Significant challenges looming on the horizon could seriously erode the airline industry’s margins, if not destroy them entirely, a panel of airline CEOs noted in the Airline CEO Insight session at the 74th IATA AGM and World Air Transport Summit in Sydney.
Moderated by CNN’s Richard Quest, the panel included Sir Tim Clark, President, Emirates; Pieter Elbers, President and CEO, KLM; Rupert Hogg, CEO, Cathay Pacific; Christopher Luxon, CEO, Air New Zealand; and Calin Rovinescu, President and CEO, Air Canada.
Among the challenges discussed were:
Big data: Airlines must engage with big data to retain control of their businesses and customers. In effect, the panel agreed, airlines must come full circle to be leaders in information technology (IT) once again. Once, airlines led the way in IT and implemented cutting-edge reservation systems at a time when banks were still doing manual ledgers.
Airlines cannot simply build digital veneers. A process-driven business has to completely change its way of working to put those processes on digital platforms
But that leadership position has been lost, the CEOs concurred, partly because airlines have far fewer interactions with individual customers than banks or retailers and partly because of a lack of investment. The incentive to invest what little money was available in new systems hasn’t been there.
That has changed, the CEOs acknowledged. But airlines cannot simply build digital veneers. A process-driven business has to completely change its way of working to put those processes on digital platforms.
The industry is clawing its way back, the CEOs agreed. Compare airport processes today with those of five years ago, they pointed out, and the changes brought about by new technologies are obvious. The airport of five years’ time will be different again given the various initiatives underway.
Infrastructure — or rather the lack of it: As traffic demand grows, passengers and aircraft will need somewhere to go. But many airports simply won’t have enough room. High airport charges threaten to further dampen demand and curtail aviation’s many benefits.
Gender equality: To be sustainable in staffing terms, aviation must attract more women to the industry at all levels and in all aspects of the industry. The panel noted that initiatives to achieve these ends must move quickly and be transparent.