Disruptive effects from long-haul low-cost carriers, the need to increase gender diversity and the glut of aircraft types on the market were debated today during the Airline Chiefs Strategy Round Table at the Farnborough air show.
Air Canada chief executive Calin Rovinescu stressed that long-haul low-cost operations were "not a concept that came up yesterday", pointing out that his own carrier had entered this market some years before, through its Rouge subsidiary.
Rovinescu says that while low-cost carriers have a competitive edge in short-haul markets, there is an "equalising" effect in long-haul markets, where fuel is such a large proportion of cost that legacy carriers' extra burdens in other areas – such as pension liabilities – are less pronounced.
He struck a combative note: "We are not ready to throw in the towel to the likes of Norwegian yet."
There emerged a consensus among panel participants that the business model chosen by long-haul low-cost operator was key. "You either get used old airplanes, which are cheaper but cost more to operate, or you get new airplanes which burn less fuel but are more expensive to have," says Adel Ali, chief executive of Air Arabia.
With over 200 customers, lessor AerCap has insight into a diverse range of airlines. "The real challenge when you get the airplane ready for your long-haul low cost [is]: do you have a two- or single-class cabin?" says chief executive Aengus Kelly. "Because when you configure for premium economy, it costs millions of dollars. Airlines have to be so careful [about entering this market].
"We've seen many business models where the customer has spent tens of millions of dollars and has to rip the cabin out because the airline didn't understand the customer base."
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Still, Kelly remains confident that the model can be successful. "Someone is going to crack the code."
Flybe chief executive Christine Ourmieres-Widener notes that while legacy carriers have infrastructure and distribution systems that allow them to connect into any airline brand, it is "more difficult" for low-cost carriers to do so.
In a discussion of controversial comments by Qatar Airways chief executive Akbar Al Baker at last month's IATA annual general meeting in Sydney – where he said that "of course" his own carrier "has to to be led by a man because it is a very challenging position" – Ourmieres-Widener observed that the widespread reaction had been "useful" for moving the subject of gender diversity to the "forefront" of the industry's priorities.
She said it was important that airlines do not just "hire more women because we need women" but instead accept diversity at a "senior leadership level".
Ajay Singh, chairman and managing director of SpiceJet, says 12% of the Indian carrier's pilots are women and that efforts are under way to increase that to 30% within the next three years.
He says the carrier is "actively mentoring" its female staff through a programme called "Women in Aviation", seeking to create role models.
Rovinescu notes that Air Canada has operated several all-female-crewed flights and that 10% of its pilots are women. "We encourage our women to not only crash through the glass ceiling but also ensure a man is there to clean it up afterwards," he says.
A different part of the debate focused on the array of aircraft types available to today's airlines. AerCap's Kelly bemoaned the wide variety of narrowbodies on the market.
"There's too much customisation; there's too much reaction by the OEMs to what the other guy is doing," argues Kelly. "You can't just build an airplane because the other guy is building one; you've got to build one that you feel your customer really needs and wants."
Steven Udvar-Hazy, executive chairman of Air Lease, also complained about the multiplicity of aircraft types.
"The menu has got too large. For some airlines, it is very confusing; and what it leads to – when airlines have too many aircraft, types and sub-types – is it significantly increases their cost of operations in terms of crews, infrastructure, spares, training, and ability to interchange aircraft."
Additional reporting by Sophie Segal
Source: Cirium Dashboard
