Government inaction and an absence of understanding of the positive future economic impacts of international air traffic growth dominated discussion on the opening session of day two of the 13th annual World Travel & Tourism Council Global Summit.
A panel of airline industry leaders reiterated the decision for increased government support – and the abolition of passenger duty taxes – to navigate a route towards sustainable sector development.
Moderated by Peter Greenberg, travel editor, CBS News, the discussion covered political and economic instability, capacity, runway access, government policies, taxes and environmental sustainability as portion of a session entitled ‘Airlines: Turbulence or clear skies ahead’.
“Aviation is a quick-moving, highly competitive environment; high cost, low margins. One of many biggest challenges we are facing is convincing governments that airlines will need to have greater and easier access,” remarked James Hogan, chief executive, Etihad Airways, in his presentation.
Also at the panel was Willie Walsh, chief executive, International Airlines Group, who agreed with the stance taken by Hogan.
“Not a single penny raised through passenger duty goes to the industry or environmental issues.
“As a vehicle to trigger economic growth, we’d like a fundamental change in attitude from governments in Europe.
“A recent PricewaterhouseCoopers shows that in case you scrap the tax, you really boost the economy and notice a favorable effect.”
The importance of partnerships to today’s airline business model was highlighted by Hogan who says that it’s far critical in relation to bilateral value, and necessary to achieve a cheaper price base and scale.
“How we partner is definitely changing and the power to construct a better proposition is key.
“We are seeing the emergence of the battle of the hubs, and in order that connectivity model is important.
“Government policies make it difficult to head as fast as one would love, but we’re seeing strong opportunities for growth,” he remarked.
With consolidation not an option in certain markets, partnership through alliances is the norm, but Walsh says they’re a “poor substitute for correct consolidation.”
“We accept that in case you didn’t have restrictions on ownership or control, you’d be seeing more consolidation.
“But we’re an industry that’s always changing; five years from now you will notice an exceedingly different industry, and two decades form now will probably be unrecognisable,” he said.
Walsh cited the united states for example where consolidation is driving change for the simpler, with just five carriers currently controlling 84-85 per cent of capacity.
“It’s about profitability now.
“The industry seriously is not sustainable unless airlines are making profits in an effort to afford investment.
“The industry has got to come back its cost of capital and we’re now seeing a realisation among industry leaders within the US, that that is the main objective,” he added.
“Unless we make a profit, we can’t develop within the way the client expects, and how the arena economy needs,” added Tony Tyler, director general IATA.
Tyler also raised the perennially debated topic of visa accessibility, using Chinese travellers to the united states as a .
“The waiting time for Chinese travellers to get US visas approved was previously 160 days, now it’s right down to two-three days.
“Aviation support 57 million jobs and is answerable for US$2.2 trillion of monetary activity, yet governments put things inside the ways and visas are an excellent example.”
On the flip side, CBS News’ Greenberg touched on ancillary fees, quoting a figure of US$33-34 billion, and asking the panel, “where do you spot revenue obsession stopping”
“It won’t stop.
“The wonderful thing about the industry now’s that it competes with regards to different business models, in order a shopper you could choose what you desire.
“Where choice is genuine, it’s a great thing. In the event you get a carrier like Ryanair, there’s got to be justification to the model he applies as annually he carries increasingly people,” said Walsh.
“It’s about value. If persons are going to modify a booking or tie up call centre agents, what’s wrong with charging for that service” added Hogan.
The Global Summit is being hosted by Jumeirah at Etihad Towers in Abu Dhabi.