2016 IATA AGM DAY 2 · 2019-06-01 · [ 3 ] ExecutiveReport The Aviation Week Network Executive Report, produced onsite at the 2016 IATA AGM, combines reporting from the network’s

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June 3, 2016

INSIDE THIS ISSUE

Quotes from the AGM page 3

US screening-line crisis was not made overnight page 4

Clark: No such thing as too many A380s page 6

IATA’s sunnier 2016 airline profit fore-cast page 7

Industry observers see potential for 5th major US airline page 8

Hawaiian CEO calls on US govern-ment to maintain competition page 9

Qantas downplays new competition threats page 10

Day 1 in pictures

Photo gallery of speakers and CEOs.SEE PAGE 11

Irish transport minister lauds open aviation policy benefits

Just four weeks into the job, Ireland’s new

Minister for Transport, Tourism and Sport

Shane Ross delivered a lively keynote address

on the AGM’s opening day Thursday, making

clear Ireland’s support for aviation, liberaliza-

tion and competition.

Ross lost no time getting to the heart of

some of the global aviation industry’s key issues.

“I have always been pro-consumer and pro-

competition. At a global level, I believe that

an open and competitive aviation sector is the

best mechanism to meet the challenges ahead.”

Ross said that by loosening the restric-

tions of Ireland’s former bilateral system and

embracing liberalization, multiple new airlines

have been able to enter the market, bringing

more competition.

“Let me be clear that from my perspective

the needs of the customer should always be at

the heart of aviation policy making; whether

it be their safety, security, service or economic

needs.”

The minister had sharp words for the US,

which has still not given full approval for Nor-

wegian Air International, an Irish unit of low

cost carrier Norwegian Air Group, to begin

Ireland-US services despite the US-EU Open

Skies agreement. NAI was given tentative

approval by the US Department of Transpor-

tation in March after more than two years, but

the review process continues.

“To my knowledge, this is the first time since

the US-EU Open Skies agreement came into

force in 2008 that an airline has announced new

transatlantic services to the traveling public,

but has been unable to operate the services due

to delayed government approval,” Ross said.

“Such competition is exactly what the agree-

ment was designed to achieve.”

Ross also touched on regulation, noting that

“there will always be a debate as to what bal-

ance between regulation and self-regulation is

best in different sectors,” and on aviation taxes.

Ireland suspended its airport departure tax in

2013 to try and encourage new routes and ser-

vices. The results have been “very positive,”

Ross said and the government will continue a

0% departure tax policy through 2016.

However, Ross also noted that the tax was

introduced during a fiscal emergency. “I can

appreciate why governments faced with the

very difficult task of balancing the books have

chosen to introduce aviation taxes,” he said.

“Taxation is a sovereign matter … no industry

should feel it is immune from contributing its

fair share.”

The Executive Report asked Aer Lingus

CEO Stephen Kavanagh at a press confer-

ence later that morning whether that could

be interpreted to mean that the departure tax

might ultimately return. Kavanagh responded

that he did not see it that way. “The political

decision to remove the departure tax has been

very positive and I think the lessons have been

learned in Ireland.”

Karen Walker/ATW

[email protected]

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ExecutiveReport

The Aviation Week Network Executive Report, produced onsite at the 2016 IATA AGM, combines reporting from the network’s “Power of Three” global editorial teams: Air Transport World, Aviation Daily and Aviation Week & Space Technology. Stay connected and informed at AviationWeek.com/IATA.

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HEARD AT THE AGM

“We went from paradise to hell.”

Brussels Airlines CEO Bernard Gustin

“I have never in my political life come

across a unanimous approval … I am green

with envy at how you conduct your business

here.”

Irish Minister for Transport, Tour-ism and Sport Shane Ross after watch-ing the AGM delegates unanimously elect Aer Lingus CEO Stephen Kava-nagh as president of the 72nd AGM.

“If oil is the reason for your profitability,

I question the sustainability of your airline.”

Aer Lingus CEO Stephen Kavanagh “Electronic shock treatment would not be

described as pleasurable, but the [2008-09]

global financial crisis certainly gave the indus-

try a shock … Airlines realized they need to

pay investors for risking their capital.”

