Sponsored by: Opening Plenary

Transcription

1 Sponsored by: Opening Plenary

2 WORLD PASSENGER SYMPOSIUM October 15 17, 2014 San Diego, CA, USA

3 Opening Plenary IATA Opening Remarks Aleks Popovich Senior Vice President, Financial and Distribution Services (FDS), IATA

4 Opening Plenary Welcome Address by Principal Airline Sponsor Keeping on Course Jerry Foran Head of Product Delivery, Revenue Management, British Airways

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10 Video Name: 2b.Foran.Jerry.Welcome Address by Principal Airline Sponsor

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12 Opening Plenary 100 years of commercial aviation, what s next? Tony Tyler Director General and CEO, IATA

13 Opening Plenary Economic outlook: Where does the industry come from? Where is it going? Julie Perovic Senior Economist, IATA

14 Key trends

15 The demand cycle has been turning up Global industrial production, trade and business confidence PMI index level, 50=no change % change o % % 0% -10% Source: CPB Netherlands, Markit 35-20% International Trade Industrial Production PMI Business Confidence Source: CPB Netherlands, Markit PMI Source: Thomson Reuters Datastream

16 Air travel growth has been robust 15% World industrial production and RPK growth 10% 5% 0% RPK growth Industrial production growth -5% -10% -15% Source: IATA, Netherlands CPB

17 Variation among regions, but solid overall 170 RPKs by region of airline registration 160 Middle East 150 Indexed to 100 in May Cycle peak for market total Latin America Europe Asia Pacific Africa North America Source: IATA

18 Passenger business has supported industry revenues US$ billion Source: IATA, ICAO Revenues from passengers and cargo Passenger revenue Cargo revenue US$ billion

19 But financial performance has been mixed Operating margins COPA Airlines Southwest Airlines Ryanair Delta Air Lines American Airlines Jet Blue United Airlines AirAsia THY - Turkish Airlines British airways (IAG) Air Canada Japan Airlines Lufthansa Avianca Air France - KLM GOL SIA Lan Airline Korean Air Garuda Thai 2014Q2 2013Q2-15% -10% -5% 0% 5% 10% 15% 20% Source: IATA, Airline Analyst

20 Part of the difference is capacity 210 ASKs by region of airline registration 200 Asia Pacific airlines +38% 190 ASKs billion European airlines +18% N America airlines +2% 130 Source: IATA

21 Ancillaries are also making a difference Ancillaries as a % of revenues American Korean GOL AF-KLM Delta 5% Air Canada LAN JAL Turkish Garuda 0% Lufthansa -10% -5% 0% 5% 10% 15% 20% Source: IdeaWorks, Airline Analyst, IATA Ancillaries and operating profits as a % of revenues 25% Ryanair 20% AirAsia 15% United JetBlue Southwest 10% Operating margin, % revenue

22 Overall the picture is improving % of invested capital Return on capital invested in airlines and their cost of capital Cost of capital (WACC) Inadequate returns Return on capital (ROIC) Source: IATA Source: IATA, ICAO F

23 Our passenger forecast service A joint partnership between: Source: IATA, Tourism Economics

24 Source: IATA, Tourism Economics Forecast overview:

25 What are the downside risks?

26 Growth in air travel depends on Asia-Pacific Middle Class in 2009 and projected for 2030 Source: OECD, Standard Chartered Research

27 The outlook for China is fragile The IMF still expects the Chinese economy to expand by 7.4% in 2014 But there are concerns over: Sharp decline in house prices Unregulated borrowing A slowdown in China will impact the entire region Source: IMF

28 Source: Markit, Eurostat The Eurozone economy is waning

29 Trade and economic openness is important Indexed to equal 100 in Air cargo, air travel, world GDP and world trade World air cargo (FTK) World air travel (RPK) World trade World GDP Source: ICAO, Haver, IATA

30 And impacts business travel growth Premium Passengers and World Trade Growth % Change over year 20% 10% 0% -10% -20% -30% Source: IATA, CPB Netherlands Premium Passengers Growth World Trade Growth Source: IATA, Netherlands CPB Source: Thomson Reuters Datastream

31 Trade was expanding faster than local output 20.0% World trade and domestic industrial production growth 15.0% World trade 10.0% % change over year 5.0% 0.0% -5.0% -10.0% Industrial production -15.0% Source: Netherlands CPB, IATA -20.0%

32 But the relationship has broken down Ratio of World Trade to Domestic Industrial Production Source: Netherlands CPB, IATA

33 Trade barriers need to be resisted Source: World Trade Organization, Global Trade Alert, B20

34 Source: Deutsche Bank Research Rising geopolitical risks

35 Opening Plenary The event for a century of aviation and beyond Eric Leopold Director, Transformation, IATA

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37 Digital Transformation Simplifying the Business StB World Passenger Symposium WPS

38 Digital Transformation

39 Mobile transformation First international itunes in 2004 Apple Pay launched in 2014

40 Media transformation First Facebook homepage in 2004 More than 1bn users in less than 10 years

41 Personal transformation

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44 Disruptions ahead?

