Both Etihad and Emirates airlines have experienced tremendous growth in recent years, with the aviation sector as a whole in the region showing further growth trends in recent months despite the backdrop of falling demand in other regions – a positive trend that is expected to hold and continue in the coming months and years ahead. Despite wider global financial uncertainties, there is a very real and increasing demand for air travel within the region and with this is mind, it is anticipated that Emirates and Etihad will continue to take delivery of aircraft on schedule, wherever possible.

When it comes to the question marks currently being raised over the potential financial control of Emirates, as to whether it will potentially be used as a bargaining chip or under guarantor, it is important to understand that the airline is regarded as one of Dubai’s crown jewel assets. With a significant number of A380s on order and demand for services in the region strong, growth forecasts indicate that the airline could become the world’s largest long-haul carrier within a decade, contributing significantly to the region’s desire to ensure Dubai is the major international travel hub, linking the Middle East with Asia, Europe, North America and Australasia.

In addition to this invaluable contribution to the region’s vision of where it wants to be, unlike the wider airline community, Emirates is also able to boast a profitable return on its business. Whilst the dust may not have settled just yet, it is highly unlikely that the Dubai government will be keen to risk using such a valuable, flagship asset as a bargaining chip. On a wider note, as with any business, the shareholders have a say in directing their company’s business. However, a point worth making is that there are opportunities for the regional carriers to seek ways in which to improve synergies, creating strategic partnerships and alliances to improve network coverage in order to better serve the community and avoid duplication, whilst driving valuable efficiencies and improvements in environmental performance.

Whilst the shifts across the economic landscape over the last 18 months have been seismic, highlighted by the recent news from Dubai World, and are a keen reminder against complacency, the development of aviation within the region is built on more solid foundations and looks set to continue with an overall more positive growth trend.

Dubai-based carrier, Emirates, is a world renowned airline that serves over 90 destinations, and similar to other regional carriers it operates a hub and spoke model that relies heavily on feeder transferring traffic.

Development of aviation within the region continues with an overall positive growth trend.

With aviation, there is inherent complexity within the operation; the simplest operation starts at one place and ends at another (often in another country), crossing boundaries and legal jurisdictions. Finding solutions therefore and indeed implementing those solutions, presents a raft of challenges.

The good news is that there are several work-streams that are currently being developed or are at various stages of implementation. Shared learning from more developed aviation regions is certainly one potentially positive opportunity – ultimately to the benefit of passengers, who can arrive at their destinations on time to start their business meetings or holidays.

However, the important question is what can be done, and how can improvements be introduced in order to streamline the various processes and complex parts of the overall operation  thereby delivering an improved service offering that is capable of sustainable growth? The answer lies with all aviation stakeholders; airports, aircraft operators and consumers all have a role to play – and the ultimate link that joins all these together is Air Traffic Management (ATM).

Within the current economic climate, aviation as a whole needs to carefully review what can be done to provide better standards of service to passengers on several levels, including punctuality. In fact, the recession and downturn in traffic could be viewed as an opportunity and potential catalyst to review current air traffic management methods and look for areas for improvement. Add to that the effects of aviation on Climate Change, and the significant improvements and efficiencies that an effective air traffic management can introduce by eliminating waste, encouraging fuel consumption efficiencies and improvement in punctuality performance, and the critical role that this link plays in the aviation chain of processes becomes apparent.

One of the leading authorities on streamlining air traffic processes is Eurocontrol. This is the European organization, set up to manage all aspects of safety of air navigation, which aims to provide a consistent high level of safety over Europe’s skies, while at the same time accommodating growing air traffic demands.

Single European Sky is a further initiative launched by the European Commission in 1999, aimed at reforming the architecture of European ATM. It leads the legislative approach to meet future capacity and safety needs at pan European, rather than local levels.

Their key objectives can be summarized thus:
1. To restructure European airspace as a function of air traffic flows
2. To create additional capacity
3. To increase the overall efficiency of the European air traffic management system.

It is clear – the Middle East is a fast growing aviation region. According to IATA, the Middle East has grown from 5% of international traffic to 10% in the past seven years. Naturally, with this level of growth have come certain challenges, as the skies over the Middle East become increasingly congested – challenges such as:

• A unified approach to policy creation
• Legal governance and mandate
• Air traffic infrastructure
• Military and civilian aviation and restricted air zones
• Control of airspace zones
• Change management
• Introducing new approaches and ATM systems

An important aspect that should be included in any review of the end to end ATM processes would be the impact of climate change on regions and operations in the sense that climate change is a fact, and the rising temperatures and melting ice caps will inevitably have a direct impact on aviation operations.

Now may be a good time to commission a study into what best practice can be gleaned from Eurocontrol and others and potentially follow a similar approach in managing the ever increasing demand for airspace in the Middle East.

Most airports around the world have at least one major airline and there is a correlation between the base carrier’s network and the airport’s passenger traffic, for example, Heathrow’s symbiotic reliance on British Airways, or Fraports’ lifelong partner: Lufthansa.

For emerging and growing ‘mega’ airports to fill the capacity that they are creating, they will need to grow at a much faster rate than the current predicted growth rates. Developing further direct traffic will be successful up to a point, which leaves transfers and aggressively seeking to develop new, yet untapped markets such as Asia, the Indian Sub-continent and China, where the real growth is expected; possibly exploring the use of low cost carriers models and low cost airport models.

