic will also offer a small premium cabin. The reason for deviating from standard low-cost practice? The potential strength of business traffic driven by Northern Ireland’s numerous business links with North America.

However, travelers will need to wait a couple of years before they are able to try out the new service. Pyne confirmed that Spring 2025 appears to be the most likely launch window for the new airline.

Reflecting on the past, present, and future of the low-cost airline industry

Is there a universal low-cost airline playbook? Or has Pyne noticed differences as the model has been successively tested in various regions of the globe?

This is a topic that Pyne had much to say about, given his experience working with different flavors of low-cost airlines all over the world.

Before wrapping-up our conversation AeroTime asked Pyne about the evolution of the low-cost airline concept during the last couple of decades, particularly considering, as he pointed out, a number of operators have deviated from the original low-cost airline practice.

How have two decades of low-cost airline development shifted public perceptions and expectations about air travel? And does he see scope for further innovation?

Pyne highlighted the fact that the airline industry is facing several challenges that were not present 20 years ago, but this may play to Fly Atlantic’s advantage.

He also said that he sees scope for innovation when it comes to the personalization of the passenger experience, not just when it comes to bundling or unbundling services, but also in using artificial intelligence (AI) tools to give passengers a greater sense of empowerment.

We could not conclude our conversation without touching upon what is fast becoming one of the central topics in aviation right now (and one could even say that it is becoming existential for the industry). We are talking about sustainability, of course.

Pyne indicated his willingness to get Fly Atlantic engaged on this front from the outset.

“We need to make flying socially acceptable to a new generation,” he said. “There must be genuine progress, rather than greenwashing and this is an area of innovation and technology we are keen to get involved with.”

The post How the founder of Fly Atlantic plans to turn Belfast into a transatlantic hub appeared first on AeroTime.

“Speed and convenience are in our DNA.” Robert Sinclair, London City Airport CEO

AeroTime Editorial — Tue, 30 May 2023 03:00:00 +0000

London City Airport (LCY) has a reputation for being a ‘boutique airport’. Indeed, its location, right next to the Canary Wharf business district, and the constraints dictated by its relatively short runway and other operational restrictions, make its value proposition rather unique in the highly competitive London airport market.

As mid-size aircraft such as the A320 and the B737, workhorses of the airline industry, cannot land there, London City had traditionally specialized in serving regional and short-haul niche operators with a clear focus on business traffic. The airport also serves an increasing number of leisure destinations.

Passenger traffic at LCY had been steadily increasing during the decade before the COVID-19 pandemic, growing from around 2.8 million passengers in 2009 to more than 5.1 million in 2019. During this period, LCY even offered a transatlantic route to New York’s John F. Kennedy International Airport (JFK), operated by British Airways on a specially configured all-business class A319 aircraft. However, this all stopped abruptly in 2020 when the global travel industry was grounded due to the COVID-19 outbreak.

But now that passenger flows are finally bouncing back, spearheaded by leisure traffic, AeroTime has spoken to the man who has been at the helm of London City Airport since 2017, CEO Robert Sinclair.

Speaking with AeroTime’s Richard Stephenson, Sinclair provided an overview of London City Airport’s current situation and future perspectives. Sinclair also shared the key strengths that make LCY such a unique airport and explained how its operator is investing in areas of the passenger experience that will help consolidate it as a leader in excellence.

Who is Robert Sinclair?

Despite being a long-time aviation enthusiast and a pilot since the age of 16, it was a career in law, accounting and finance that brought Robert Sinclair to work in the airport industry.

Following a stint of several years as chief financial officer (CFO) at Auckland Airport (AKL), the largest international airport in his native country of New Zealand, Sinclair moved with his family to the United Kingdom in 2018 to take on the role of chief executive officer (CEO) at Bristol Airport (BRS).

In 2017, after nearly a decade in southwest England, Sinclair was offered the role of CEO at London City Airport. In this position he has not only navigated the impact and aftermath of the COVID-19 pandemic, but also continued to invest in strengthening the role of LCY as an alternative gateway to the British capital, one that is renowned for the level of convenience it offers users.

Post-pandemic

As elsewhere in the industry, the COVID-19 outbreak was a pivotal moment for the airport, which did not waste time during a period when the entire sector had been brought to a standstill. It was closed for three months, which allowed it to carry out some infrastructure work airside, a decision that proved its worth when the time came to ramp up capacity.

While the airport is still reeling from the pandemic (for example, traffic in 2021 was still less than 20% of pre-pandemic levels), Sinclair was happy to report that demand has already started to bounce back.

He claimed that he always believed in a strong comeback because of the essential role aviation plays in people’s lives. “At the peak of the pandemic there were lots of naysayers saying travel had changed forever,” he said. “They have been proven wrong, and relatively quickly, I am pleased to say.”

It is remarkable that while business traffic continues to be important for LCY and is expected to have fully recovered by the end of 2023, leisure traffic has been driving a sizeable part of the post-pandemic growth.

Aware that larger competitors in the London area are streamlining their own processes, LCY has continued to invest in strengthening those elements of the passenger experience that set it apart from its competitors.

What is unique about London City Airport?

Referring to the airport’s unique selling points, Sinclair said: “Our core DNA is speed and convenience and customer service.”

The goal, according to Sinclair, is to continue providing a stress-free, convenient and fast experience. “Speed and convenience are absolutely in our DNA, and this doesn’t happen by accident,” he noted.

“We have an incredibly detailed, methodical approach to measuring everything we do, to ensure we deliver this proposition every day, all the time. And this means so much to our customers because they know they can rely on us, they know they are going to get that service,” he explained.

Not only can passengers show up at LCY 30 minutes before their flight is due to depart, but the airport is also streamlining the security process.

While speed and convenience are critical, Sinclair also highlighted that the airport was keen to invest in what he refers to as “next level of customer service”. This includes things like how travelers feel as they transit through the airport and their interaction with security. As a result, the airport has deployed new CT scans which will allow travelers to move through security without having to unpack their belongings.

Similarly, the airport has also been investing in customer service resources. Another, less visible innovation expected to be a source of efficiency is the remotely operated digital control tower. The tower is not conducted on-site but from a remote location, with air traffic control (ATC) having access to a 360-degree high-definition view of everything that goes on around the airport.

According to Sinclair, this is a pioneering project that highlights the airport’s commitment to innovation. “This is a world first!” he said. “We are the first airport in the world of our size to have a digitally controlled remote tower.”

One field of innovation that is likely to attract most efforts – and budgets – in the coming years is sustainability.

Sinclair believes LCY is ideally placed to be a leader in sustainability and innovation. This is in great part due to the relatively smaller aircraft that the airport specializes in being more likely to incorporate some of the sustainability-enhancing technologies currently under development.

“I want to make LCY the airport people choose because of its sustainability,” Sinclair said.

Sinclair ended with a call to professionals from all backgrounds to consider a career in aviation.

“Why is this industry so amazing? We make the world a smaller place,” he said. “We connect people and there is something fundamentally rewarding about that.”

Watch the full interview here:

The post “Speed and convenience are in our DNA.” Robert Sinclair, London City Airport CEO appeared first on AeroTime.

“We’ll be number one in ancillaries.” Charles Duncan, President, Norse Atlantic

Miquel Ros — Mon, 15 May 2023 03:00:00 +0000

The North Atlantic has proven to be a hard region to crack for carriers trying to operate in a long-haul low-cost market. But Norse Atlantic Airways, a new airline headquartered in Arendal, Norway, is giving it a go.

Norse Atlantic Airways was established in 2021 and completed its first revenue flight in June 2022. The airline is one of the few examples of a long-haul, low-cost airline in Europe and, when looking at its operation and business model, it is hard not to draw comparison with other airlines, such as Norwegian, that preceded them in this market segment.

Charles Duncan joined Norse Atlantic as President in February 2023, bringing almost three decades of experience in the airline industry to the new role. Starting in revenue management at Continental Airlines, Duncan went on to take a succession of senior executive roles throughout the business, both in the United States and in the Asia-Pacific region. After Continental’s merger with United Airlines in 2010, Duncan remained at the airline where he oversaw several key commercial and operational areas.

In 2017 Duncan moved to Canada’s WestJet group, where he first held the position of EVP & President at WestJet Encore before taking on the role of EVP & Chief Strategy Officer in 2018 and finally Cargo, Strategy and M&A in 2020 until his recent move to Norse Atlantic. He also helped with the development of business units such as the group’s low-cost and regional subsidiaries.

In the latest instalment of AeroTime’s Executive Spotlight series, Duncan discusses how the airline is faring so far and what its plans are for the near future.

Duncan also shared how Norse’s executive team has learned from the airlines that attempted to bring the low-cost business model to the transatlantic market before them, and how Norse is tweaking the business model to better achieve product market fit and maximize operational efficiency while remaining faithful to the tried and tested low-cost formula.

Norse recently announced new routes between Europe and the United States, including some new destinations such as Paris and Rome, in addition to flights from Oslo, London, Gatwick and Berlin.

AeroTime asked Duncan about the current situation of the business and if there were any recent developments that he could share. While highlighting the difficulties of starting a new airline from scratch, Duncan sounded positive about the ongoing roll out and Norse Atlantic’s prospects for growth.

“We’re very much a startup airline,” Duncan said. “We announced our first routes in April 2022 and began flying in June 2022, so we’ve not yet been flying for one full year. And what’s really exciting for us right now is that we have had a lot of foundational work to get set up and established.

“There are so many complexities around traffic rights and getting the corporate setup, the operating certificate. We have two: one in the UK and one in Norway. We really spent this first year, the last 12 months, just getting organized and prepared. And what’s exciting is that we now have a full schedule, which is out for sale. It’s only been out for sale since the end February, and we have five daily flights from London Gatwick to seven destinations in the United States. We’re also flying from Oslo, we’re flying from Berlin, Rome, Paris.”

He added: “We have got all the destinations on the European side, in addition to London Gatwick, so we have a full fleet, a full slate of flying for this summer – and that’s just really exciting!

“Every day we’ve been setting records in terms of new booking volume, revenue coming in and that’s also just been very positive and very exciting for our team.”

