Opening session
AIRLINE CHALLENGES
CURRENT STRATEGIES
A personal perspective
by Pierre J. Jeanniot
INDUSTRY CHALLENGES
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Economic cycles
Financial crises
Government actions
Terrorism
Environmental constraints
Infrastructure
2013 profit $12.9 billion
passenger load factor 80.3%
yield 0.3%
forecast - 2014
profit $18.7 billion
REGIONAL FORECASTS
Asia-Pacific $3.7 billion
North America $8.6 billion
Europe $3.1 billion
Middle East $2.2 billion
South America $1.0 billion
Africa $0.2 billion
NORTH AMERICA
Full Service Network Carriers
North American Hybrid Models
FOUR MAJOR CARRIERS
consolidation, slot reduction
OPPORTUNITIES FOR NEW LCC’s
EUROPE
THE SHORT-HAUL MARKET
low-cost airlines
overtaking legacy airlines
regional offerings – HOP!
leisure brand - Transavia
alliance and partnerships
“SCORE” cost reduction program
 81.5 million passengers

st
1
base outside Europe
Business model - changing
pre-tax profit +27.9%
hybrid model for business passengers
one of the fastest growing airlines
aims to connect the world
via Istanbul
MIDDLE EAST
WORLD GULF HUBS
recent aircraft & engine technology-driven
the world economy continues to shift
... so do the traffic flows
equity alliance
strategy
ASIA PACIFIC
INDIA
World’s largest democracy
hard to do business !
Changing Aviation Policies
new airlines, many LCCs
fuel costs
Indian rupee depreciation
all LCCs losing money – except Indigo
Full Service Segment
lacked liquidity
major losses
heavily indebted
New Joint Ventures
Tata Sons – Singapore Airlines
full service airline
Tata Sons – Telestra Tradeplace – Air Asia
low cost carrier - LCC
LATIN AMERICA
co-operative model
“virtual airline” buys aircraft
individual airlines operate flights
CONSOLIDATION
highly profitable!
largest LCC in Brazil
15% domestic market
AFRICA
 traffic growth +6% p.a.
 accident rate
 mostly government-owned
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urbanization
emerging middle class
strong services
Africa could industrialize
aviation would play an important role !
North America
Europe
Asia Pacific
Latin America
Gulf Airlines
Africa
SHAPING FORCES
New airplanes and engines
Narrow bodies
Less fuel burn – lower operating costs
SHAPING FORCES
New airplanes and engines
Wide bodies
Less fuel burn – lower operating costs
Continued impact of IT
INTERNET
SOCIAL MEDIA
SELF HANDLING
MOBILE DEVICES
CURRENT TRENDS
Ancillary Revenues
up to 20% of total intake
New Distribution Capability
diversified product distribution
OBSERVATIONS
Aviation continues to change.
It needs to adapt …
And it needs STRONG LEADERSHIP