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The Proposition: This House believes international airline operations will be thoroughly disrupted by 2025
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| Part l: Ownership and control rules will be discarded (with thorough disruption of the aviation system) [More info] |
Part II: Big data and disruption - How will third parties disrupt selling travel? And the future role of Big Data in the airline system [More info] |
Part III: What do Brexit, Trump and rising nationalism mean for aviation? (To take place at the Powerscourt Dinner Debate) [More info] |
Part IV: How do airlines prepare for the new environment? [More info] |
DAY 1 – THURSDAY 11 May 2017 |
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| 08:00 | Registration | |
| 09:00 | Chairman's Welcome CAPA – Centre for Aviation, Executive Chairman, Peter Harbison |
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| 09:10 | Welcome Address: Dublin Airport Authority, Chief Executive Officer, Kevin Toland | |
| 09:25 | Introduction: CAPA Overview of the disruptive forces at work, in the regulatory and big data areas CAPA - Centre for Aviation, Executive Chairman, Peter Harbison |
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| 10:00 |
Ownership and control rules will be discarded (with thorough disruption of the aviation system) Despite decades of inertia, new forces are at work, operationally and commercially that are coming together to disrupt the airline industry. From a range of sources, momentum has been building that signals the potential for a remarkable evolution in international ownership restrictions. But changing the regulatory order of things is extremely complex, even assuming willing parties. Underpinning the transactional bilateral approach, the persistent role of “ownership and control” clauses in the myriad of bilateral agreements has dogged any prospect of substantial disruption. Joint venture and bilateral partnerships have become enormously important to the success – and even survival – of major airlines. Limited by ownership and control rules, airlines have constantly sought options to expand their global presence. The multilateral alliances have gone some way in that respect, but the intensification of international long haul competition has greatly enhanced the value of close bilateral ties. A new disruptive influence has appeared in the marketplace, with an abundance of aviation bilateral “currency” at levels never previously imagined. China has emerged, and its outbound tourists are delivering massive economic benefits to every country in which they land. The magnitude (and sudden appearance) of China’s currency asset is unprecedented. Until recently, China has not been a principal voice in the formulation of international policy. Instead it has been content to rely upon the historical constraints of the bilateral system, protecting its airlines as they achieve a level of international competitiveness. As it stretches its wings in the aviation market, China’s influence is growing rapidly. Secondly, there have already been a number of incursions into the sanctity of ownership and control provisions. These include (1) the proliferation of cross-border JVs, which have been particularly functional in Southeast Asia as LCCs like AirAsia have sought to establish themselves across the region as Pan Asian airlines; and (2) the revival of significant minority shareholdings in foreign airlines. Etihad accelerated this trend, which is now being elaborated multiple ways. To disrupt the complex regulatory structure that has survived 7 decades is no easy task, but most of the industry believes it needs to be, at least insofar as the deadlock of “ownership and control”. That said, there are clearly cracks appearing in the fabric. Moderator: John R. Byerly, Consultant, John Byerly For the proposition that ownership and control restrictions will be disrupted: Proposer: European Aviation Club, Chairman, Rigas Doganis Seconded: BKH Aviation, Chairman, Barry Humphreys Against the proposition: Against: Aviation Strategy & Concepts, Managing Director, Ulrich Schulte-Strathaus Seconded: DVB Bank, Senior Vice President Aviation Research, Albert Muntane Casanova Audience participation will be encouraged and the audience will vote on the various issues raised. |
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| 11:00 | Coffee & Networking | |
| 11:30 | Boardroom Session: Investing in airlines and travel across borders - How valuable is equity in the search for partnership solutions? Etihad's investment in Alitalia, airberlin, Jet Airways and five others, as well as AirAsia’s cross-border JVs have helped redefine the definitions of partnership and alliance. HNA Group, which has bought stakes in LATAM Group, Virgin Australia; Qatar Airways, with investments in IAG and LATAM; Delta in Virgin Atlantic CIT Group on the aircraft side and Hilton on the hotel side. For now it is mostly airlines investing in other airlines, where potential synergies arise.