But how is this growth translating into specific figures? AeroTime asked Duncan about Norse’s goals for the end of the year and how many passengers the airline expects to carry in 2023. Duncan is aware of the issues caused by having a ‘growth at all costs’ approach to business and focused the conversation on the simple financial goal of breaking even rather than passenger numbers.

He said: “More importantly, we have created what I call a ‘strategy on a page’. There’s a financial pillar, a people pillar, and operations and commercial and we’ve got lots of goals within that.

“The most important goal within that one-page document that we’ve shared with everyone at Norse is that for the second half of this year, July to December, we want to make $1, to break even. We have been losing money, obviously, as a startup for our first year. But we want, first and foremost, to make money to stay in business and, as part of that, we also have a goal of $500 million in top line revenue for the year.”

He continued: “The number of passengers is not top of my mind, but we’ve got really clear goals around ancillary revenue, aircraft utilization, our crew utilization, air cargo revenue, charters, you name it. And it’s just really exciting. It’s an exciting time to be part of this. This is a young airline.”

Since Norse Atlantic is a listed company in Oslo, it is possible to check its financial reports to best understand the airline’s business model. One piece of interesting information included in the startup carrier’s income statement is that ancillaries represent around one third of the Norse’s revenue. But what percentage of ancillary revenue is Norse Atlantic aiming for in the long run?

“At a rough level, in terms of our KPIs, we’ve set internally a goal of $100 per passenger in ancillary revenue,” Duncan explained. “So, ultimately, whether that’s one third or how that shakes out, we will see.”

He continued: “I was at an investor conference earlier this week and the CEO of Frontier Airlines was touting in his presentation that they’re achieving right now $82 per passenger, and they’re number one globally and their goal for this year is $85 [per passenger].

“Now, it’s a bit different [with] long-haul versus short haul and so forth. But if we achieve our goal of $100, and I believe we will, that means we’ll be number one in the world in terms of ancillary per passenger and that’s exciting for us as well.”

He added: “It’s very easy to have a low entry-level fare but for the long-haul, low-cost model to work, we really do need to have interesting products, seat bags, onboard food, and so on, and collect the ancillary revenue.”

At this point in the interview, we took a step back to talk about the product Norse Atlantic is currently offering. Basically, it’s a two-class offering: with both “economy” and “premium” cabins. AeroTime asked Duncan about the features of both and whether it would be accurate to call the latter a premium economy product.

“We’re actually going to be calling it ‘Norse Premium’. We’ve had a lot of internal debate around that. It’s a fantastic product, 56 seats in our premium class,” Duncan revealed. “It’s a 2-3-2 configuration and these have a generous pitch, fantastic recline, [and] leg rest. It’s not a flatbed seat, very much in keeping with our long-haul low-cost aspirations, but it’s very good.

“Upselling that premium seat is part of our ancillary strategy as well, and our airport teams have been very successful in selling that upgrade for us”

But more about the premium product. The seat is, of course, better with more space but what else would a passenger in North Premium be offered compared to someone flying on a regular economy fare? Would it be the food? The in-flight entertainment (IFE)?

“There’s IFE in both cabins,” Duncan explained. “The primary difference would be really around food and space and the experience. We’re trying to stick with the à-la-carte aspects of the model.

“So even within Premium, we do have two price points, one with checked bags, one without. And we’re also providing lounges as an à-la-carte fee as well. So even for Premium we give people the choice to pick and choose which services they want.”

Next, we moved onto the topic of fleet development. While we asked Duncan to clarify how many aircraft were currently available to Norse Atlantic, the answer was far from straightforward.

“Let me explain because it’s a little bit complicated,” Duncan said, “We have 15 aircraft in total. They are 12 787-9s and three 787-8s.”

But have all 15 been delivered? Duncan confirmed that they had. 15 were delivered, five of which have already been dry leased to another airline for a one-year term.

Norse has 10 aircraft available for its own operations during the summer season, and all are B787–9s.

“So, if you go and look at our flight schedules, and I’m sure some of your readers can do this quite easily, you’ll actually find nine lines of flight that are out for sale, and we’re keeping one aircraft back as a spare just to help ensure operational resilience,” Duncan added.

Most of these aircraft are 787s previously operated by Norwegian and now leased by Norse.

AeroTime asked Duncan whether the COVID-19 pandemic, rather than being a deterring factor when launching a new airline, may have facilitated the obtention of better lease rates than would have otherwise been possible?

“There is no question about that and in fact, our founder, our CEO, Bjorn Tore Larsen, had this idea that the lease rates being offered had never been seen before,” Duncan said. “We got very attractive pricing, because we were able to opportunistically sign the leases at the bottom of the market when no one else wanted these aircraft, and they’re on long term lease. We believe that helps to create a permanent structural advantage for us around cost.

“We believe this summer and for years to come we will be the lowest unit cost operator across the Atlantic and part of that is the low aircraft leases.

“But in addition to that, we’re focusing really hard on crew efficiency and just overall costs, aircraft utilization and so forth, to ensure that we have a cost advantage and maintain that, and we think that will help ensure our success competitively.”

He continued: “If we are the lowest cost provider that will allow us to offer the lowest fares and still make a profit and be able to not only survive but thrive in what is a very competitive industry. That’s the one thing I’ve learned in my almost 30 years in the business is how competitive it is. But if you have the lowest costs that sets you up best for success.”

Norse appears to be following the Norwegian playbook when it comes to long-haul operations, but its network is still far from the size and scope of Norwegian. At its peak Norwegian was flying from several cities that are not currently included in Norse’s network, such as Stockholm, Barcelona, and Copenhagen.

AeroTime asked Duncan whether there are any prospects for Norse to include these cities as its next long-haul base? In this regard, Duncan was keen to differentiate the current project from Norwegian’s.

“I did not work for Norwegian Airlines, so I don’t have that history. We are very much a different company, very separate and distinct,” Duncan said. “It is true that most, if not all, of our aircraft came from the last orders placed by Norwegian. But we are very much doing our own thing.

“We want to be the first successful low-cost, long-haul carrier. We want to have a single fleet type and have very high utilization of the aircraft and be very efficient with our crew scheduling, and I don’t think Norwegian did many of those things.”

He added: “We also want to be very careful and deliberate in terms of our growth strategy, not to grow too much, too fast. We don’t want to be too complex with too many crew bases.

“There are many lessons that we can learn not only from Norwegian, but from all other low-cost, long-haul carriers who maybe have not been as successful in the past.”

For now, Norse Atlantic’s management is prioritizing the consolidation of its position at its current bases, particularly after a winter season that Duncan said was quite tough. Interestingly, it is the need to escape the ‘winter blues’ that may take Norse to some new – and rather unexpected – destinations.

“So, I think we are very happy with the cities we have right now. Our schedule for the summer is out for sale, the next step in our evolution,” Duncan said. “And you made reference to our financial reports. We are not satisfied with our performance in the current winter, the winter that has just ended. There are a lot of reasons for it. We were a startup, and we didn’t have all the traffic rights we wanted and so forth.”

“There were really two faults, I won’t call them mistakes, but two big faults,” he continued. “The first one is that we announced our schedule much too late, and we were very close to travel time. But we didn’t have the benefit of a wide, long booking curve.

“So, we want to get our current coming winter out for sale much earlier. The other change we want to make is much less cold to cold. Think of Oslo to JFK or Berlin to JFK. Those are very difficult markets in the winter months. We want to do less of that flying and do a lot more flying to warm sun destinations, whether they’re in the US, the Caribbean, maybe Mexico, we want to fly to markets like this from European points, from Europe, from the UK.”

He added: “We will be announcing even towards the end of March and through April, our planned flying for the coming winter and getting those out for sale. I’m actually very excited about that. It’ll be our first time with 10 airplanes in this new philosophy and strategy to be flying between cold European destinations and warm winter sun destinations. So that will be a big transformation.”

On May 3, 2023, shortly after the interview took place, Norse Atlantic Airways announced the launch of new routes from London-Gatwick Airport (LGW) to Barbados (BGI), Kingston (KIN) and Montego Bay (MBG), as well as from Oslo (OSL) to Bangkok (BKK) – editor’s note.

In the interview Duncan confirmed that the next significant step had been scheduled for summer 2024 when the airline plans to grow its fleet by taking delivery of the remaining five aircraft currently leased to another operator.

He continued: “We will be growing. I don’t know if we’ll add any more destinations or not. I see lots of opportunity to connect existing dots in our network. For example, we are flying from Paris to JFK daily from the end of March, and we’re very excited about Paris and this opportunity. Maybe next year, by next summer, we will fly Paris to JFK and Paris to somewhere else in the US, as an example. So, I think there’s room to thicken the routes.

“I love the idea of flying some routes more than daily and that can allow us to get a bigger presence in cities without being spread too thin. And I think [it] also helps us keep our costs low and build a following.

“I think that may have been one of our lessons, or distinction, from Norwegian. That history of being spread in many, many different places.”

He added: “So, stay tuned, we’ll see. But the most important goal for us is to make money. And we are unapologetic about that. And, again, our goal this year is for the second half of 2023 to make $1. If we do that, we’ll be happy.”

Norse has also entered into partnerships with several airlines. Passengers can now book itineraries combining flights flown by Norse with those operated by other low-cost carriers such as easyJet, Spirit Airlines and Vueling. These can be booked via a software platform developed by Icelandic company, Dohop, which allows independent and low-cost airlines to offer combine itineraries and connecting flights without an interline agreement.

But what is the importance of these partnerships when it comes to feeding Norse’s long-haul operations?

“I would say they’re important,” Duncan said. “We’re excited about that volume. What’s great about Dohop is that we are able to expand our reach, our network without the costs and complexity of traditional codeshare and interline relationships. It still looks to us like two different tickets, two reservations, and Dohop helps facilitate the connection and even provide travel insurance. So, it’s actually fantastic for us.

“As an example, one of our largest markets is JFK to Copenhagen. We don’t serve Copenhagen, but we do serve JFK and we have connections via both Oslo and London Gatwick. And so, through Dohop we can work with partners like Norwegian and easyJet for the short haul to get people to Copenhagen.”