IATA chief economist Brian Pearce

“We’re not happy that our customers are

missing flights. But we’re not going to criticize

the TSA publicly.”

Delta Air Lines CEO Ed Bastian

“We have a very good relationship with

low cost carriers because they bring in lots

of people … to not welcome them, to me,

makes no sense.”

Emirates Airline president Tim Clark

“Capacity is growing ahead of under-

lying demand. That is not necessarily

irresponsible.”

Jetstar Airways Group CEO Jayne Hrdlicka

“A Single European Sky would add €245

billion to the European economy in 2035

alone. ... Putting into numbers what we, as a

force for good, can make possible is important.

It should help governments put more muscle

into the long-term political leadership needed

for infrastructure development.”

IATA DG and CEO Tony Tyler

“Folks making comments on [Delta Air

Lines’ CSeries] pricing probably don’t have

the information. They don’t know what our

pricing is and it’s all speculation … A lot of

the commentary that’s out there is because

people are now seeing there is a threat from

our airplane.”

Bombardier VP-commercial opera-tions Ross Mitchell

“I think the airline industry today is structur-

ally much stronger than it was, so there is a stron-

ger possibility of keeping it this way, even if fuel

prices go up.”

Aeromexico CEO Andres Conesa

[ 4 ]

ExecutiveReport

US screening-line crisis was not made overnightLong queues and large crowds on the landside of airports

are not necessary and put people at risk, IATA DG and CEO Tony Tyler made clear on the opening day of the AGM.

But the security queue crisis that hit major US airports this spring

was not only long in the making, it will also be slow to remedy.

The US Transportation Security Administration (TSA) reached

a crisis point this spring, when extremely long security lines wreaked

havoc with air travel at major airports. United Airlines had to rebook

4,300 passengers in just a single day in early May because of long

checkpoint queues at Chicago O’Hare (ORD).

But from the point of view of TSA administrator Peter Neffenger,

TSA was already in crisis when he was sworn in as the agency’s head

last July. Neffenger, formerly the vice commandant of the US Coast

Guard, was installed in the top post at TSA in the aftermath of revela-

tions that undercover investigators from the Department of Homeland

Security (DHS) had repeatedly brought banned items through check-

points at major airports.

Neffenger found a TSA workforce that he considered too small,

inadequately trained and which he believed placed too much emphasis

on moving passengers through lines quickly. “I do think we are at a

lower staffing level than we need to be to meet peak demand at peak

periods,” Neffenger told the US House of Representatives Homeland

Security Committee during May 25 testimony.

Neffenger warned that the “summer travel season is going to be

busy” and noted that TSA will screen 740 million total passengers for

the full year versus 643 million in 2013. He said that after being sworn

in, “it was immediately apparent to me” that TSA would not have

“enough screening staff to man the checkpoints effectively.”

Neffenger said the entire TSA workforce had to be retrained. “I

was surprised to discover when I came to TSA that there was no true,

formal training program across the entire organization, at any level of

the organization,” he explained. “To me, that’s foundational.”

Neffenger said front-line TSA workers were not to blame for the fail-

ures unearthed by the DHS investigators. The screeners, he explained,

“were doing what they were told to do: get people through the lines

fast.”

TSA has temporarily thrown enough resources at the Chicago

market so that ORD security lines, which had consistently exceeded

1 hour in the first half of May, have generally been reduced to about

15 minutes. But with TSA expected to screen nearly 100 million more

passengers in 2016 versus 2013 with a 12% smaller workforce, security

checkpoint lines are expected to remain a problem in the US for the

foreseeable future.

While he did not mention TSA specifically, Tyler said in his opening

address Thursday at the AGM that the Brussels attack highlighted the

importance of security in airport landside areas. “This is fully within

the remit of government—as in any public space,” he said.

In a media briefing afterward, Tyler added, “we should not have

heavy crowds at airports, so let’s get on and do it—make the system

flow and reduce the risks for everybody.”

Aaron Karp/ATW

[email protected]

IATA pushes for latitude in how airlines meet tracking standard

IATA has called for an open approach on the specifics of how airlines will meet a 15-minute interval aircraft tracking requirement by November 2018.

