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A quarter-century retrospection by leading aviation experts

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by ByaseL, Feb 21, 2011.

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    ByaseL JF-Expert Member

    Feb 21, 2011
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    The Airline Business Magazine celebrated its 25th Anniversary in December 2010. The leading business and corporate strategy publication for the air transport industry was founded in 1985. Over the period the Airline Business Magazine (ABM) has firmly established itself as an authoritative and a must-read monthly reference point on air transport business matters with a wide and diverse readership including airline and aviation executives, academicians and aviation enthusiasts.

    In celebrating this Silver Jubilee, the ABM invited 26 of the air transport industry’s most influential leaders of the past 25 years to talk about the aviation evolution over this period who gave a synopsis on this exciting, dynamic and one of the most challenging if not treacherous industries in the world. It makes quite an interesting reading to see different perspectives as espoused by different aviation personalities which came out in the December 2010 ABM issue. In a nutshell one thing became very clear. Over the last 25 years air transport has gone through a revolution of some sort. In this piece I would like to share with readers some of the salient insights which came to fore out of this interesting discourse.

    Giovvanni Bisigani, Director General of IATA says that air transport today is unrecognizable compared to 1985 when the ABM was born. For instance, passenger numbers have more than doubled from 900 million to 2.4 billion while global airline revenues tripled from $122 billion to $560 billion and all this comes when the prices for tickets are at least 30% cheaper in real terms!

    The above changes have been achieved through various factors but two stand out. The mushrooming of largely successful low-coast airlines had the effect of stimulating a huge demand for travel due the decrease in the cost of travel while the emergence of the gulf based airlines (Emirates, Qatar, etc) have developed and promoted a superior product at very competitive prices thus spurring a boom in air travel. This has been possible for the gulf airlines due their geographic location, efficient ultra-long range aircraft and the integrated strategies between the airlines, airports, governments and the financial community- This boils down to a conducive environment.

    “There weren’t many clues 25 years ago that China would emerge as a driving force in the aviation world,” says Tony Tyler, Chief Executive- Cathay Pacific Airways, a Hong Kong based airline. 25 years later China is now the second biggest economic powerhouse in the world after the USA as well as one of the fastest–growing aviation markets in the world. It’s estimated that China will require between a whopping 4,000 to 5,000 new aircraft in the next 20 years! This is obviously good news to the aircraft manufacturing industry.

    Almost all observers agree that no one could have estimated correctly the ability of the air transport industry to withstand serious crisis like there has been in the last 25 years. Two gulf wars, the Asian financial crisis, 9/11, SARS and Swine Flu pandemics, the fuel price escalation which reached a crescendo in 2007 and the recent global economic meltdown. No doubt there have been victims amid the “rough storms”, for example, Sabena Airlines and Swiss Air who were causalities of 9/11, but generally the industry has been able to withstand the rigors of man-made and natural calamities and pulled through fairly quickly.

    What about on-board product? 25 years ago, the standard in-flight entertainment experience was an overhead projector screen offering no choice to passengers. “Today, we are able to offer passengers more that 1,000 channels on demand, and the chance to use their mobile phones to stay in touch”, says Tim Clark, the CEO- Emirates Airlines. From basic on-board comfort to flat-beds that are now standard first/business class equipment and on-board chefs to choose and pay-as-you-eat! At the extreme end of the spectrum you have the no-frills service courtesy of the low cost carriers.

    Technological advancement has made things regarded as impossible two decades ago become possible. Elimination of paper tickets the world over is the case in point and so is the evolution of superior reservations systems that allow for self-booking, aircraft seat selection, meal choices and printing out of boarding passes. Lately, the coming into being of the mega A380 airliner and B787 environmentally friendly, fuel efficient aircraft that are not only tougher and lighter, thanks to technological development in alloys composition is further proof that the catchword all along has been “ innovation and nothing but innovation”. There has been retrogression in one aspect, though. According to Sir Richard Branson, Founder Chairman- Virgin Group, “it’s sad that we no longer have supersonic travel due the demise of the Concorde aircraft,” says the billionaire aviator.

    From the African aviation industry perspective, Girma Wake, Retired CEO- Ethiopian Airlines is of the view that during the period under review, the African airspace has become a major transport market due to emerging economic opportunities in the continent and attraction from foreign carriers. “Since 2003 African air transportation has increased from 5.3% to 5.7% annually and is projected to continue with the continuing rapid growth in the continent’s oil industry. While total international traffic worldwide picked up at a 6% rate in May 2008, Africa’s traffic increased by 15% second only to the Middle East,” says Wake. Nevertheless, there is a general concern that air safety is still a major concern, market liberalization is not yet fully entrenched and many airlines’ balance sheets remain wobbly.

    “Air transport is a tumultuous industry, frequently dictated by uncontrollable events,” says Sir. Michael Bishop, Former Chairman-British Midlands Airlines. Since 9/11 in 2001 aviation security took a different dimension with airlines now dedicating a big chunk of their budgets to ensure water tight aviation security. Nevertheless, there can be no prospect of an immediate solution to the terrorist threat.

    During the last quarter-century airline consolidation and alliances are perhaps the biggest aviation metaphors that will, by and large, continue to shape and influence the global aviation landscape for the next 25 years. There are many interesting observations but editorial space is the handicap here.

    The ABM Anniversary gave aviation stakeholders the opportunity to look back at the industry and take stock of the developments of the last 25 years and through that experience try to figure out what the future could look like in the coming 25 years. Indeed these experts’ reflections are quite refreshing.

    Byase Luteke