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The 9th Annual Conference of Air Transport Research Society (ATRS) was held in Rio de Janeiro on (3-7) July attended by than 200 participants.
At the plenary keynote panel session focusing on “Future development of the Air Transport industry: Focus on airline strategies in the increasingly competitive market”, Mr Orlando Jose Ferreira Neto, VP Marketing-Strategy, of Embraer stated that network airlines have been recording some traffic recovery for 2005 but despite this, US passenger yields continue to fall sharply, in line with the trend that started ever since 2000. He went on to say that there is by now a new passenger profile, passengers that have different set of values as far as flying is concerned. According to Embraer predictions, network airlines will have to limit the capacity of their aircraft because passengers seem to prefer point-to-point routes and service, whereas regional airlines will increase capacity to enable themselves not only to better feed traffic to the network carriers at those periods when the market is strong but also to operate services on behalf of network carriers when the market is weak. The routes served by regional airlines increased from 192 in 1995 at 2912 in 2004 in US and from 104 at 1143 in Europe. He concluded by pointing out that low cost carriers (LCC) they are moving downward in capacity (example: JetBlue in USA).
Mr Duncan Dee, SVP, Corporate Affairs & Chief Administrative Officer, Air Canada, presented the strategy Air Canada followed to exit the chapter 11 protection and avoid bankruptcy. This strategy consisted of four-prongs: first of all, they used a customer driven revenue model with a best as possible network, competitive processes and an easy to use web site, secondly they used as a growth leverage a competitive cost structure, third they tried to Capitalize on network, product and technology, finally they maximized the value of the business units.
Hideyuki Kanenari, Senior Executive Officer, Marketing Strategy, Research & Corporate Planning and Vice–President Strategic Policy & Research, Japan Airlines Group (JAL), presented the survival plan this Asian carrier adopted to guarantee its continued existence as a network carrier. Such a plan has been necessary as JAL expect an accumulated loss of 42 billion $ for the period 2001-2004 and expect another 6 billion $ loss in 2005, these losses are mainly due to high fuel and high labour costs. JAL had concluded that it had to expand its domestic strategy and to evaluate whether they should be joining an alliance. At the same time, in order to reduce labour costs, JAL has established to separate companies with new cost level, one for international services (JALways) and one for domestic services (JAL Express).
Within the framework of the same session, Mr. Michael Allen, the Chief Operating Officer (COO) of Back Aviation, predicted that for the period 2005-2010 low cost carriers will take more aircraft than network airlines.
Professor Oum, President of ATRS, presided over the Global Airport Performance Benchmarking and Airport Efficiency Excellence Awards Session. The following awards were announced:
Global Airport Efficiency Excellence Award to:
Tampa International Airport
North American Airport Efficiency Excellence Awards to:
Hartsfield-Jackson Atlanta International Airport
Vancouver (YVR) International Airport Authority
European Airport Efficiency Excellence Award to:
Copenhagen Airports A/S
Asia-Pacific Airport Efficiency Excellence Award to:
Singapore Changi Airport
In the other sessions held some interesting presentations were made such as those by:
Andrew Gordon, Airbus, France who talked about “Recent Structural Changes in air transport and their influence on traffic and aircraft developments
George Williams (Cranfield University, UK) and Kostas Iatrou (Hellenic Aviation Society, Greece), whose presentation was entitled “New for Old, an Analysis of the Impact of the New Athens and Oslo Airports”. Based both on an econometric model and OAG data, they concluded that the newly built airports in both cities have recorded a fall in passenger traffic. According to their findings, this decrease in traffic at both Oslo and Athens airports can be attributed to four key factors:
- the global economic downturn of 2000 and 2001;
- the influence of the respective flag carriers: in Norway’s case, SAS regards Gardermoen as a secondary hub in its route network and focuses nearly all of its long haul operations at Copenhagen airport, while in the case of Greece, Olympic has been facing severe financial problems for so many years that its ability to develop and grow has been seriously hampered
- in the case of Norway the sheer market power of SAS in Scandinavia resulting in quick demise of any new entrant airlines; and
- the geographic location of both countries on the periphery of Europe and thus of route networks.
Cass Howell, from Embry Riddle Aeronautical University, USA, presented “The ICAO Runway Safety Toolkit” which offers detailed directions about the way aircraft should move within the airport area and runway to avoid accidents and collisions.
Nigel Dennis, University of Westminster, UK, in his presentation “Competition and Change in the Long Haul Markets from Europe” finished by making some predictions about the future traffic structure in Europe: “there is hope that 2004 will provide some sort of return to normality on the demand side. Whereas a large number of airlines are likely to maintain short-haul networks in Europe, long-haul travel will be concentrated in the hands of a few key players. There are significant barriers to entry in the long-haul market, resulting from the dispersed distribution of demand, alliances and frequent flyer programmes, slot constraints at major airports and the sheer cost and risk involved in building up critical mass. Several European airlines have already abandoned the effort to be or become major long-haul players (e.g. SN Brussels, SAS, Olympic) and settled for a niche or feeder role.” He continued by saying that it is difficult for low cost airlines to enter the long-haul market. but that at the same time these low cost airlines are likely to capture between 30 and 50% of the short-haul market for travel within Europe over the next few years”, bringing about serious concern to the standard airlines
Alvaro Costa, Kenneth Button and Carlos Cruz, Universidade do Porto (Portugal) and George Mason University (USA), who talked about “The Impact of Low Cost Carriers on the Price Leadership Model in a Small Country” found that: “Where there is a monopoly low cost supplier the standard textbooks can be retained; there is evidence of a steady increase in the fare offered to departure. There are also indications that when there are more than two carriers then competitive pressures can override the ability of any carrier to price lead; the market rules. This latter effect is, though, far from complete and there are at times indications of carriers deviating this; the causes, however, are not always clear and there is no indication that size of carrier is always important.”
Photo: From left Mrs Evgenia Votanopoulou
Dr Kostas Iatrou – Secretary General, Hellenic Aviation Society
Prof. Respicio A. Espirito Santo Jr., ATRS 2005 Conference Chair
Prof Fariba Alamdari – Cranfield University, UK
Dr George Williams – Cranfield University, UK
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