He continued: “I would say it’s important, but it’s not critical to our success. We’re focused on our point-to-point demand and filling our airplanes, but I would sort of think of it like the gravy or the cream. The extra bit on top that helps to make a route more successful.”

While the low-cost, long-haul model has had some success in Asia, the North Atlantic market has been resistant to those attempting to introduce the business model and the entry of low-cost players. AeroTime asked Duncan what he would attribute this difficulty to? Why is it difficult to expand the low-cost model to the long-haul segment? And why does he think that this time will be any different?

“What we are doing is not easy and we are under no illusion that this is going to be an easy path to take,” Duncan explained. “But I do believe we’ve got the building blocks, the right foundation, to be successful and I wouldn’t have joined the company otherwise. I’m actually quite excited about the opportunity and the possibility. But that’s not to say it’s going to be easy. And that’s part of the attraction as well.”

He said: “I think each geography is different. If I think about the North Atlantic, I think the reason we’ve had challenges as an industry, why anyone hasn’t been successful up to this point, is the challenge of the winter. The summer is relatively easy. There’s a very, very strong demand. Everybody makes money in the summer, and then most carriers lose money in the winter.

“It becomes a question then of how much are you losing? Is your winter loss larger than your summer profit or not? So, this is why we are thinking very differently about the coming winter. In pursuing a sun strategy, we’re going to be really changing our network quite a lot, east to west, if you will, across the Atlantic between North America and Europe for the summer, and then very much pointing south and towards some destinations in the winter.”

“I think that that piece is a bit unique,” he continued. “We’ve not seen other carriers do that and change the network so much and what’s interesting is it’s very similar to what we did it at my former airline WestJet, in Canada, where there is the same seasonal dynamic, and the network shifts quite a lot between winter and summer. We’ll be trying that out and pursuing that strategy.

“But I think that there’s always a demand for air travel. It’s important for us to fly also between existing markets that are quite large and to provide a competitive offering.”

Duncan added: “It’s a wonderful product, and we’re able to provide it by keeping the lowest cost base and offering the best fares we can provide and, hopefully, we will also be able to stimulate and grow the market at the same time. And all that’s exciting to me, so I believe there is a path here for us to be successful.

“The whole team at Norse knows what a challenge it is, and I think that’s also how we think of ourselves, as being disruptors. We’re motivated by that challenge.”

With the ever-increasing range of single aisle aircraft such as the Airbus A321LR and XLR, as well as the Boeing 737 MAX with extended range, we are witnessing some low-cost carriers in Europe operating longer and longer segments. Could long-haul, low-cost become more mainstream in just a few years’ time and could it attract more competition?

AeroTime asked Duncan about his views regarding the future of the long-haul, low-cost market, whether he sees other carriers attempting to follow Norse along this path, and how this might affect a wide-body aircraft operator such as Norse Atlantic?

“The one constant in our industry has been the evolution of technology and aircraft and range and so forth. I think we’re going to continue to see evolution and new business models,” Duncan said.

“I think the XLR [Airbus A321 XLR – ed. note] is a fantastic airplane and has fantastic range, and we’ve been seeing some B737NGs flying across the Atlantic for a number of years and [also] some Airbus operators [flying] the neo. So, I think we’ll continue to see some of that service.

“There’s no question the wide-body product is superior in terms of comfort and so on, with twin aisles, access to lavatories and so forth. So, I think we [will] get a bit of a marketing benefit from that.”

He continued: “The other really big benefit that we get as a wide-body operator, as a 787 operator, over narrow-body [aircraft] is cargo, and cargo is a huge part of our overall offering. And as we are flying to JFK and other big markets these are also big cargo markets and can in some ways help to make a route sustainable for the full year when passenger demand is a little bit weaker. In a narrow-body aircraft, there’s no room for a ULD, a cargo container, they don’t have the payload or the volume to carry cargo.

“There’s probably room for both types [of aircraft] and what we’ve begun to see on the LR [is] service to secondary airports, Stewart for New York or Hamilton, and these are fine airports but they’re not the city center airports.”

He added: “So, I think that we’ll all pursue our different models, and competition is good. We’ll let the consumer choose ultimately what they want to do and how they want to travel.”

Duncan could not be clearer regarding this point. For the foreseeable future Norse Atlantic will remain committed to operating at large airports and this will apply to both sides of the Atlantic.

“We have 282 seats in economy class and 56 seats in our Norse Premium product,” Duncan said. “It’s a lot of seats to fill and it’s very, very challenging to do that from secondary airports. That’s why we operate at airports like [Rome] Fiumicino, [Paris] Charles de Gaulle, JFK, Boston. Maybe we’ll review this over time when our name and our brand are better known, and we have a bigger customer following.

“Secondary and tertiary airports are very challenging with a wide-body aircraft. I think with a narrow-body, it’s a different story.”

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Gatwick’s growth trajectory: CEO Stewart Wingate’s vision for expansion

AeroTime Editorial — Sat, 29 Apr 2023 08:00:00 +0000

London-Gatwick Airport (LGW) is the second largest airport in the United Kingdom and the world’s busiest single-runway airport.

Traditionally overshadowed by the larger and more congested London-Heathrow Airport (LHR), Gatwick underwent radical changes in the decade that followed its sale in 2009 to Global Infrastructure Partners (GIP) (the firm that has since sold a majority stake to VINCI Airports), and until the outbreak of the COVID-19 pandemic.

Following a massive investment program, London Gatwick has not only improved service standards, but also serves a diverse mix of airlines and destinations.

The 15 million people living within an hour of its two terminals and its excellent rail and road connections have made Gatwick the airport of choice for many carriers looking to establish or ramp up their presence in the London market.

In an exclusive interview with AeroTime, Gatwick Airport’s CEO, Stewart Wingate, talked about his tenure as the head of the airport during this eventful and transformative period. He also shared his views about the challenges and opportunities LGW continues to experience as it recovers to pre-COVID traffic levels and returns to the growth trajectory that led it to become one of Europe’s leading airports.

Who is Stewart Wingate?

Wingate began his professional career outside the aviation industry, as an executive at toolmaker Black & Decker. But it was a friend’s suggestion nearly two decades ago that led him to apply for a managerial role at Glasgow Airport (GLA).

His time at the Scottish airport was followed by stints as managing director at Budapest and Stansted airports and his appointment as the CEO of Gatwick Airport, a post he has held since 2009.

Today Wingate is one of the most experienced executives at the helm of any major European airport.

Making Gatwick a world-class airport

Wingate landed his role at Gatwick shortly after the change of ownership that followed a decision by the UK’s competition authority to force airport operator BAA to divest from several of its assets.

One of the first tasks that the airport’s new managers set for themselves was to change a number of known issues, such as inefficient and slow security procedures, that had been hindering the airport’s performance and its image among the public and airlines.

Reflecting on those times, Wingate said: “We took the reputation of Gatwick from probably being one of the poorest airports to travel through in terms of the passenger screening experience to, in very short order, probably one of the best in in Europe.”

Dealing with COVID-19 aftershocks

The number of passengers at Gatwick climbed from just over 30 million in 2009 to more than 46 million in 2019. This more than 40% increase was driven by the growth of low-cost and hybrid airlines and the establishment of new long-haul links to regions such as North America and the Middle East.

Then COVID struck in early 2020, a shock from which Gatwick has not yet fully recovered.

“We’re serving practically all of the destinations from a short-haul perspective that we served before the pandemic,” Wingate claimed. “And I expected that probably the area where there was a little bit more concern and doubt was on the recovery of the long-haul routes.”

Wingate added that the airport has only recovered to 70% of the total traffic volume, with the busiest month seeing around 90%. “So, we [have] still got a little way to go before we get back to the pre-pandemic volumes,” he said.

Growth opportunities at LGW

Wingate was adamant that interest from the airlines is not lacking, with most of the pre-pandemic operators flocking back to Gatwick as soon as circumstances allowed.

He highlighted the commitment of easyJet, the airport’s largest operator, as well as British Airways, which has been adding back flights, and Wizz Air, which had already earmarked Gatwick as a growth opportunity before the pandemic.

Looking at the long-haul market, he pointed to the return of Gulf carriers, such as Emirates and Qatar Airways, the launch of the first nonstop routes to India, the arrival of JetBlue and the fact that Norse Atlantic Airways has partly filled the gap left by Norwegian’s withdrawal from the long-haul segment.

Wingate said: “As we started to recover from the pandemic, we saw a number of airlines grow and a number of new entrants into Gatwick emerge.”

COVID aside, the long-term upward trend in passenger numbers has been backed by considerable investment in infrastructure, including rail connectivity. But how much more can Gatwick grow before running into capacity issues?

“I think it’s incredibly important that we have growth plans,” Wingate said. “And we’re very fortunate that we have two pathways to growth that we publicly consulted on in our master plan back in 2019. The first one is all about investing in the current runway to incrementally increase the peak hourly movements from 55, which is where they currently stand, to 60 movements per hour.”

A little-known fact about Gatwick is that it does have a second runway, although it is not used due to its close proximity to the main runway. Could this underused asset be a vector for further capacity expansion? Wingate sounded optimistic when talking about this matter.

“The second pathway for growth is to routinely use our existing standby runway. This is a program of works that we started back in 2017,” Wingate said. “And we now have an approach which has been designated as being safe and meeting the highest safety standards by the CAA.

“We’re in the final stages in preparing our plans, which will be submitted to the Planning Inspectorate. We’re going through what’s called a Development Consent Order, because this needs to be scrutinized by the Planning Inspectorate.”

Wingate believes there is room to “progressively grow” to up to 80 million passengers per year if these capacity improvements go ahead. But is this growth compatible with sustainability commitments and the path to achieving net zero?

Wingate was also adamant about the capability of the industry to deliver on this front. Concerning the airport’s own operations, the pledge is to bring forward the airport’s commitment to reach net zero carbon by a decade.