In the aftermath of the March 2014 disappearance of Malaysia

Airlines flight MH370, ICAO adopted a proposal for airlines to adhere

to a standard of reporting aircraft position at least once every 15 min-

utes when in oceanic or remote airspace. That standard was originally

supposed to be applicable by November 2016, but after IATA and

others questioned the timeline’s feasibility, the applicability date was

pushed back to November 2018.

IATA SVP-safety and flight operations Gilberto Lopez-Meyer,

speaking to reporters at the AGM Thursday, said November 2018 is

workable for the new tracking standard as long as there is not a specific

technology requirement. “We expect there will be new technology very

soon,” he explained. “In one or two or three years, we may have bet-

ter technology and the industry should be able to switch to the better,

lower-cost technology.”

IATA is working with ICAO on developing guidance material and

recommended practices for meeting the tracking requirement. Com-

plimentary standards, spelling out more specifically how airlines can

meet the requirement, are expected to be completed by March 2017.

“This is a decision that has to be taken very carefully,” Lopez-Meyer

said. “The technology is changing so fast that we might expect that

very soon we’d have a better solution.”

As that new technology is developed, airlines should be given lati-

tude in leveraging existing systems already installed on aircraft to meet

the tracking standards, he said. “In a few years, systems and technol-

ogy may allow for global surveillance coverage,” Lopez-Meyer noted,

cautioning that it may not make sense for airlines to invest heavily while

new airliner surveillance technology is under development.

“The cost to the industry is going to be enormous,” he said. “We

are willing to do it.” But, he emphasized, forcing an investment in a

specific technology is unwise.

Aaron Karp/ATW

[email protected]

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ExecutiveReport

Clark: You can never have enough A380sDubai-based Emirates Airline will get its 79th Airbus A380

soon, and two more aircraft are in the pipeline. “That means by the end of next month we have 81 A380s in the fleet,” Emir-ates president Tim Clark told the Executive Report on the sidelines of the AGM.

Clark said if an A380neo was built, he understood it would have bigger

winglets, delivering a significant improvement on fuel burn. “If Airbus

does not build the A380neo, but will put new, bigger winglets on exist-

ing A380s we have on the order book, that would be great,” Clark said.

“However, there are no plans to build bigger winglets for the current

A380s.”

Earlier this week at a media event in Hamburg, Airbus president and

CEO Fabrice Brégier said, “Perhaps it is possible to offer some options

regarding bigger, more efficient winglets, but this depends on the business

case. The A380 is not an easy program to manage. Each time we need to

invest on top of any very reliable aircraft, which is what we have today,

we need to look at the return on investments.”

Brégier said market conditions were not yet there to launch a neo

variant and “we don’t plan to make any decision.”

Clark said the global economy was flat, but passenger numbers were

increasing at a rate of 4%-5%. “But that is not enough to fill the capac-

ity that is coming in,” he noted. “Seat and yield factors are not as strong

as they used to be, and the prognosis for me, for the next years, is about

the same. But we always manage it; we have had good years, and we

have had bad years.”

Asked whether there were too many A380s in the Emirates’ fleet, Clark

said, “Oh no, never enough, no way. The A380 is the sweetest thing for

us. It is our one unique selling point; this is a marketing advantage.”

Clark said the next new European destination for the Dubai carrier’s

A380 will be Nice, France.

Kurt Hofmann/ATW

Terrorism is a concern for airlines across the world, but the big-gest challenge to growth is the lack of airport infrastructure in Asia Pacific and Africa, according to Turkish Airlines CEO Temel Kotil.

“Demand in Asia Pacific and Africa is increasing, but airport infrastructure

cannot accommodate this demand. There is a slot problem in these regions.

We need to stimulate investment in adequate airport infrastructure,” Kotil said

on the sidelines of the AGM.

The second biggest challenge airlines face is the threat of terrorism, he said.

“This is not a regional issue, this is a worldwide problem,” he said, acknowledg-

ing that Turkey had several terror attacks recently. “It’s everywhere, also in Paris

and Brussels or other parts of the world. Everybody has to stand strong and

take measures against the upsurge of terrorism,” Kotil said.

Passenger traffic into Turkey has declined as a result of terror attacks in

the country, but Turkish Airlines has been able to get around this by growing

international-to-international transfer traffic, he pointed out.