Third Parties:
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| 13:00 | Lunch |
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| Part II: Big data and disruption - How will third parties disrupt selling travel? And the future role of Big Data in the airline system |
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| 14:00 | Evolution, Not Disruption: Delivering API Distribution Travelport, Global Head of Product & Marketing, Air Commerce, Ian Heywood |
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| 14:20 | Google Flight Search and Why it’s Bad for Airlines CarTrawler, CTO, Bobby Healy |
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| 14:35 |
Disrupted by Data - How Big Data and Analytics are Shaping the Industry's Future Now SAP, GM and Global Head of Travel & Transportation, Paul Pessutti |
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| 14:50 | Q&A |
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| 15:00 |
Coffee & Networking |
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| 15:30 | Panel Discussion: A big discussion about Big Data in two sessions Session 1: How will intermediaries & third parties disrupt selling travel? If Airlines and intermediaries are to retain relevance in the overall supply chain, they will need either to adapt their models enormously or to forge deep associations with the channel of disruption at the marketing and sales/retail end of the spectrum. These can be modified versions of existing distribution models or wholly new paradigms. Equity and otherwise, these liaisons will probably be with the same data organisations that are fomenting the airlines’ disruption, such as Google, Facebook, airbnb and others who will appear in coming years. In effect airlines will need to adapt to behave and act more like world class retailers if they are to avoid increased risk of marginalisation and commoditisation. Yet even embracing the current, and future travel industry implies increasing marginalisation. For much of the world, travel has simply become one of a range of consumer options, interchangeable and competing with buying a new laptop or mobile device, going to dinner with friends, or to a football match. Understanding the changing and holistic nature of consumer behaviour just by analysing its own data is well beyond the range of airlines. The massive new aggregators live and die on that data and are able to combine it with rich travel profiles to complement it; they will not be slow to exercise their power. In this respect even the most sophisticated data sets available to airlines from their own FFP’s are just pale shadows. When embracing a traveller’s “total” annual travel data picture, a single airline, partnership (or even alliance), can only touch one small piece of the jigsaw. For airlines to avoid commoditisation and marginalisation, they will need new pragmatic alliances that allow access to broader and new forms of data. What form these will these take – for example the profile of the other partners needed, who will dominate the partnerships – and even the very role that airlines will play, are all in the mix here. It seems inevitable that these massive aggregators, who own more data on travelling individuals than airlines and intermediaries combined, cause airlines to lose control of pricing, revenue and yield, just as hotels have lost control to OTAs and HBAs. Can airlines have any hope of emerging as winners in this data revolution? Innovation, thinking outside the box, will be critical. That will need management boards with different profiles, and new managements, who understand more about retail and data than about buying and flying big boys’ toys. Even if it is possible, getting from here to there will be a massive leap. The debate itself will be a powerful disruptive force in its own right. This session seeks to determine the likely shape of the way third party will evolve. Moderator: WebinTravel, Founder & Editor, Siew Hoon Yeoh Panel:
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| 16:30 | Panel Discussion: A big discussion about Big Data in two sessions Session 2: The future role of Big Data in the airline system Whereas Session 1 has looked at the likely evolution of the present system, and the issues involved in that, Session 2 will cover the new external forces that are beginning to emerge that will challenge the fundamentals of the airline system. These potential challenges to the system are emerging very rapidly. As more organisations invest heavily in big data and in using that data to develop granular profiles of millions of travellers and would-be travellers, the old arguments about who owns the passenger become moot. Amazon for example has spent USD3 billion in the past three years in the data analytics area. For individual airlines - even the more enlightened ones - to engage and invest on this scale is unthinkable. This panel will seek to expose in detail the nature and scale of these developments as they affect the airline industry, as a preface to tomorrow’s boardroom session, which will explore potential airline responses to the new forces. Moderator: Troovo, CEO (and President of ACTE), Kurt Knackstedt Panel:
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| 17:30 | End of Day | |
| 19:00 | Pre-Dinner Drinks | |
| 19:30 |
Part III: What do Brexit, Trump and rising nationalism mean for aviation? Hosted by CNN's Anchor Richard Quest |
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| DAY 2 – FRIDAY 12 May 2017 | ||
| 09:00 | Chairman's Welcome CAPA – Centre for Aviation, Executive Chairman, Peter Harbison |
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| Part IV: How do airlines prepare for the new environment? If disruption occurs of the scale envisaged, airline managements will need to address ways of preparing for the change – now. Change is much more than incremental. Do Managements have the tools to deal with it? We have assembled two management boards with their respective advisers, to assess options for future. The first will review the operational market evolution, partnerships and ownership issue; the second will address how to respond to the inevitable inroads into data manipulation that external companies will control. |
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| 09:05 |
Whatever the status of disruption in the short and medium term, what can airlines do to prepare for a new environment which will exist in 2025? Creating a bridge to the future. Getting it right now will not just be optional, but a matter of survival – or not. As the old system dies, there will be casualties. This Board meeting will explore the options available to airline managements, notably the shape of alliances and airline partnering, the role of equity acquisitions, how regulatory bodies will view JVs; can inter-governmental bilateral relations adapt fast enough to allow airlines the scope to prepare for the future. Is there scope for large non-airline investors to help?