“As we now move into the second decade of change, increasingly, we’re working on this agenda,” he said. “We’re now taking forward plans to work with our airlines to, for example, introduce SAF [sustainable aviation fuel] into the fueling of the fleet, which I think is incredibly exciting in this current decade.

“Hopefully, the following step will be electric planes or hydrogen planes. I think that’s really, really important. But we’re also looking at an airport, ourselves and our emissions. So, we’re really pleased that we’ve now accelerated our commitment to get to net zero by 2030. Previously, we were targeting to get to net zero by 2040. That’s a 10-year acceleration. And I think there’s no bigger statement that we could make at this particular junction than to do that and take a leadership position on emissions.”

Wingate concluded the interview by making a passionate appeal to young people from all backgrounds to consider a career in the airport industry.

“You can be the pilot, you can be the air crew, you can be the ground handling crew. You can also work for the airport planning, or regulation, or finance or retail or property. You can work in the Border Force, you can work in the police force, you can work in our fire service on our airfield ops areas, or even on our surface access areas. There’s just so many different roles, which are really important in their own right, but all interlink and play together to ensure that passengers have a safe and a secure and good experience as they travel through the airport.

“So certainly, from my perspective, I wouldn’t hesitate in recommending [that] young people take a look at the airport or airports or the companies that operate here, because it is quite a unique place to work.”

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Executive Spotlight: “We are an airline of the future.” Wizz Air CEO, Jozsef Váradi

Miquel Ros — Mon, 10 Apr 2023 03:00:00 +0000

Ruthless cost discipline and a single-minded focus on growth are two key elements of Wizz Air’s recipe for success. From its original base in Central and Eastern Europe, the purple ultra-low-cost airline is spreading its wings not just across the whole of Europe, but also into new geographies such as the Middle East.

The architect of Wizz Air’s successful formula, its CEO József Váradi, does not give interviews often. However, he made an exception for AeroTime and we flew to Budapest, Hungary – on Wizz Air, of course – for an in-depth interview with one of the international airline industry’s key figures.

Watch our video interview with Váradi discusses a broad range of topics, from the post-COVID recovery and the perspectives for future growth and market consolidation in Europe, how it compares with arch-rival Ryanair, and Wizz Air’s commitment to its already ongoing expansion in the Middle East and beyond.

We also talk about Wizz Air’s ambitious plans to increase its fleet to 500 aircraft and to reach 170 million annual passengers before the end of this decade. We also touch upon other relevant topics such as the airline’s approach to ancillaries, inflight product and the airline’s approach to sustainability.

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“The side that adapts fastest prevails” Sir Richard Knighton, the UK’s next Air Chief

Richard Stephenson — Mon, 03 Apr 2023 06:23:49 +0000

In an exclusive interview, AeroTime Chairman and Editor-in-Chief, Richard Stephenson, met Air Marshal Sir Richard Knighton, who has been named as the United Kingdom’s next Chief of the Air Staff (CAS) – he will become the first engineer to ever hold the post. In the first interview to be published since the announcement of his new appointment, Air Marshal Knighton discussed topics such as projecting power globally, the role of airpower, the importance of a modern Royal Air Force, the strong relationship it maintains with allies, the importance of the next generation of personnel and key technological areas that will enhance operations and capabilities.

WATCH THE INTERVIEW HERE:

Who is Sir Richard Knighton?

Air Marshal Sir Richard Knighton joined the Royal Air Force (RAF) in 1988 as a University Cadet and studied at Clare College Cambridge. He then went on to work on several iconic RAF aircraft, including the Panavia Tornado combat aircraft, the British Aerospace Harrier jump jet, and the Hawker Siddeley Nimrod maritime patrol aircraft.

The Air Marshal’s experience and knowledge spans many areas of the RAF, including logistics, finance, strategy, and planning. He has held a range of senior positions throughout his career.

In 2014, Sir Rich (as he is known to most people) set up and led the Future Combat Air System (FCAS) program, a joint project between Britain’s BAE Systems and France’s Dassault Aviation to develop a fighter drone. The program was to rely on two demonstrators previously developed by each manufacturer, the Dassault nEUROn and the BAE Systems Taranis.

He was appointed as Assistant Chief of the Air Staff in 2015, and in 2017 he became Assistant Chief of Defence Staff (Capability and Force Design). In 2019 he was promoted to Air Marshal and appointed Deputy Chief of the Defence Staff (Military Capability). In 2022, he became Deputy Commander for Capability and People and on Friday 31 March 2023, he was announced as the next Chief of the Air Staff, a role he will officially commence in June 2023.

As a young boy, Rich Knighton remembers that what really captured his imagination was space. The Space Shuttle Program, which was gathering pace as he became a teenager, only reinforced his fascination for the physics and engineering of aerospace.

“At some point in my early teens, I knew I was going to join the Air Force as an engineer, partly because my eyesight started to deteriorate when I was 12, so I knew I was never going to be a pilot.

“I have a pilot’s license, which I obtained through a scholarship when I was at university, and I still fly regularly.”

He added: “Sometimes, when I go flying at an airfield or when I have to walk out onto the apron to board a 737, I can smell the aviation fuel, and it takes me back to my first tour at RAF Kinloss, seeing a jet take off to hunt Russian submarines in the early hours of the morning.”

As Sir Rich prepares to assume his new role later this year, as the first engineer to ever serve in the top role at the Royal Air Force, he has been spurred to contemplate the complex challenges confronting the RAF at present, particularly how to get the most out of recent investments.

“The Air Force we have today is the most modern in terms of kit and capability throughout my career. We are currently operating F-35, Typhoon, Voyager, A400, and other aircraft that are at the leading edge of capability and technology,” he said. “However, this investment is coming to an end, and the Air Force we have today is the Air Force we will have for the next 5-10 years.

“On the horizon is the Future Combat Air System or the Global Combat Air Program with Italy and Japan, which is an exciting prospect for the future of aerospace and the Air Force. Our challenge now is to continue to evolve and develop this capability because technology has rapidly progressed over the last 20 years. We must find a way to extract the benefits from private sector inventions, such as artificial intelligence, digital tools, and miniaturization, and integrate them rapidly into our capability, to keep up with our adversaries.”

“The quality of people and training we have remains world-class.”

Another specific challenge ahead is the capability of the RAF to continue to recruit and retain the people needed to deliver that capability in the future.

“Despite recruitment headwinds, we are still able to recruit high-quality people into the Air Force, and we keep hold of them through good infrastructure and terms and conditions of service. The quality of people and training we have remains world-class.”

“We are still going to need people to fix our aircraft, to prepare our logistics and supply and to do all the things that are necessary to get our aircraft in the air and deliver that air power, ” he continued. “But increasingly, we’re going to need to operate in a more agile fashion. We’ve become very heavily focused around a small number of bases. What we know is, in the future, we’re going to have to be able to move around, and that’s going to be essential for survival. So, we need people with those skills. We’re going to have to relearn some of the things that we knew about the Air Force in the ’80s and the ’90s.”

In 2021, the current CAS, Air Chief Marshal Sir Mike Wigston, announced he wanted to revive Cold War strategies with the AGILE STANCE Campaign Plan, a series of exercises to prepare the RAF to conduct dispersed operations.

Dispersed operations allow an air force in wartime to complicate enemy targeting by multiplying operating locations, using civilian airfields or improvised road bases. With the looming return of high intensity warfare, the concept found renewed interest in the doctrines of western armed forces.

“We’ve got to offer people exciting opportunities that they can’t get working for Google or for Microsoft”

Sir Rich also highlighted the need to bring in “new skills” to the Air Force. “People who can program, people who understand some of that digital technology, understand cyberspace, and are able to understand space and are able to make sure that we are extracting the maximum value out of the investment we’ve already made and exploiting that technology that’s emerging.

“We’ve got to offer people exciting opportunities that they can’t get working for Google or for Microsoft or for a local garage. And I think we still offer those things. We offer the opportunity to do things you can’t do elsewhere. And we offer a wider set of opportunities around the camaraderie, the spirit, and the community that we join. And, as you say, some of the adverts we see today really focus on that and demonstrate that these people from all backgrounds, like mine, are fundamental to delivering power of the future and protecting the country.”

In 2021, the UK Integrated Review emphasized the importance of the armed forces in projecting power and maintaining stability globally. The RAF’s unique ability to move rapidly and project force around the world to bring stability was highlighted.

“Air power and air superiority are fundamental to success, and the ability to adapt quickly is vital. The side that can adapt fastest will prevail,” Air Marshal Knighton explained. “To achieve this, we need an agile mindset, creativity, and education in our people. We need to focus on adapting what we have to stay ahead of potential enemies in the next few years.

“Airpower is crucial in protecting the country’s interests and was highlighted in the situation in Ukraine. We need to be ready to fight and win and control the air to deliver effective operations, integrated with land and maritime forces.”

“The fact that like-minded nations are able to lock shields […] is something that our allies value most and which our foes fear”

Another core value for the RAF is the strong relationship with its allies, including NATO, and the joint operations it conducts across the globe.

Sir Rich explained, “The fact that like-minded nations are able to link arms and lock shields, if you like, and be prepared to face down aggression in the world is something that our allies value most and which our foes fear. Particularly in terms of NATO, the alliance has really demonstrated its strength and unity through the last year and a bit since Russia invaded Ukraine. It really demonstrated the importance of alliances and the value that it adds in terms of bringing stability and really facing down an existential threat to NATO and to our allies inside NATO. The health of that relationship is really strong.”

“Right now, we’ve got British and German Typhoons operating out of Estonia as part of NATO Baltic Air Policing, demonstrating to allies in the east that we are all part of this alliance and that we are prepared to put our armed forces in harm’s way to protect them. I think that’s a really good indicator of the strength of that relationship and the commitment that the UK and our allies have to stability in Europe.”

Air Marshal Knighton believes there are three main technological areas that will significantly impact the RAF’s operational outlook and enhance capability as a result of investing in these platforms.

“First of those is around uncrewed systems or robotic and automated systems. And I expect to see in the next 10 to 15 years the Air Force operating crewed aircraft alongside uncrewed aircraft. And that’s how we’ll improve survivability and lethality.