Turkish Airlines has built a large international network over the past 10 years,

taking advantage of the strategic location of Istanbul to establish a hub-and-

spoke system. Its geographic footprint now spans 246 international destinations,

“thus we are not dependent on one region. We put our strategy in place to

de-risk our operations,” Kotil said.

It added 17 gateways to its network last year and plans to add a further 12

this year. “We are slowing down the expansion of the size of the network,”

he noted: “There just aren’t enough cities around. We now serve 15 cities in

Germany, 10 in Italy.”

But, he vowed, Turkish Airlines will continue growing. The Istanbul Ataturk

Airport (IST)-based carrier produces 2.1% of total ASKs put in the market

by airlines worldwide. “We are still small. Our capacity is less than half of the

production [ASK] of the largest airline.”

Turkish Airlines plans to grow ASKs 18% this year, slowing down to a 10%

growth in 2017. The focus will be on adding frequencies, Kotil said, while stress-

ing that IST can handle the scheduled growth. An extension of the terminal

building opened last month, and delivered additional passenger handling capac-

ity and aircraft parking places.

Ample capacity will be available as of 2018 when Istanbul’s third airport

is scheduled to open. In the first phase, the new airport will have two parallel

runways and a terminal capacity of 90 million passengers annually.

All airlines using IST will move to the new airport. “It has been contractually

defined that all airlines will move. It would not be good for Turkish Airlines or

for [return on] the investment if only some operators would make use of this

airport,” Kotil insisted.

Cathy Buyck, Aviation Week

[email protected]

Turkish CEO: Airport infrastructure, terrorism biggest challenges

Kur

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Emirates president Tim Clark (right) sitting with Turkish Airlines CEO Temel Kotil during the AGM this week.

AviationWeek.com/IATA [ 7 ]

ExecutiveReportJUNE 3, 2016

IATA raises 2016 global airline profit forecast 8.5%IATA boosted its 2016 global airline net profit forecast by 8.5% from its

December 2015 forecast to $39.4 billion, citing lower fuel prices and improv-

ing airline efficiency.

Speaking to reporters Thursday at the AGM, IATA DG and CEO Tony

Tyler said the main difference between the new forecast and the previous

projection is that per-barrel oil prices are now expected to average $45 for

the full year, down from December’s assumption of over $50 per barrel. But

he and IATA chief economist Brian Pearce were quick to emphasize that

industry profitability is not solely a function of low fuel costs. In fact, per-barrel

oil prices—sitting at just under $50 after falling to as low as $33 earlier this

year—are generally trending up.

Following the 2008-09 global financial crisis, “airlines were actually changing

the structure of their business before low fuel prices,” Pearce said. Given that

carriers have paid down debt and are more effectively utilizing capital, par-

ticularly in North America (from where more than half of the 2016 forecasted

net profit will come), airlines are likely to “deliver a pretty good performance”

even if fuel prices continue to rise, according to Pearce.

“In the last 24 hours, I’ve talked to two airline CEOs, one of a large airline

and one of a small airline, and both have said to me, ‘I’m not bothered with

fuel prices going up. I’m still going to make money.’ The industry is showing

more resilience,” Tyler said.

Pearce described airlines’ financial performance in 2015 and 2016—the

only two years ever in which the industry will have produced a positive return

on invested capital in aggregate—as “a normalization” of the commercial

air transport business. “This is really airlines looking like other industries,” he

explained. “This should be commonplace. It looks exceptional, but it should

be commonplace.”

With a net profit margin of 5.6% on an expected aggregate $709 billion

in total revenue for 2016, airlines are in the middle of the pack in terms of

corporate profitability, Tyler noted. “On average, airlines will make $10.42 [per

flight segment] for each passenger carried,” he explained. “In Dublin, that’s

enough to buy four double-espressos at Starbucks. Looked at from a different

angle, Starbucks will earn about $11 for every $100 in sales while airlines will

make $5.60. We don’t begrudge Starbucks their profitability. But there is clearly

still upside for airline profits.”

Tyler and Pearce pointed out that airlines’ solid profitability is being achieved

despite a tepid global economy. “It’s an impressive performance and the mood

of the industry is generally optimistic,” Tyler said.

