State of the Aviation Industry a Hot Topic at City Break 2008

Reed Travel Exhibitions’ business-to-business show dedicated to the city break market, City Break 2008, held a lively panel discussion on one of the hottest topics of the industry - the state of the aviation sector.

With the growth of the European city break market attributed to the low-cost airlines, the panel discussion was a fitting subject area for the gathered professionals. Overseen by respected aviation consultant, John Strickland, Director of JLS Consulting, senior representatives from key European airlines – Arian van der Werff from Transavia.com, Vladimir Ognjenovic from JAT Airlines and Michael Whitfield from Easyjet – made up the panel.

Collectively representing a range of opinion from traditional carriers to focused and pan-European low-cost carriers, the panel, concentrating on ‘route development in a challenging climate’, addressed the crisis conditions facing the airline sector:

- Fuel prices and the global credit crunch
- The growing tax burden on airlines
- The sensitive issues of airlines and the environment.

The panel explained some of the aspects of the low-cost model and looked at positive opportunities including lessons that traditional airlines can learn from low-cost carriers and the promotion and marketing of new routes to city destinations.

The consensus among the panellists was that whilst fuel prices were spiralling, acting to cut costs would be the key to survival for airlines. Panellists concurred that it would be the strength of a company’s balance sheet that would determine its financial future.

Despite the bleak economic backdrop, there was confidence that airlines could continue to grow by choosing their new routes carefully and adding capacity on the most successful routes. However, the issue of rising airport costs and governments’ propensity to increase taxes on flight tickets became a topic of discussion.

The airlines raised their concern that, whilst taxes were being levied and justified on environmental grounds, there was no evidence of the funds generated being invested in research into alternative fuel sources or improving engine efficiency.

Traditional airlines were also learning from the low-cost sector’s rigorous focus on cost and sales techniques such as online bookings.

Despite the negative financial climate, the panel discussed the possibility of opening new routes. It was agreed that not only was two-way traffic flow important to the success of a route, but marketing support by the local city and its partners was imperative. The airlines pointed out that risk sharing is an ongoing requirement that goes well beyond the initial launch of a new route.

The widely reported issue of carbon emissions generated by airlines was also addressed, with panellists confirming that low-cost carriers as well as regular airline were investing in new planes which are more fuel efficient and have lower carbon emissions. Improvements were needed on the part of airports and air traffic control to reduce taxiing time on the ground and to reduce circuitous flight routings, both of which increase fuel consumption. 

John Strickland said, “Despite extremely tough market conditions our panellists expressed confidence about the future. Each of the participating companies is opening new routes and believes that by using sound business management and choosing the right markets it will survive.”

Mark Walsh, City Break Show Director added, “The climate for airlines has changed dramatically since the start of the city break phenomenon in 2000. Eight years on, the market has matured to such an extent that secondary cities too are seeing huge growth in their inbound tourism. The airlines have given a strong message to all cities that the short break market is key. Creating a win–win situation through partnership marketing and sharing risk will ensure that both airlines and cities continue to benefit from the short break tourist.”

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