“We’ll see increasing use of simulators and synthetic devices. There are some things we just can’t do with some of our aircraft today, like the F-35, outside of war and outside of the simulator, because it would tell our adversaries too much about those techniques and processes and the capability.

“The third technology is digital. It’s about how we exploit the amazing development of artificial intelligence to help us make sense of vast amounts of data on the battlefield, and to help us make faster and better decisions and being able to outthink and outmaneuver our adversary. So, in terms of capability, it is going to be how do we make what we have even better by the exploitation of technology, use of automated systems, use of simulators and digital.”

As the new Air Chief Marshall and Chief of the Air Staff, Sir Rich Knighton will inherit an Air Force that has not been short on challenges in recent years. However, anyone who knows him, and especially those who have worked with him in the past, will undoubtedly welcome his appointment.

A senior figure in the UK aviation industry told AeroTime, “Rich is razor sharp, one of the biggest intellects I have ever worked with and the one of the nicest, most supportive colleagues you could ever wish for. His ability to get to grips with the most technical and complex issues is extraordinary and he is the kind of colleague you want around the table when you have a crisis to manage. His leadership skills were identified early on in his RAF career and the Air Force could not be in better hands in the future. I am delighted that Rich has broken the barrier to non-pilots become CAS, but if anyone was ever going to break that, it was Rich Knighton.”

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Executive Spotlight: “We are ready now to restart long-haul flying.” SAA CEO, John Lamola

Andreas Spaeth — Wed, 22 Mar 2023 04:00:00 +0000

South African Airways was once an iconic national carrier, with a history that reached as far back as 1929. However, the last decades were marred by corruption, political interference, and mismanagement. Until 2020 the airline amassed the equivalent of €6 billion in debt and was placed into business rescue, the South African version of US chapter 11 bankruptcy protection, in December 2019.

Even before the global pandemic grounded aviation, the situation at SAA became so dire that the airline stopped flying four of its remaining long-haul routes and much of its domestic and regional network in February 2020, briefly continuing to just London and Frankfurt, before an extremely strict lockdown hit South Africa. In September 2020, operations were suspended. After a year, a re-incarnation of SAA restarted on a very low level from September 2021.

In April 2022, it was announced that the airline would be welcoming a new CEO, with John Lamola, who is also an Associate Professor of Philosophy of Technology at the University of Johannesburg, taking the helm. Lamola has previously worked as CEO for Denel Aviation and served on the board of Airports Company South Africa (ACSA).

In an interview for AeroTime, aviation journalist Andreas Spaeth talks to Professor Lamola about developments at South African Airways and its plans for the future.

Andreas Spaeth: SAA returned in September 2021 on a new, much smaller scale. Do you still believe you have the status of a national carrier?

John Lamola: By law of what is called “the South African act”, SAA has been established as the national carrier, with responsibility for passengers and cargo. Until that act is repealed, SAA has a special status. The only thing that has changed compared to before is the financing challenges of the airline. We had to take a decision that the state is no longer going to capitalize the airline, because there are other priorities for the government. The decision was taken to have a strategic equity partner, merely to assist with the working capital and technical expertise to broaden SAA. [The private partner is the Takatso Consortium, their investment hasn’t materialized as of yet – ed. note]. The name remains, the government remains as a 49% shareholder, maybe taking even more, depending on how things turn out.

Spaeth: Is that progress, compared to the situation before the shutdown?

Lamola: All of us agree that we need an airline that is not encumbered in political and governmental processes. It has to be privatized in terms of how it works, but in a corporate structure of the national carrier.

Spaeth: How much of the old SAA remains?

Lamola: We have reduced our staff to a third of the earlier levels throughout the entire group. We now employ about 2000, versus 6000 before, including SAA Technical and the catering unit. The airline itself is at 20% of former staff levels. Our aim is not to rebuild the old SAA that was flying 54 very expensive aircraft. We’d rather operate as a mid-size airline that takes decisions under commercial considerations, not political ones. We are not going to be told by a minister “fly to Beijing”, or anywhere else.

Spaeth: How did the airline perform since re-establishing operations?

Lamola: Since SAA restarted in September 2021, it has been operationally successful and also financially. In the last quarter of 2022, SAA was profitable. SAA is no longer even technically insolvent, we are producing cash, we are within our cost parameters, and we are doing well, more than what was expected before. [SAA has been allocated the equivalent of €52 million from the 2023 state budget to cover costs – ed. note.]

Spaeth: What does the current SAA fleet consist of?

Lamola: We have one A319, from the three we originally had, and it’s going to be replaced by another A320. Overall, we have six narrow-bodies right now and it will be seven A320s. Our strategy is to take former SAA aircraft, because it’s easier for us. We go to the lessors and negotiate. Taking such airplanes helps us because there is product uniformity.

Overall, we have nine aircraft, including the two wide-bodies, an A340-300 and an A330-300, and [will be] getting a second A330 before the end of May. It will be a sister ship of our current A330. As a state-owned public enterprise, we now have an approval from the minister to acquire six additional aircraft. They will be five additional A320s and one additional wide-body. That’s where the story of the return of the A350 started.

Vidit Luthra / Shutterstock.com

Spaeth: What’s your aircraft strategy for restarting long-haul operations?

Lamola: Fact is that we are the national carrier and, as such, we have an obligation for long-haul airlift capability in South Africa. SAA is the only airline in South Africa that flies wide-bodies. We will restart long-haul operations with our A330s. We then want to retake some of our former A350s currently stored in France. They have been offered to us. We have lessors knocking on our door every day. We said no so far, as we undertake our route studies. But the plan is to retake two A350s and maybe move to the third.

There is a danger, however, of over-emphasizing the A350s for the sake of uniformity of our fleet. But we also have very strong propositions from Boeing, and we are in a major strategic partnership with Kenya Airways, and they fly 787s, so we have to also look for such synergies as well.

Spaeth: Which long-haul routes do you plan to serve?

Lamola: We have been under a lot of pressure to restart our routes to London and the United States by our customers. We have a loyalty program with members who can’t spend their miles, because we don’t have enough international routes. In the United States it’s also a regulatory issue, if you don’t fly for 12 months, you lose your route rights. So, every 12 months we have to plead with the US Department of Transportation to allow us more time. In Heathrow we still have four daily slots that we have leased out, making money for us, two each in the morning and in the evening.

Spaeth: So where will you go first and when?

Lamola: We are ready now to start. From July or August, we will begin to sell flights again to either Sao Paulo or Perth and start operating maybe a month later. The destinations are picked based on empirical research, but, of course, the market changes every few months.

Spaeth: What about returning to Frankfurt?

Lamola: Not at first. We have a relationship with Lufthansa that works very well in Star Alliance, therefore we might also choose to go to Munich. It will be either Munich or Frankfurt. There are indications we might fly from Cape Town to Munich, as Lufthansa is full every day, so that’s what we are looking at. Learning from SAA’s mistake long ago of pulling long-haul flights out of Cape Town, we will go from there to Europe directly from 2026 or earlier.

Spaeth: How will you proceed in fleet development? And how will it be financed?

Lamola: As part of our five-pillar strategy, we have one part called balance sheet value extraction, where we go into the existing assets of SAA. It owns a lot of properties; the plan is to leverage all of that. So, we act on our new fleet strategy. We have been in discussions with Airbus and Boeing. I just came back from Seattle where we sat down to look at the future of the broader SAA fleet.

By 2025, SAA will be a mid-size airline flying about 30 aircraft. We have to look at a market and then we put aircraft there. Not doing that was one of the mistakes of the old SAA. There was no proper empirical research taken on route selection. It was more a capital-driven airline, that’s why SAA bought a huge number of aircraft for billions of dollars. The trigger of the airline industry is that the barriers of entry are low, but the barriers to exit are very high.

Spaeth: SAA currently has a limited domestic and regional network. Will that change?

Lamola: We serve Cape Town and Durban from Johannesburg, and we don’t want to do more, other than also start serving Port Elizabeth. For that we will operate an extra A320 on an ACMI basis. In Africa we currently serve 10 destinations from Accra to Mauritius. That’s good for us, we are targeting high-value, high-volume regional routes. And we will expand. The traffic flows and the market makes sense. The yields in the regional traffic are good so we can make money. But as our domestic routes from Cape Town work so well, we have delayed starting some regional routes and put our metal there.

Spaeth: You have an unusual dual leadership role at SAA how did that come about and is it practical?

Lamola: I was appointed as non-executive chairman in July 2021, with the specific mandate to act in the combination of chairman and CEO. As chairman I have the power of the board and a direct line with the minister of public enterprises. The decision of establishing a new SAA needed this combination, so I am doing that. It has worked. I wish it could be done elsewhere, then we would have less problems. But it depends on the character and the personality of a person holding such a combination of posts. There is a situation where there is an abuse of power, but if you have the consciousness of how to do it, to know when I am the CEO and I don’t abuse my fellow directors and to be able to command respect. My industry knowledge comes from having been CEO of the defence company Denel before, trying to bring their capabilities into civil aviation. 20 years ago, I was also a consultant to SAA.

Spaeth: SAA has seen so many interim and acting CEOs in recent history, changing constantly. Do you plan to stay on longer?

Lamola: I’ve been in my post now for more than one and a half years and I intend to remain there for some time, until SAA has been rebuilt and is going to be great again. But it will be a different SAA.

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Executive Spotlight: “We can go a long way.” Breeze Airways founder David Neeleman

Miquel Ros — Wed, 15 Mar 2023 09:00:00 +0000

David Neeleman is one of the most prolific and successful entrepreneurs in the aviation industry.

Starting in the 1980s with the creation of Morris Air, a regional carrier that was later acquired by Southwest Airlines, Neeleman is not only the founder of five different airlines but has also shaped the future of the industry by innovating with business models and product concepts.

In addition to Morris Air, WestJet in Canada, JetBlue in the US, and Azul in Brazil all bear the hallmark of David Neeleman, who has also previously been an investor in two other airlines, Portuguese flag carrier TAP and French carrier Aigle Azur.

