Registration

Chairman's Welcome

Overview of LCC development in global markets 
CAPA - Centre for Aviation, Executive Chairman, Peter Harbison 

Airline Keynote & Q&A

The LCC Air Finance Outlook: The perspectives OF financiers, airlines and lessor CEOs 

LCCs, as the newer players in the industry, are competing to meet future growth needs. They can scarcely afford to stand still if they are to assert themselves in the long term – especially as newer models enter. The need to plan for fleet expansion and replacement, as well as making decisions on leasing and purchasing can make for difficult decisions. This often means that if they are to be seen as serious long term competitors, they need to make aggressive decisions on new aircraft orders. In this respect (and many others) they are very different from the traditional established airlines. 

(1) Panel: 

• Finding the funding – debt and equity – to support LCC expansion. Is the money there? 
• What special features need to be considered in funding new and established LCCs? 
• Which funding models are most attractive to LCCS? 
• What roles have the OEMs played in LCC expansion? 
• Are markets large enough to support all the new orders?
  
  

(2) Masterclass: 

Can LCCs be effective in establishing their own leasing companies? 

One of the strategies that LCCs have used to offset the risk inherent in large forward orders has been to establish a leasing capability, to absorb any excess capacity as new aircraft are delivered. In some cases this is informal – and airlines of all colours have done this to some extent for many years – but in others a formal company structure is established, with its own bottom line. This then gives rise to opportunities for joint ventures with established lessors and so the circle continues. 

• What are the conditions that prompt LCCs to establish a leasing capability? 
• What skills are necessary for an LCC to be successful in this very different venture – while maintaining the airline operation? 
• Case studies of models established; the success pointers 

Case Study: Allegiant Air - Innovation through diversification

Are there any pure LCCs left? 

As LCCs move up the yield curve, even as far as seeking corporate travel contracts, they move further away from the bare bones low cost operation and begin to resemble their FSC counterparts. Many now offer network connectivity, targeting business travellers and going long haul, adding to cost and complexity. Meanwhile FSCs are taking on many of the characteristics of LCCs, notably through product unbundling and discount pricing strategies, especially on short to medium haul routes, thus increasingly challenging the hybrid LCCs. 

• What characterises a “pure” LCC? 
  • Aircraft type and configuration 
  • Aircraft and crew utilisation 
  • Pricing and distribution 
• How do experiences of the LCC business model vary in emerging vs established markets? 
• Can traditional “ultra” low cost short haul point to point operations still guarantee success, where full service airlines are reducing costs and maintaining high yields? 
• Is it inevitable that LCCs move upstream as they become older and as new competition emerges? 

Is the long haul low cost model sustainable in the long term? 

New aircraft technology like the 787, A350, and larger single aisle aircraft, as well as evolving passenger preferences and stable fuel prices are encouraging LCCs - and restructured full service airlines - to consider new growth opportunities on long, thin routes. What were previously niche city pairs are becoming increasingly mainstream as more LHLCCs come online and disrupt entrenched business models. But the low cost model relies largely for its cost advantage on higher utilisation and higher seating density, features that tend to be diluted as routes become longer. 

• What are the features that distinguish long haul LCCs from their full service peers? 
• Does the long haul model depend on low fuel prices for its survival? 
• Can LHLCCs remain viable as stand alone entities operating point to point or do they need feed traffic from partners or parent airlines? 
• In the face of intensifying competition, should traditional network carriers launch their own long haul LCC subsidiaries? What conditions do they need to be successful? 
• To what extent are the new entrants competing for existing traffic, as opposed to carving new markets? 
• Are there particular features of the new generation equipment might enable sustainable LHLCC growth?
  
  

The evolution of the airline-airport interface; how can airports (and tourism bodies) cater most effectively for LCCs? 

Keeping pace with the changing operational requirements of airlines is complex, with LCCs in particular demanding their own unique features: low costs, simple facilities and quick turnarounds among factors. But as long haul low cost airlines start to proliferate globally and behave more like full service carriers, the need for connectivity becomes critical. 

• What are LCCs looking for in establishing and growing routes? 
• Low cost long haul to short haul connectivity: How do airports identify self connecting passengers and provide the infrastructure to keep them landside? 
• What is virtual interlining and what are the implications for LCC-LCC connectivity? 
• What role can airports play in facilitating virtual interlining?
  
