Facing down challenges and seizing opportunities in the airline business

Facing down challenges and seizing opportunities in the airline business

The airline industry has always faced its share of challenges. The key to survival is a rigorous management of costs whilst being versatile in adapting to shifts in market conditions and changing consumer trends. Not all airlines manage to do that. In Europe, we’ve recently seen a growing list of airline bankruptcies. Niche regional operators, charter airlines and long haul low cost carriers have all gone to the wall as they’ve wrestled with rising fuel costs and intense competition. Closer to home for ATM, India’s Jet Airways appears to have come to the end of the road, with its flights grounded and uncertainty as to whether any investor may be willing to take on its heavy debts.

One recent failure was the Icelandic long haul low cost (LH LCC) airline, WOW. While this business model is demonstrating growing popularity with customers, it’s proving very elusive in delivering profitability and financial stability. The irony is that WOW was an airline born of the digital era, adept in its use of technology and social media and had successfully targeted a tech savvy millennial customer base. Sadly none of this saved it, as most of its customers were looking for a cheap seat flying via Iceland to/from the U.S. and Canada. This didn’t add up against the costs of its rapid expansion and the spike in fuel prices seen in 2018.

By contrast, Air Arabia, is a Low Cost Carrier that has not only celebrated its 15th birthday last year, but has achieved a strong record of profitability. Its CEO Adel Ali is our interview guest at ATM on Tuesday 30th April at 13:20. He has led the airline from the outset and undoubtedly his vast industry experience has helped him in navigating the many trials and tribulations it has found in its path.  Last year proved a challenge even for Air Arabia as it declared a loss, but over its 15 years it has demonstrated a prudent approach to expansion with its fleet now totalling over 50 aircraft and carrying almost 9 million passengers a year. The airline has stuck to a well-defined path which has seen it expand its home base of Sharjah, whilst also establishing subsidiaries in Morocco and Egypt, and adding an additional UAE base in Ras Al Khaimah. I’m eager to explore with Adel Ali his approach to developing the business, whilst keeping an eye on profitability. The airline has just taken delivery of the first of three Airbus A321 NEOs, a larger and longer-range version of the A320 currently used which in turn will open up the possibility of new routes. On top of this and based on the solid foundations of the last 15 years, a much bigger step is imminently anticipated, with the announcement of a large aircraft order, potentially for 100 new planes. So what next for Air Arabia? Plenty to talk about with Adel Ali!

I mentioned the need for airlines to show versatility in dealing with the vagaries of the market and one airline which has had to do this is Singapore Airlines. Whilst sticking to its “Singapore Girl” reputation for quality and service, it has had to adapt to competition from LCC’s by developing its own Low Cost subsidiary, Scoot.  It has also upped its game for premium customers including offering ultra-long-haul nonstop flights between Singapore and the USA. The airline has also benefited tourism in its home country by investing in a stopover product. I’ll discuss these points with Joey Seow, Regional Vice President West Asia & Africa for the airline in our panel discussion on Monday 29th April at 16:15.

Technology is also a rapidly moving area for airlines and big investments are being made in digital as consumers look for new ways of booking and researching their travel. I’ll look to Gavin Harris, Commercial Director APAC, for leading flight comparison website Skyscanner, to explain the trends we are seeing, as consumers become more adept at planning their own itineraries, expecting to be able to find out more than just the price and timing of a flight before making their selection. We’ll also get an update on the role of technology in the airport experience for customers. We all want to get through the process of check in, security and boarding as speedily and stress free as possible and airports are working hard to help improve the experience whilst also providing opportunities to relax and enjoy our travels. Jordan’s Amman Queen Alia International Airport has taken enormous steps in embodying the potential offered by the digital age and I’ll quiz my third panel guest Deema Anani, Chief Commercial Officer about the progress that’s been made.

I’m looking forward to some interesting discussions at this year’s ATM and I hope you’ll be able to join us.

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Director, John Strickland, is a graduate of the University of York and has held senior positions with a number of airlines including British Caledonian, British Airways, KLMuk and Buzz. John was instrumental in the decision by KLM to establish the low cost operator Buzz and in its selection of new routes. His 36 years of experience have exposed him to the business models of regional, global, legacy and low cost carriers. JLS Consulting was established in 2003 and now serves a growing range of clients including airports, airlines, investors and those whose businesses require strategic insight on and advisory services concerning the air transport sector. John regularly devises and chairs panel discussions and interviews senior executives at industry conferences and events. Media work is undertaken for numerous global media organisations including the BBC, CNN, Sky, Al Jazeera, and business specialists Bloomberg and CNBC. John also contributes to a wide range of respected written publications including the Financial Times, Wall Street Journal/Dow Jones Newswires, Business Week, The New York Times, Gulf News, Reuters and AFP.

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