Possible Case Studies #2: Chinese airlines and long haul lower cost Asian carriers are becoming powerful on the Pacific and European routes. How do foreign secure viable positions in these markets. Possible Case Studies #3: Gulf airlines are the most efficiently positioned geographically and in terms of fleets and cost bases. There are only three (along with the other super-connector, Turkish Airlines); what partnership options present themselves – or should they be stopped on the grounds of unfair competition? Chairman: CAPA - Centre for Aviation, Executive Chairman, Peter Harbison Third parties:
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| 10:25 | Airlink BKH Aviation, Chairman, Barry Humphreys |
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| 10:30 | Coffee & Networking | |
| 11:00 |
The most significant disruption that has occurred to date in the aviation and travel industry (and retail generally) is the shift in behaviour of consumers. The app-empowered consumer is more knowledgeable today, leveraging greater transparency, wanting direct control and unwilling to accept arcane rules that have governed airline operations for decades. And when they behave as business travellers they demand to be rewarded and treated with some recognition of the value they bring to the airline – something airlines are rarely able to deliver. In short, consumers have been liberated (and captured) by technology. Small businesses are able to compete in global markets in ways that would not have been possible 15 years ago (CAPA is one of them!); B2C consumers are equipped with the information to see into the market – and the tools to get what they want. And if they are prevented for what they consider unnecessary reasons, they will make their concerns felt vocally through social media outlets. For an industry which has so often relied on opacity to extract greater benefits, transparency can hurt. Many airlines are now aware of this new consumer power – and they are making all the right noises, talking of the need for personalisation and understanding the customer. Yet very few airlines are actually doing anything effective to implement the words they are using; they know they need to, but rarely have the instruments to convert words into action. Third party data aggregators, like Airbnb, Amazon, or messaging functions such as Facebook's WhatsApp or China's WeChat - which now enables travel bookings - illustrate how every word spoken can be used to capture consumers. A private conversation where people discuss a football match can translate into an offer of travel and accommodation for the game. And WeChat can book it all. For an airline, even with a willing management and the ability to fund a few billion dollars’ worth of investment (that narrows the field significantly), it would take at least two years for even the most innovative airline to achieve “personalisation” on a useful scale. And it cost money. The airlines’ lack of enthusiasm for investing heavily in big data “could be due to the fact that many big data projects don't have a tangible return on investment (ROI) that can be determined upfront" (Gartner). Some airlines are trying, with tech labs and the like, but even the best pale into insignificance when faced with the scope and scale of the major analytics aggregators. So these third party data hegemonists are able to offer a growing array of “solutions” to the providers, all the while strengthening the reliance of their hotel, airline and other clients. The end game would appear to close out airlines, GDSs and other traditional sales outlets – or would it? Whatever the overall outcome, airlines have a massive job to do to approach the sort of data reach and personalisation opportunities that the third parties have. This second board room discussion will explore the options available and what is possible, or not.
Chairmen: CNN, Anchor, Richard Quest Third Parties:
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| 12:30 | Lunch and Conference Close |
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| 13:15 |
Golf Day: THE CAPA CUP: Europe vs ROW Tourism Ireland are kindly hosting a special Golf Day at the Powerscourt Golf Course. Tee off will be at 13:15 following lunch at the end of the Summit. Anyone wanting to play golf should ensure they register on the registration form and bring their golf shoes. Clubs will be provided but golfers must advise if they are left or right handed.
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