  

Panel: Evolving LCC distribution strategies to adjust to new business models 

Changing consumer expectations, new technologies, the proliferation of intermediaries and recent NDC developments, highlight LCCs’ need to differentiate, decommoditise and better “retail” their inventory and ancillary offerings. What are some of the key factors that will influence future LCC distribution strategies? 

• How disruptive are new players in the current distribution landscape? 
• Is technology enabling greater product differentiation? 
• Are intermediaries creating value for the LCCs? 
• As LCCs expand into new markets or target business travellers, how is their relationship with the GDSs and other intermediaries evolving? 
• Are LCCs exploiting digital/ automated/mobile channels effectively to distribute their product? 
• Where does the direct channel stand among the new wave of travel distribution models?
  
  

Keynote: The new generation ancillaries

Panel: Leveraging digital solutions to deliver a personalised customer experience 

As price becomes only one of the decisive factors for customers when choosing an airline, airlines must look to differentiate their product and deliver a smooth passenger experience end to end. How are LCCs using technology and working with other players in the travel ecosystem to deliver on these expectations? 

• What are the challenges of personalisation? 
• How do you convert real time insights into an opportunity to personalise the traveller experience? 
• How much data should be shared with ecosystem partners to aid the personalisation experience? 
• Can LCCs really differentiate? What on board services and ancillaries do they offer to delight customers and avoid commoditisation? 
• How are LCCs (and airports) helping to facilitate the smooth transfer of self connecting passengers on-airport?
  
  

Closing Comments

Registration

Chairman's Welcome

Airline CEO Keynote & Q&A 

Airline CEO Keynote & Q&A 

Panel: LCC subsidiaries in FSC airline groups. What are the secrets for success - and the pitfalls?

Competitive pressures on short haul routes have prompted many full service airlines to create LCC subsidiaries, but ensuring the new carrier aligns with the parent strategy poses a key challenge. 

• Do LCCs created by FSCs have a competitive advantage? 
• How does the LCC child operate while maintaining management independence from their parent? 
• Conversely, how does the LCC work with its parent to maximise group profitability? Can the FSC avoid creating just another product line – without the lower cost base to match? 
• Is it possible to introduce seamless interlining despite their different service levels, in order to maximise group network coverage? 
• Should network carriers be prepared to launch Long Haul LCCs – at the expense of, or to complement, their existing operation?

Panel: Cross border JVs and LCC alliances. Establishing and operating multi-airline brands 

Partnerships of one form or another are critical for enabling expansion across borders in the relatively crowded and increasingly competitive Asian market. These serve as a platform for attracting transit traffic and expanding into different markets. The cross border JV model has allowed Asia’s major LCC groups – AirAsia, Jetstar, Lion Air, and to a lesser extent VietJet – to accommodate foreign ownership restrictions by taking branded minority stakes in local airlines. Similar strategies are being pursued in Latin America and Africa. Smaller LCCs that might fall outside these major groups have established alliances of their own, such as the U-Fly Alliance, consisting of HNA-owned carriers, and the eight member Value Alliance; both groupings are powered by a technology platform linking the member airline websites, crucially enabling the ability to cross-sell all the ancillaries offered by each of the partner airlines, allowing members to grow their passenger base without increasing cost and complexity 

• How effective are cross border JVs and LCC groupings in a) synergising costs b) generating revenues, especially ancillaries and c) increasing traffic 
• What are the opportunities or limitations for creating brand awareness, increasing purchasing power and synergising fleets under the two partnership models? 
• How to strategically manage more than one brand when there is multi brand ownership 
• Can a non aligned LCC survive without being part of either a branded group or LCC alliance? 
• Can the branded JV model and LCC alliance serve as examples for others to follow?
  
  

MASTERCLASS: Can LCCs really compete in the corporate travel space? 

As business customers and corporate buyers increasingly seek value for money, especially for short-haul travel, and a new generation blends work and leisure when travelling, the distinction between travelling for business or personal reasons has become less relevant. This has provided LCCs with the opportunity to compete for ‘corporate’ business that may previously have not been considered a real revenue opportunity 

• What is the awareness level amongst travel managers and buyers of LCCs as an alternative to traditional airlines? 
• What LCCs are chasing the corporate travel dollar and how successful have they been in luring buyers away from entrenched carriers? 
• What obstacles need to be overcome to persuade corporate buyers to use LCCs? 
• The legacy carriers’ view of the LCC “threat” 
• How do you demonstrate value beyond price? 
• Can LCCs profitably realise the yield premium required to sustain a ‘premium’ hard product?
  
  

Closing Keynote