His latest venture is Breeze Airways. Launched in 2021, Breeze is opening up new markets to air travel in the United States, by connecting small and medium-sized airports that, until now, lacked nonstop air service.

As was the case with his previous ventures, Neeleman seems to have an ability to deliver a product that is superior to existing alternatives at an affordable price.

What is his secret? In the latest instalment of our Executive Spotlight series, AeroTime spoke to Neeleman to try and find out exactly that.

[Audio snippets are selected fragments of our conversation with David Neeleman – ed. note]

I know you’re a very busy man. So, we’ll keep it short. I just wanted to start by asking you about your new venture, Breeze Airways.

In May 2023, it will be two years since the first flight, so I think it’s the right time to touch base and ask you a few things about this very exciting project that you are leading.

Right now, you are flying 143 routes all over the United States, which is quite an impressive number for a new airline. How many passengers are you carrying at the moment?

A lot! Today I am not sure, but we’ve got well over a million customers. So, it’s growing every single month, it’s really hard to keep track of it.

Every time we add an airplane, we add more routes. As of the end of this month, we’ll have, I think, 31 airplanes

And you have 80 airplanes on order?

That’s the 220s with 80 A220s. We have an additional 40 options for those airplanes. And we’re currently operating 19 Embraer E190s and 195s.

At 80 A220s plus another 40 options, we would be looking at the fleet of 120 A220s. So, what will happen with the Embraers? My understanding is that they were a kind of stopgap solution until you could get the A220s. Are they staying in the fleet? And how long will they remain?

They’ll stay in the fleet; they’ve got different missions. The 220s are, obviously, cheaper to operate, but a bit more capital expensive.

We do hundreds of charters every month, so we use the E190s on those, plus we do have a lot of routes that we’ve just [got] flights Thursdays and Fridays and Sundays and Mondays, so all those routes work for the Embraer. It’s a little more complicated, but it gives us a lot more reach.

So, looking ahead, let’s say two, three, four years from now, how big is Breeze going to be in terms of fleet? Are we talking about 130 aircraft or something like that?

Yeah, I think so, I think this would probably make some sense. Maybe five years from now we can have that many airplanes.

A lot of the Embraers staying flying have a lot to do with GE [General Electric], because the thing that is obsolete with those airplanes is the overall cost.

So, we’re working with GE to see if we can’t keep that fleet flying because the planes are still young. They’re very young, you don’t want to return a plane after flying for five years, because of the cost of an engine overhaul.

You are mainly flying routes in places where there is no competition, at least from other carriers, perhaps there is from other modes of transport. Is competition – or the absence of competition – the primary driver when you are choosing new routes?

Yes, I would say on over 90% of our routes, we have no nonstop competition. Those are routes that either had nonstop competition in the past or the cities have grown, and the air service hasn’t kept up with it.

There’s a lot of really great small and medium-sized cities that you can’t fly to at all. I’m here in San Bernardino and we have the only flights in San Bernardino, and there’s millions of people surrounding this airport. But they really forced people to go to either Ontario or LAX [Los Angeles International Airport] or to SNA, Orange County Airport [John Wayne Airport].

So, we are finding these little gems and having service out of here, you know, we serve daily service to San Francisco (SFO). We also just started service to Las Vegas [LAS] today.

And how far can this concept go until you start getting into markets that are more contested?

“We can go a long way…”

We can go a long way, certainly with all the planes we have on order. One of the little-known facts is that in 2010, there were over a million regional flights a year in the United States. Today, there’s a little over 500,000.

Those are movements?

Yeah, movements. And the major airlines have only picked up about 80,000 or so of those, so the net loss is about 420,000 flights. So, certainly adjusted for size, maybe a bit like half of all the services have gone away. And that’s a lot of airplanes!

I would like to ask you about the product, because I haven’t flown on Breeze yet, but I’ve been checking what you offer and the different fares by playing a little bit with your website. I’m pretty impressed by the relationship between the prices that I’ve seen, and the services on offer.

So, it seems that just as you did with JetBlue a few years ago, you have managed to challenge the, let’s say, textbook low-cost business model, coming up with these new value propositions. Obviously, you’re not going to tell us what your secret is to be able to do that, but how sustainable is this model? For example, one of the things that I saw is that you offer a lot of flexibility for a relatively low price, which is something that was the traditional trade-off. How do you define this value proposition? And how do you do it?

Well, we decided early on that we wouldn’t charge a ticket change fee because if you buy a ticket for $69 and the change fee is $75, then it’s just kind of a non-refundable ticket and we didn’t want that. We wanted people to have their credit and use it.

So, while we don’t give you a refund, we do give you credit for a future flight, and we don’t deduct that change fee. So, people just like it a lot better and we want to get people to fly. We don’t want to make people mad at us. We think it’s a better value proposition for our customers.

The logic of Breeze Airways fare policy

I was wondering whether you found a formula to have a lower cost base than other competitors out there?

Yeah, I think we do! We only have, I think, 30 employees per aircraft. So, we use a lot of contracts, people at the airports, but we’re just trying to be more efficient than everybody else, and just fly in the best markets and at the best times of the year. So, you’ll see some seasonality shifts, our fleets will kind of chase the peak travelers.

On starting international flights

So, we do a lot of that, and we expect to get a lot more into the packaging business, all-inclusive resorts. We’re going to be doing some stuff as soon as we get authorized by the FAA [US Federal Aviation Administration – ed. note] to fly internationally, which is called “flag status”.

Actually, that’s something that I wanted to ask you about. Right now, all your network is in the US. Are you planning to go international anytime soon?

Well, yeah, we can’t do it today. But we expect over the next six months we’ll be authorized to do that. It’s a process with the FAA and that’s well underway.

And you recently announced, as well, a deal with Viasat to provide internet connectivity. What’s the status of this? How long is it going to take for this to be rolled out across the whole fleet?

The upcoming IFE roll-out

The first plane is under installation now. And we’ll get two down before the summer. Then, when we hit the low season after the summer, we will do the rest of the fleet and hope to have them all up and running with internet by the end of the year.

Is it going to be a paid service, as an ancillary?

We haven’t decided yet, maybe there’ll be free aspects to it or very low cost. More and more airlines are going to. Delta went for free; JetBlue is free. If you charge even a little fare, a little price, people just don’t buy it and they don’t get the benefits. So, we want people to get the benefit of it.

You have three types of product: the “nice fare”, the “nicer” and the “nicest”. Would the nicest be comparable to a traditional business class?

It’s more than European business class. It would be more like a US domestic first class. We have little leg rests and stuff that they [the European airlines – ed. note] don’t have on their planes. So, I think it’s pretty comparable to that.

What are the next big milestones that we should be looking for?

Just more of the same. Just growing and finding good markets and taking care of our customers and getting them to fly [with] us again, and growing markets.

There’s something I wanted to ask you because you are the closest I can think of to a serial entrepreneur in aviation. You’ve founded five airlines, and you’ve invested in another two. Which airline project has been the hardest to roll out? Morris Air, WestJet, JetBlue, Azul, or Breeze Airways?

On launching Azul in Brazil

I think the most rewarding, and probably the most challenging, is Azul. We really transformed aviation. Brazil’s the fourth largest travel market in the world, domestic travel market, and to be the largest airline in that market after 14 years is really an accomplishment. So, I’m really proud of what the team has done down there.

I love being chairman of that company. I love being the founder. And it’s done remarkable things for Brazil, not just in airline travel, but also in logistics. You can get a package in 48 hours in 4,800 municipalities in Brazil delivered by us or by last mile providers.

Are you still an investor in Azul?

Yeah, I am the chairman of the board and the controlling shareholder.

I would also like to ask you about TAP Air Portugal. Are you involved with TAP anymore?

No, no, we privatized it and were doing great, but COVID came along and the government I think wanted the company back. You know, governments change, and so we sold it back.

So now it’s entirely publicly owned by the Portuguese government?

Correct.

Any other airline venture that you have in mind?

No, this is good. I’ve got my hands full.

Yeah, I think you should write a book sometime about all these very different, very interesting and, mostly, very successful airlines that you’ve built from scratch.

Maybe someday.

That would be a bestseller, I think.

I don’t know about that. Maybe on your site, but I don’t know about everywhere else!

The post Executive Spotlight: “We can go a long way.” Breeze Airways founder David Neeleman appeared first on AeroTime.

Icelandair’s CEO, Bogi Nils Bogason, talks to AeroTime

Miquel Ros — Wed, 15 Feb 2023 13:00:00 +0000

Every other year, the Icelandair Mid-Atlantic Tradeshow takes place in the Icelandic capital, Reykjavik, showcasing Iceland’s credentials as a tourist destination and air hub.

The national flag carrier, Icelandair, is one of the co-organizers and we gladly accepted their invitation to fly to Reykjavik to learn more, first hand, from its CEO, Bogi Nils Bogason, about the current projects, opportunities and challenges that this iconic airline is facing.

Bogason has been at the helm of Icelandair since 2018. This has been a rather eventful period, which has seen the demise of its main domestic low cost competitor, the emergence of a new one, not to mention the global systemic shock brought about by the Covid pandemic and the growing importance of sustainability as a central topic for the future of the aviation industry, particularly in such an environmentally-conscious region as the Nordic countries.

We sat down with Bogason during a recess of the Mid-Atlantic show for an in-depth conversation about all of these matters and to better understand where Icelandair fits in the current aviation landscape.

We started our chat by talking about the post-Covid recovery that Icelandair has gone through. At the time this interview was conducted, Icelandair was just days away from releasing its 2022 figures, which later showed a return to the black.

On February 3, 2023, the Icelandic airline posted a small, but symbolically important, positive return, with earnings before tax of $0.2 million. Revenue more than doubled to over $1.26 billion while passenger traffic showed a 150% increase on the previous year.

You have made a pretty good recovery from the Covid pandemic. What would you say are the other challenges Icelandair is currently facing? You have a new local competitor with a similar business model but, as a low cost carrier, there are also lots of longer-range narrow body aircraft coming to the market, including the A321XLR which will enable airlines to fly between many more different points in Europe and the US. How much of a threat are these two factors to your traditional business model?