Aaron Karp/ATW

[email protected]

Bombardier executives tout CSeries’ sales momentum

Fresh from securing the most significant order for the CSeries—75 CS100s

plus 50 options from Delta Air Lines—Bombardier is making an aggressive push

to market the aircraft to airlines around the world. All of the Canadian company’s

top executives, including president and CEO Alain Bellemare, are in Dublin at

the AGM, showing off a CSeries to airline executives.

“A year ago people didn’t think the aircraft would survive,” Bellemare told

the Executive Report. “Today people are talking about what is the next big order

… It’s clear that the aircraft is here to stay. We’re getting great momentum and

there’s more to come.”

Delta’s April CS100 order, as well as a February commitment from Air Canada

for 45 CS300s plus 30 options, have given the CSeries newfound credibility in

the marketplace, according to Bombardier Commercial Aircraft president Fred

Cromer. “Adding Air Canada and adding Delta, you’re starting to have airlines

… coming to us and saying, ‘There’s something there obviously and now I need

to take sometimes a first look at the airplane and sometimes a second look at the

airplane.’ So the endorsement [from Delta] is doing exactly what we hoped it

would do,” Cromer said.

“The exposure of this airplane is really creating a lot of buzz in the industry,” he added.

Bombardier acknowledges that it was aggressive in pricing during negotiations with Delta and Air Canada, but company executives have brushed aside

comments about pricing from competitor manufacturers.

“What I can say is we have said that we were going to be more aggressive to capture some deals,” Bombardier VP-commercial operations Ross Mitchell said.

Aaron Karp/ATW

[email protected]

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Bombardier CEO Alain Bellemare and Bombardier Commercial Aircraft president Fred Cromer

[ 8 ]

ExecutiveReport

US airline industry consolidation has not run its course, with further mergers

possibly resulting in a fifth major network carrier, two PWC consultants said

in an interview on the sidelines of the AGM.

A new airline could emerge to match the networks of the four major US

airlines—Delta Air Lines, American Airlines, United Airlines and Southwest

Airlines. “There is still room for a fifth large airline,” Terry said.

“There probably is more room in this space for consolidation,” PWC

principal Jonathan Kletzel said. Organic growth among the middle tier of

airlines probably has come to an end, meaning the only growth will come

from acquisitions, Kletzel and Terry said. Without consolidation, airlines in

the middle tier will find it difficult to grow larger at slot-constrained airports,

such as the three New York-area airports, and it would be difficult for them to

match the scale of the majors, Kletzel said. “When you have a mature market,

the middle gets squeezed,” he said. “Either play up or go away.”

Madhu Unnikrishnan/Aviation Daily

[email protected]

Industry observers see potential for fifth major US airline

AerCap CEO sees airlines extend older aircraft leases

Airlines are extending a significant number of leasing contracts for older

aircraft, taking advantage of lower fuel prices and deferring decisions to take

delivery of new jets, according to AerCap CEO Aengus Kelly.

“We have seen lots of these cases,” Kelly said on the sidelines of the AGM.

In his observation, lease contracts are extended by two to three years before

the aircraft are finally retired. Kelly has not seen many cases where leases are

extended much beyond a few years.

Airbus A340s, Boeing 747s and 757s are the aircraft types most affected,

he said. Kelly also expects demand for used Airbus A330s and Boeing 777s,

which will come available off their first leases in significant quantities through

the next one to three years.

“A lot of airlines are looking at them,” Kelly said. “You will lose a lot of

money on new 777s or A330s,” he predicted, pointing out they will soon be

replaced by the 777X and the A330neo, depressing residual values and market

demand.

Jens Flottau/Aviation Week

[email protected]

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Hawaiian’s Dunkerley: US government must ensure competition

Airline industry consolidation has benefitted the merged carriers and the industry at large, but the US government must ensure independent carriers are able to compete, Hawaiian Airlines CEO Mark Dunkerley said at the IATA AGM.

“Those who make policy must recognize that if they value competi-

tion represented by the smaller, independent carriers, they must ensure

a competitive environment,” Dunkerley said. This

centers on access, which he defined as access to both

slots at slot-constrained airports as well as access to

connecting traffic.