45 Towards value-add services?

46 More choice and transparency? Air examples Checked bags Preferred seating In-flight meals Early boarding Non-Air Air Value-add Air un-bundled Non-Air core Non-Air examples Hotel revenue & commissions Car rental commissions FFP miles sales

47 Towards door-to-door? Bike - Car Bus - Train Flight(s) Bus - Train Bike - Car Door to Door Trip planning Fulfillment intermodal Real-time information Delivery Pax & Bag

48 Relevance today? Years of travel history FFP preferences Shopping behavior Business & leisure patterns

49 Towards life experiences?

50 Simplifying the Business StB

51 The first 10 years of StB Shopping Departure Flight Arrival Enhancing passenger end-to-end journey Product differentiation Receipt for misc. orders Tickets Security check-point Airline selfservice Check-in kiosks Boarding passes Bags

52 Tickets Paper tickets Electronic tickets

53 Boarding passes Paper boarding passes Electronic and mobile boarding passes

54 Self-service check-in kiosks Airline dedicated kiosk Shared common-use kiosks

55 Fast Travel Manual boarding gate Self-boarding gate

56 Border Control Manual Border Control Automated Border Control

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61 Customer Order Transformation

62 World Passenger Symposium WPS

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64 The Invisible Highway

65 The 1 st Passenger innovation award

66 Welcome Reception & Gala Dinner

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68 #iatawps

69 Digital Transformation Simplifying the Business StB World Passenger Symposium WPS

70 Thank you

71 Opening Plenary 100 years of flying; 50 years of reservation and customer service systems Gary Doernhoefer Consultant, former IATA General Counsel Bryan Wilson Director, Industry Architect, Transformation, IATA

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73 Pan-Am Res. Center

74 AA s Magnetronic Reservisor 1952

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78 1969

79 1929 First US guide is 24 pages 1954 Global guide is 528 pages 1962 Begins feed to CRSs

80 Aeronautical Radio Incorporated founded 1929 SITA founded 1949 Pan Am teletype operators in 1940 s

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88 ATL 1956

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94 1994 A great year

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96 First OTA 12 March 1996 But quickly followed

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98 Feb 21, 2005 G2 SwitchWorks to sell final asset, its res system April 17, 2008

99 Summary of last 50 years 1. First computer reservations systems 2. Expansion of reservation systems to travel agency desktops 3. Failure of joint industry efforts leading to the arms race fueled by deregulation 4. Use of CRSs as competitive weapons which attracted government regulation 5. CAB s choice not to follow DOJ s advice on who should pay for CRS use 6. Expansion of CRSs into Global GDSs 7. Combination of ETs and the Internet leading to Direct Sales 8. OTAs to support industry shoppers 9. Full Content negotiations

100 Networking Coffee Break Sponsored by:

101 Opening Plenary The Voice of the Customer Facilitated by Rajan Datar, Correspondent, BBC

102 Opening Plenary Aviation: The Invisible Highway Brian Terwilliger Film Director, Terwilliger Productions

103 100 years of aviation and beyond: The lense of the customer Moderator: Rajan Datar, Correspondent, BBC Opening Plenary Panelists: Steven J Peterson, Thought Leader, IBM's Global Business Services Travel & Transportation Brett Snyder, President, Cranky Flier LLC Brian Terwilliger, Film Director, Terwilliger Productions Ben Schlappig, Founder and Blogger, One Mile at a Time James Gichuru Kirubi, CEO, Belvoir Holdings Limited Jonathan Lieberman, Recruitment Specialist, Allstate Insurance Company of Canada

104 100 years of aviation and beyond: The lense of the customer Moderator: Rajan Datar, Correspondent, BBC Opening Plenary Panelists: Steven J Peterson, Thought Leader, IBM's Global Business Services Travel & Transportation Brett Snyder, President, Cranky Flier LLC Brian Terwilliger, Film Director, Terwilliger Productions Ben Schlappig, Founder and Blogger, One Mile at a Time James Gichuru Kirubi, CEO, Belvoir Holdings Limited Jonathan Lieberman, Recruitment Specialist, Allstate Insurance Company of Canada

105 Opening Plenary From exclusivity to commodity, is flying still glamorous? Moderator: Rajan Datar, Correspondent, BBC Panelists: Thella Bowens, President and CEO, San Diego County Regional Airport Authority José Luis Garza, CEO, Interjet Christoph Mueller, CEO, Aer Lingus Marty Salfen, General Manager, Global Travel & Transportation Industry, IBM Otto de Vries, CEO, Association of Southern African Travel Agents(ASATA)

106 Sponsored by: Lunch

107 WORLD PASSENGER SYMPOSIUM October 15 17, 2014 San Diego, CA, USA