We are operating in a very competitive environment. There are 27 airlines flying to Iceland during the summer, including some of the largest American and European carriers, and many of them also many of them flying here year-round. We also have, as you mentioned, a local competitor, PLAY, and they are growing. We respect the competition, we love the competition…the environment is so dynamic…that’s why we need to focus on ourselves and constantly live up to the expectations of our customers, on our operations.

We firmly believe in our business model and our business model has proven itself for decades, not least since post-Covid…We see a bright future ahead.

You mentioned the new aircraft, the A321LR and XLR, we don’t see those as a big threat. We firmly believe in the strength of our network, where we are operating in three distinct markets: to and from Iceland and then the transatlantic market.

We are connecting many points in North America, and we see opportunities to add destinations and connect secondary airports throughout Europe with secondary airports in North America. Some of these won’t be big enough to have direct flights between them…and then we are also connecting secondary with primary and so on.

So, we firmly believe that this model will remain strong. Of course, we need to keep adjusting to what is happening in the competitive environment, but our focus is on our operation, growing and developing our network.

When Icelandair started with this business model many decades ago, a mid-Atlantic stopover was pretty much a necessity, but nowadays not so much. To better understand this market, can you please tell me what the split is between connecting and origin and destination (O&D) traffic? It seems that Iceland has, in recent years, become a very popular tourist destination in its own right.

As we see it, both markets that you mentioned work very well together. We have a mix of passengers in our planes, those that are connecting and those that come to Iceland. We always ask, when we look at new destinations, ‘is it a big market for transit?’, but also ‘is it a good market for generate traffic to Iceland?’. On a normal year, connecting passengers are 40 to 45% of the total. Last year, for example, they were 43% and tourists coming to Iceland represent a similar amount. It may fluctuate a bit, but we are talking about this order of magnitude. And then we have the Icelanders that travel abroad, which are around 10-15% of our traffic.

The stopover traffic, this is about 25-30% of our transatlantic passengers. These are people that spend from one to seven nights in Iceland between their two flights with us. This is our stopover product, which is very popular.

What is the capacity of Iceland, as a country, to keep growing and getting more tourists? I am not talking just about Icelandair here, but also the other 26 airlines that you mentioned. Is there a risk of saturation or are we still far from that point?

First of all, the airport operator, Isavia, is working on a big expansion plan. There are constructions going on, they are expanding the airport. This is a project that is ongoing.

And regarding tourism infrastructure, tourism here is very seasonal, even if we have been quite successful in the last 10 years in turning Iceland into a year-round tourist destination.

Until around 2010, most tourists came in July and August. Now we have tourists coming the whole year, but we still have a lot of seasonality and a big peak in late June and July. It is necessary to invest in infrastructure, hotels and so on, but we also need to get the tourists to go around the whole country. We have great nature all around, in the east, in the north, and in the west coast.

Is there the potential to operate some flights from other regional airports? For example, last year a small airline launched non-stop flights between Akureyri, in the north of Iceland, and Europe, in order to provide a more direct access to the north of the country, mainly to those tourists that have already been to Reykjavik.

There is both the potential and the need for tourists to travel around the country. Until Covid hit, around two thirds of tourists were concentrated in the south west of Iceland. There is an opportunity to bring more tourists to the countryside and to connect the domestic airports with our international network at Keflavik, from where you can access 50 destinations. We are a very strong connector and our strategy is to connect Akureyri to our hub.

Now, if you take a domestic flight, you get to Reykjavik airport, near the city centre, and from there you need to take land transport, a taxi or a bus, to get to Keflavik international airport.

Yes, but we are implementing a big change. Earlier the domestic airline operated it differently [Icelandair fully integrated its domestic subsidiary – Air Iceland Connect – in 2021], they even had different reservation systems, but now we have integrated everything and we are going to provide for a stronger flow between domestic and international destinations.

So, you are planning to add flights to Keflavik from domestic destinations?

Yes, well, not so much move flights, but add more flights. Our original plan was to start a direct flight between Keflavik and Akureyri already this spring, but due to some minor issues we decided to postpone that until spring of 2024. We will then be connecting the north of Iceland to our whole international network.

I wanted to ask you about the recent rebranding and whether you have quantified in some way whether this has resulted in a better brand perception. My understanding is that one of the goals of this rebranding was to make the brand more visible and recognizable, for example in social media. Are you getting any feedback from the market about that?

What we have experienced is that the new colours and the new brand is much easier to use and to recognize, the old colour was quite difficult in that respect. All in all, the rebranding has worked very well, not that I have any numbers in that respect, but our impression is that it has been very well received.

Let’s talk about the fleet. You currently operate a mix of Boeing 737 MAX, Boeing 757s and three B767s. The B757s, which have traditionally been the mainstay of your fleet, are meant to remain in service until 2026, right?

Yes, until around that time.

But you are already working on a re-fleeting plan for the longer term. What can you tell me about this? You recently hinted that you may consider going with Airbus. What do you think the fleet look like in, let’s say, 10 years’ time?

In two months’ time we will make a decision about what our fleet is going to look like, how are we going to replace the 757s. It’s a type of aircraft that has been working very well for us, performing very well across our network.

We now have two options in front of us. One is to keep adding B737 MAX aircraft and have the MAX as the core aircraft of our fleet, plus the 767s, with the latter being eventually replaced as well, perhaps with Boeing 787s. The other option is to go to Airbus and start introducing Airbus A321LR and XLR aircraft as replacements for the B757s.

So, it is already decided that the future replacement of the B767s would be the 787?

We currently have three B767s and if we go the Boeing route, we make the decision to stick with Boeing for the whole fleet. In that case, the replacement would be the B787, but no decision has been made yet. We are in negotiations with both Boeing and Airbus. We issued a request for proposals (RFP) in the fourth quarter of last year and we are working on this now.

If the Airbus route is chosen, then it seems that the A321LR or the XLR will replace the B757s. But what would then be the replacement for the B767s?

At the moment, our focus is the replacement of the B757s. The replacement of the wide-body fleet is not a concern at this point of time.

I read about your interest in the Heart Aerospace electric aircraft project. How far have you advanced in this direction? Have you already committed to adopt Heart Aerospace’s future electric aircraft the moment it becomes available?

We have letters of intent (LOI) in place with both Heart Aerospace and Universal Hydrogen.

Would the Universal Hydrogen option be for retrofit?

Yes, they are working on both the ATR and the Q300s. We are cooperating with both, with Heart Aerospace and Universal Hydrogen. We have letters of intent with both. We are very optimistic and think it is realistic that we will be operating carbon-free aircraft within our domestic network before the end of this decade, but as of now, we still don’t know what aircraft will be the first.

So it would be one or the other or both?

Or maybe another option…we have the LOI in place but both aircraft types are at a development phase and they need to be certified and so on. We are not running that process. We believe it is a realistic and viable option, though.

Are you looking at these as a like-for-like replacement of the existing short haul fleet or as a way to expand?

Both. We are planning to grow our regional operation, so it would, hopefully, be both, replacement and expansion. And the range is perfect, 45-50 minutes of flight…more investment in infrastructure is needed, though.

When it comes to destinations, are you working on any new ones?

We added four last year, Raleigh-Durham, Rome, Nice and Salzburg, and another four this year, Detroit, Prague, Barcelona and Tel Aviv.

Some of these are very seasonal, like Salzburg for the ski traffic. Some we had covered already in the past, like Barcelona, but we are doing it now in a way that we facilitate the connection with our US flights.

We also fly to Crete, but this was a bit different because it’s seasonal and we had been doing it as a charter and through our tour operator, but it is now integrated into our network too.

We are always analysing new opportunities and new destinations and adding frequencies to some of our old destinations. For example, when we started Raleigh-Durham, we started conservatively, during the high season…if a new destination then works well, we then expand, adding frequencies, extending to the low season and so on.

On the west side of your network, how far can you go? What would be the maximum range you can reach? Would your narrow body fleet get to California?

Not to California, the B767s can do that, but not the narrow bodies. The limit is Seattle, Portland, Denver…and Orlando!

And on the European side? How far can you go? Would Tel Aviv be the maximum range?

You can go to Tel Aviv comfortably, and a bit further!

There is a new airline in the US, Northern Pacific Airways, that takes inspiration from Icelandair and wants to replicate your business model in the Pacific region, using Alaska as a stopover point to fly between Asia and America. My understanding is that they had been talking with you about this project. Is there some sort of cooperation agreement?

There is nothing formal. We have been talking but there is no formal agreement or partnership in place, just informal conversations. Also, their project has been put on hold.

Are there partnerships with any other airlines on the horizon?

Our strategy is to strengthen our existing partnerships and add new partners eventually, but I can’t name any new ones now. Bilateral agreements with airlines like JetBlue and Alaska Airlines have worked very well, it is a win-win for all airlines involved. This is our strategy.

We also recently announced an agreement with Air Greenland, even if we are competing on the route between Greenland and Iceland, we are adjusting our schedules and they are adjusting theirs so that they fit better. We are still competitors, but by adjusting our schedules we are strengthening the traffic flow between our respective networks, so it’s a win-win situation that benefits both.

Is there any product that allows people to easily combine trip visits to Iceland and Greenland?

There is a package, it is part of our stopover programme. We offer flights to other parts of Iceland and also to Greenland.

Back in 2019, Icelandair subsidiary Loftleiðir acquired a majority stake in Cabo Verde Airlines, the national carrier of Cape Verde, a small Portuguese-speaking island nation located between the coasts of Africa and South America. Loftleidir subsequently got out of this venture. I couldn’t miss the chance to ask about this short-lived project.

I would like to ask you about the Cape Verde project, which I think was conducted via Loftleidir, right?

Yes, it was done through them. Loftleidir is a subsidiary of the Icelandair group, fully owned by us.

What happened with that project? It seems that it didn’t go as expected?

No, it didn’t go as expected. Cape Verde was partly privatized and we got 51% and then Covid came and the project didn’t go as expected and now we are fully out of it, we are not involved anymore.