And to this point, Dunkerley said Hawaiian

is studying the proposed Virgin America-Alaska

Airlines merger to see if “there are specific things

to pursue further.” He declined to say what those

measures may be or what specific areas of the com-

bined carriers’ operation Hawaiian would find most

detrimental.

However, Virgin America’s entry into the Hawaiian market so far has

not affected Hawaiian. “We believe we offer the best formula for service

and brand equity in the Hawaiian market,” he said.

Hawaiian prefers to remain independent. “Consolidation requires

those airlines to be all things to all people,” he said. “We get more elbow

room to differentiate ourselves from the competition.”

Ensuring smaller carriers’ access to markets is behind Hawaiian’s

aggressive pursuit of slots at Tokyo’s Haneda Airport, Dunkerley said.

The US Department of Transportation (DOT) awarded Hawaiian a

nighttime slot for a split Haneda-Kona and Haneda-Honolulu service,

but the airline has also applied for a daytime slot for Haneda-Honolulu

flights. The Japanese government has made six mainly daytime slots

available to US carriers for flights to the mainland.

“Four out of 10 US-Japan passengers fly to and from Hawaii,”

Dunkerley said. “Every other applicant

is either a substitute for a Narita flight or

needs significant transfer traffic in order to

succeed.”

Basing the slot award on the amount of

connecting traffic is a mistake, Dunkerley

said. It becomes a vicious circle. In other

words, if that is the main criterion, network

carriers will shut out smaller carriers, an

effect that will only increase as network car-

riers grow larger. “This creates a per se bias

against the smaller carriers,” he said.

Returning to the theme of access, Dunkerley said the US government

should rule to ensure that competition thrives. Giving the Haneda slot

to Hawaiian would show that policymakers “care about competition,”

he said.

Madhu Unnikrishnan/Aviation Daily

[email protected]

Airlink seeks to double airline partner numbers

Airlink executive director Steven Smith has a clear mis-sion and vision. “We would like to double our airline part-ners and deepen our network so we have sufficient capacity when needed,” he told the Executive Report.

His timeframe is “as soon as possible.” Airlink, established in 2010,

connects more than 60 nongovernmental organizations (NGOs) and

some 35 airlines that can help provide critical supplies and disaster

response teams when a crisis occurs, such as an earthquake, tsunami

or other life-threatening event. Many more carriers around the world

actively participate in the provision of emergency response and recov-

ery efforts. But, Smith said, “by coordinating these individual efforts

we can deliver efficiencies and cut costs.” Member airlines vary in

size, from small to large, and include freighter carriers as well as pas-

senger airlines.

“Everybody is welcome. Airlines really do want to help and do the

right thing. We are here to pull these efforts together,” he said.

Airlink does not just consolidate the demand of NGOs and coordi-

nates cargo and passenger capacity on airlines to ensure timely emer-

gency humanitarian relief to disaster sites. It also identifies the needs

and requirements, and prioritizes the support for humanitarian relief.

In addition, it scrutinizes the NGOs to assure they are legitimate and

focused on providing the right relief. The organization has a booth

in the AGM exhibit hall

Cathy Buyck/Aviation Week

[email protected]

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“Four out of 10 US-Japan passen-gers fly to and from Hawaii. Every other applicant is either a sub-stitute for a Narita flight or needs significant transfer traffic in order to succeed.”

—Hawaiian CEO Mark Dunkerley

[ 10 ]

ExecutiveReport

Qantas downplays new competitive threats

Qantas Group executives are confident their network offer-ings are strong enough that new competitor alliances in key international markets will not hurt their business.

Rival Virgin Australia this week unveiled a partnership with China’s HNA

Group that will see them combine in the Australia-China market, with Virgin

signaling it will launch new flights to China. Meanwhile, several of Jetstar’s

LCC competitors have formed an alliance that will cover many important

Asian markets.

Briefing reporters on the sidelines of the AGM Thursday, Qantas CEO

Alan Joyce said he was comfortable with the carrier’s position in the China

market. While Qantas mainline has just one route to Shanghai and also has

flights to Hong Kong, Joyce noted that Jetstar recently launched service to

the Chinese city of Wuhan. And Qantas can offer a broad Chinese network

beyond its gateways thanks to partnerships with China Eastern and China

Southern.