The logic was to do what you do here in Iceland, with connecting traffic, but in the South Atlantic?

Yes, to connect a few continents via Cape Verde, just as we do here in Reykjavik: Europe, Africa and North and South America.

What is your shareholding structure? Does the Icelandic state have any participation in the company?

No, the Icelandic state is not our shareholder. We have some 16,000 shareholders and the main one is Bain Capital, based in Boston, that has slightly above 17% of the company.

To wrap it up, I would like to get back to your business model. We have talked about the balance between connecting and origin and destination (O&D) traffic, but how do you expect both markets to evolve? Are both segments of the market evolving in the same direction?

Looking back over the last few years, to 2012 or so, the two main markets have been of similar importance, they have remained pretty constant. If anything, connecting traffic has increased in the last 10-12 years, from around 30 to nearly 50%. The highest up it got was 52%.

And within this segment, the split between European and American traffic has been shifting, it depends a lot on circumstances such as the strength of the US dollar. In the past, Europe, as a whole, was a bit higher, although, as a single country, the US is our largest and most important market.

The post Icelandair’s CEO, Bogi Nils Bogason, talks to AeroTime appeared first on AeroTime.

Executive Spotlight: Meet the A350 loving CEO guiding Finnair back to growth

Richard Stephenson — Tue, 31 Jan 2023 07:41:38 +0000

In the first of our new ‘Executive Spotlight’ series, AeroTime Editor in Chief, Richard Stephenson, meets the Finnair President & CEO, Topi Manner, who tells us about his role guiding the airline back to growth, aided by the resilience and adaptability of the team, his love of the A350, and the superpowers of blueberry juice.

WATCH THE INTERVIEW HERE:

You can’t help but warm to Topi Manner, the calm, friendly and naturally engaging President & CEO of Finnair. He is happy to be asked about anything and you feel a genuine desire to be transparent about the challenges he (and his airline) has faced and the opportunity and potential that exists in the future.

We meet in the spacious surroundings of the Platinum Wing Lounge at Helsinki Airport. The Nordic design, soft furnishings, trendy bar, and plethora of fancy food and beverage options tell their own story about what Finnair has become as it marks its 100th anniversary in 2023. As one of the oldest airlines in the world, Finnair has survived while many others have failed. Today, as it continues to manage the hangover from the pandemic and the impact of the war in Ukraine (specifically the closure of Russian airspace), this resilient airline continues to prosper, despite the continued adversity it faces.

Finnair

“Not every airline makes it to 100,” a proud Manner tells me. And he is right. Few make it to their centenary year. But there is no sense of mission accomplished, with Manner later explaining: “We want to be the leading airline in the Nordics.”

Although he admits that he was not an aviation geek prior to joining Finnair, he was a frequent flyer who was fascinated by the industry. “To me the industry is, on one hand, a service industry and as such, it’s a people business,” Manner explains. “On the other hand, it’s a complex web of logistics, and safety driven operations. And the combination pretty much is unique, and the industry gets under your skin in a very positive way.”

Manner joined Finnair in January 2019 as the airline was enjoying record growth in profitability and passenger numbers and looking ahead to further fleet expansion. He was the man to lead the airline into its next phase of development. But after less than a year, Topi Manner was leading a crisis management operation ‘of biblical proportions’ and fighting for his airline’s survival as the COVID pandemic struck.

“It has been three years of crisis not only with the pandemic, but also with the consequences of the war, the Russian Airspace closure hitting us badly forcing us to change our strategy. So, during these four years I have been really meeting the highs and lows of the history.

“We are probably the airline in Europe that is most impacted [by the war in Ukraine]. Our strategy was connecting Europe and Asia via the short northern route utilizing the Russian airspace. So, we have needed to adapt. And that is what we are doing. When you meet not only one black swan, but several black swans, like we have been meeting over the past three years, then it all boils down to the resilience, the resourcefulness, the innovativeness of your people.”

“And I think that is what we as a big Finnair team have been demonstrating over the past three years,” Manner continues. “So, we are clearly creating a path through the crisis for ourselves. And this is something that I’m proud of. We are emerging as a culturally stronger airline, as a culturally stronger team.”

So, what is different about Finnair? It’s an easy question for the CEO who speaks so passionately and enthusiastically about his team.

“Well, I think that it boils down to adaptability. We have been able to adapt to changing business environments, changing circumstances like we are doing right now with the consequences of the pandemic and consequences of the war in Ukraine. It all boils down to evolution theory in a sense that it is not the biggest or the strongest who survive. It is those who actually can adapt. And adaptability really boils down to our own people, our employees. So, while we are grateful for all of those people who are currently part of our story, we are also grateful for all of those people who have been part of our story in the past.”

Finnair

Anyone who has flown with the airline will be aware of the traditional cup of blueberry juice that is served onboard. It’s refreshing and a great thirst quencher, but what is the secret to this Finnair tradition? “Blueberry is a superfood,” Manner explains. “And it simply tastes Nordic. It’s pure, it’s authentic, it’s distinctive, and it’s a big part of our customer experience. Our customers love it. Blueberries are a big part of Nordic cuisine, and those are the kinds of items that we want to bring to our customers for them to have a truly Nordic experience on board of our flights.”

But you can’t always rely on customers to love your traditions or your innovations. For example, the new business class cabin design launched in 2022. There is no doubt it received a mixed reaction at the time of launch, but it seems to be working now and the airline’s passenger survey data shows that the customers approve. I admit that I was one of the sceptics. Manner smiles in a way that tells me he has heard this before – and was expecting it. But I go on to explain that I was fortunate enough to try out the new ‘AirLounge’ and I enjoyed the experience. So, is the company happy with the reaction?

“We are very happy with the introduction, and we are very happy with the reception that we have been having from our customers,” Manner says. “The journey with the elevated long-haul experience as we call it started more than four years ago and our designers, our engineers, together with our partners have been doing a tremendous job in putting all of these things together.

“What we’re doing is that we’re using in the business class seat, the AirLounge it is called, a 3D contour shell to basically create more space for the passengers and with pillows you can adjust your position in the seat. You can find a comfortable lounging position and then you can get the 180 degrees sleeping experience with mattresses and all – and that really is second to none, I must say. So, it’s beautifully designed. And something that we are very proud about.”

Finnair

Manner goes on to explain that the new cabins have already won awards. “We got the best airline seat nomination in 2022,” he reveals. “And for the whole campaign, with the new Premium Economy travel class and the beautifully refreshed economy class, we also got the best cabin innovation award last year. So, the customers are happy, the reception has been good. If we compare the customer satisfaction on those routes where we have the new cabin versus the routes where we have the old cabin, the customer satisfaction is clearly higher.”

Today, the airline flies around 260 legs per day. Its most recent new route was introduced between Helsinki and Doha in November 2022 and the frequency of some eastern routes (China, Japan, and India) has been increasing. Manner explains that the airline had to rethink its strategy and ensure it was competitive on the routes that remain open, balancing the operation between the east, new routes from the south, increasing Atlantic traffic to the west and maintaining the network in Europe.

Along with new routes and increasing frequencies comes a focus on load factors, but these seem to be holding up well with yields up and the longer journey times (flying around Russian airspace) not having much impact on customer demand.

“I think that during the past six months especially, there have been also positives and positive surprises. And you know, that is a nice change after three years of crisis,” Manner says. “And to me, the most important thing is that the demand is there. Even in the recessionary environment, people clearly want to fly and even though consumer confidence by many measurements is low these days, consumers prioritize travel experience. So, the hierarchy of consumer spend, seems to have changed. And that gives me a lot of hope.”

There are only so many aircraft you can use on these routes and Finnair is operating a growing fleet of A350s (currently 17 with two more on order). So how important is this aircraft to the Finnair strategy?

Danil Tsoy / Shutterstock.com

“So, we really like the A350 aircraft, fantastic customer experience. It’s a good, good aircraft, you know, safe, operationally, of quality and we have been having good experiences, and especially right now, for us with the increased flight times to Asia, it also gives us the range that that we need,” Manner explains. “So, therefore, we are happy with the Airbus 350 fleet. And we have still two coming up and that means that that part of the long-haul fleet will stay as it is for many, many years to come.”

The ATR fleet has also been recently renewed. The “reliable and efficient” aircraft is well suited to the shorter Finnair routes and there are no plans to change this workhorse.

Sustainability is also a major focus for Finnair. The CEO tells me that it is at the “core” of the airline’s strategy.

“During the past three years, we have been keeping our sustainability goals. So, in terms of environmental pillar of sustainability, we aim to be carbon neutral by 2045. And we aim to reduce our carbon footprint by 50% by the end of 2025,” Manner says. “So those targets are intact. Increasing the usage of biofuels, synthetic electric, electro fuels going forward is a big part of the agenda with many, many other items. But then again, we also use sustainability as a wider concept. So environmental sustainability certainly is one pillar, but social sustainability and financial sustainability are important pillars as well.”

As we look to the future, Topi Manner is clear about the next steps he will take. “Well, first and foremost, we need to implement our strategy. And we need to restore our profitability, come back to pre-pandemic levels of profitability by mid 2024. And once we have done that, then we can invest,” he says. “And the long-term goal is really to position ourselves as a modern Nordic airline. I think that we have many strengths, great customer experience, great customer satisfaction, the new long-haul cabins are part of that, blueberry juice is part of that. So, we can still develop that customer experience, and use that as a source of growth over the long run. And then with that, we truly can position ourselves as the best and the leading airline in this region.”

Finnair

Having spent time with this ambitious, calm, and dedicated aviation professional (and wannabe geek in waiting), there is no doubt that Finnair is in safe hands. It is a bold, Nordic airline, with a bold, friendly CEO at the helm. Not afraid to face multiple black swans head-on, while maintaining high levels of customer service and innovation (and with plenty more to come), this is an airline that will face the worst and embrace the best that is thrown at it. Maybe it could be partially down to the superfood status of blueberries, but it’s more likely down to the collaborative and very Finnish approach that puts team at the heart of everything. That starts at the top and Topi Manner is a clear symbol of leadership and devotion that many others could learn from.

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