The China Eastern alliance is particularly valuable, as the carriers code-

share on their flights between Australia and China and on many domestic

routes, and have co-located services in the Shanghai gateway. Joyce said he

recently held discussions with China Eastern chairman Liu Shaoyong about

how to further advance the alliance.

Joyce said similar questions about competitive pressure were raised when

new players or partnerships emerged in Australia-US and Australia-Europe

markets. “We’ve seen this movie before,” Joyce says. Qantas will “play our

own game” in the China market.

Regarding the competing LCC alliance, Jetstar Group CEO Jayne

Hrdlicka said “it is great

to see innovation” like

that in the industry.

However, she noted that

Jetstar also has an exten-

sive list of interline and

codeshare partners out-

side its group, so other

Asian LCCs that are

just starting to form such

relationships are “playing

catch-up” to some extent.

One of Jetstar’s new-

est interline relationships

is with Korean LCC Jin

Air, which is scheduled to

take effect later this year. Jetstar is in discussions with Jin Air about the pos-

sibility of interlining on routes beyond Korea, Hrdlicka said. She would not

discuss specific markets, but signaled that it could give Jetstar customers from

Japan in particular greater access to North Asia destinations.

Regarding the expected entry of AirAsia Japan into that market, Hrdlicka

does not believe it will affect Jetstar Japan’s business much.

Adrian Schofield/Aviation Daily

[email protected]

Get

ty Im

ages

Mueller details Malaysia Airlines’ A350 fleet plansThe recent expansion of Malaysia Airline Bhd.’s (MAB) Airbus A350

commitments means the airline cannot only replace its A380s on London

flights, but will also use the new aircraft on another route.

Speaking to the Executive Report, MAB CEO Christoph Mueller said

four of the six leased A350s will be used for the carrier’s double-daily Kuala

Lumpur-London flights. The other two aircraft will be used for cover in case

of maintenance issues, and also to operate an existing Asia-Pacific route.

Mueller said Auckland or Tokyo flights were the most likely to be selected.

An agreement covering the initial four A350s was reached with Air Lease

Corp. last year, with deliveries scheduled to begin in late 2017. The carrier

exercised options for two more leased A350s in May, which are expected to

begin arriving in 2018.

The main rationale for ordering A350s was to replace the A380s on

London flights, Mueller said. However, this will not occur immediately. The

first few A350s will be used initially on shorter Asian routes so the carrier can

gain more experience with their operation. The airline also does not want

a mixed fleet on the London flights, so it will wait until it has four A350s

before it allocates them to this route.

This also means MAB will not phase out its A380s one-for-one as the

A350s arrive, Mueller said. The airline will need to retain at least four of

them until it has the same number of A350s. However, all of the A380s will

leave the fleet by June 2018.

MAB attempted to sell two of the six A380s last year, but did not find

buyers and elected to retain them all until the A350s arrive. Mueller says

the airline will probably start actively marketing them again in about a year.

It is unlikely any of the A380s will need to be parked before 2018, Mueller

said. As well as the London flights, one of the A380s is used almost full-time

for charter operations. The A380 fleet essentially will be cut to five through

April, as they will be undergoing heavy maintenance one at a time.

MAB is scheduled to finish work on a strategic fleet plan within a month

or two. This will lay out the airline’s fleet strategy for the next five to six years.

Mueller will be leaving the carrier in September, however, citing undisclosed

personal reasons when his decision was announced in April.

Adrian Schofield/Aviation Daily

[email protected]



Faces of the AGM in DublinTop left: IATA SVP & corporate secretary Paul Steele, Aer Lingus CEO Stephen Kavanagh, IATA DG & CEO Tony Tyler.

Center from left: ICAO Council president Olumuyiwa Benard Aliu, Tyler, Delta Air Lines CEO Ed Bastian.

Bottom, from left: Qatar Airways CEO Akbar Al Baker, IAG CEO Willie Walsh, Emirates Airline president Tim Clark.

All photos by Barry Cronin

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2016 IATA AGM DAY 2 · 2019-06-01 · [ 3 ] ExecutiveReport The Aviation Week Network Executive Report, produced onsite at the 2016 IATA AGM, combines reporting from the network’s