Whilst the Gulf countries stand to benefit from the aggressive growth strategies of their home-based carriers, there may still be a risk for the region in terms of overcapacity creation. With all the growth projected or anticipated around the Middle East mega airports, then commercial development in the vicinity of those airports should be seen as a great opportunity, but airport cities don’t just happen. They are the result of careful thought and business planning, in addition to linking a transport hub to boost local/regional economy.

Airport City is a term that is used to describe the evolution of airports, from mere infrastructure and facility providers/operators to a hybrid and complex service provider that develops and caters to community needs for business, shopping and leisure, whilst contributing to the overall economic well-being of the airport. It also supports the local / regional economy, as well as supporting further job creation both directly and indirectly, more akin to a national business hub, as opposed to ‘solely a transport hub’.

The ethos behind airport cities is to develop plots and spaces based on specific investors/developers or end-users’ needs such as retail or exhibitions & conferences with an aim of attracting the right businesses that will add value to the community and the airport’s business model.

Airport cities are a natural evolution for airports, who continue to play a key role in the economic development of cities and countries, from simple infrastructure providers dependent on public finances to today’s diversified and complex businesses, increasingly privately owned and independent. This is achieved by seeking and exploiting existing business opportunities of non-aeronautical activities, therefore redesigning commercial space within the terminals, while actively pursuing the exploitation of its real estate assets. In turbulent times, with airlines decreasing capacity and cutting routes, this strategy can go a long way in cushioning airport operators from variations in aeronautical-related revenues, therefore offering a more sustainable approach to business that supports the community more effectively and for longer term.

There are existing major hubs like Amsterdam Schiphol, Frankfurt and Hong Kong, among others, who have been leading the way in developing airport cities and supplementing the aeronautical income with non-aeronautical revenues and development programs. It goes without saying that airports are already responsible for the creation of thousands and thousands of jobs around the world, both directly and indirectly. This can only improve significantly with the creation of strategic airport cities. E.g. Frances’ Charles de Gaulle Airport recruiting approximately 95,000 direct jobs and 260,000 indirectly.

Airports of the future can become more and more self-supporting, standalone communities in their own right, acting as social and economic catalysts for long-term business growth, by providing a business enabling platform and infrastructure that enables the right transport connectivity and freight flow. Thus can airports become even more critical assets for their countries’ and region’s economic well-being.

Aviation does, of course, get widespread coverage in the media. More often than not in recent years this has been linked to growth and increases in capacity and the consequent issues that accompany such growth in terms of external costs. Unfortunately, in some instances, this coverage is negative and implies that aviation is perhaps a bigger polluter than it really is.

Before considering the external costs of aviation, it’s worth pausing to reflect on the numerous critical and complex issues in aviation that need to be addressed before an aircraft can even become airborne. These are fundamental aspects like safety, security, flight planning and adherence to legislation and regulation. And so, while aviation specialists and managers are focused on delivering the rigorous demands of running the operation, it can be difficult for them to take on what can seem to be “nice to have” environmental criteria, which quite often clash with other, more pressing, parameters that they are striving to achieve consistently around the clock, namely the safety and security of each and every passenger and aircraft.

This reflection can help highlight one of the main challenges slowing down significant progress on covering the external costs of transportation as an industry: the lack of awareness amongst the public, and I include passengers and transport industry staff here in the term ‘public’. If people truly understood the direct link between their actions and the impact on the environment, if they could relate to and understand the effect of each action they make and each decision they take, then I think the  response would be more powerful. There is a real pressing need to share information about the external costs of transport (as a whole, and not just aviation) to help drive changes in behaviour and to support the industry leaders who are working towards covering the external costs of their operations in the transport sector.

Even with the current economic downturn putting pressure on the transport sector, and aviation in particular, Climate Change is maintaining its importance in the media and is still headline-grabbing in relation to the transport industry. It is good to see that there is an appetite out there for a global solution currently being driven by key transport stakeholders. This is even truer in aviation, where there’s already a plethora of internal initiatives aimed at tackling the environmental impact of our industry, with various elements of the industry coming together and calling for a global policy framework for addressing carbon dioxide emissions (e.g. the Aviation Global Deal Group, comprising British Airways, Cathay Pacific Airways, Air France KLM, Virgin Atlantic Airways, BAA and international non-governmental organisation The Climate Group).

Whilst there are diverging initiatives around the world, with several of the world’s biggest airlines pledging to meet environmental performance standards, the focus is mainly on CO2 emissions, without any remedial action for the other external costs of aviation. These different approaches can seem piecemeal, fragmented and weak, highlighting the real and urgent need for balance and for a global framework, and further highlighting the necessity of having a detailed assessment of aviation’s total external costs and issues – as a whole ‘big picture’. 

Currently, there is no single point of reference that can provide an overall picture. Therefore, without knowing what the total external costs are, it is impossible to effectively and holistically assess the situation in order to start tackling the issues effectively and in a meaningful way that the public can also relate to.

In this blog, I would like to encourage a debate, and get people talking about the Climate Change issues and challenges we face as an industry. Rather than wait for the processes, proposals and ‘solutions’ to be be made and presented by politicians and bureaucrats, I believe that as industry leaders, who know this business better than anyone else, we need to get involved in shaping the outcome and the solutions. We need to be the role model, rather than the whipping boy. 

It is a good start to see that aviation stakeholders and business leaders have recently made direct recommendations to the UN climate change officials on how the industry’s CO2 emissions should be accounted for, with growing calls for the inclusion of international aviation under a framework.

This is a truly unique opportunity for aviation leaders around the world to join forces with various other related groups and organisations to lead aviation in the next revolution, one that would drive it into becoming a truly sustainable industry. Organisations such as IATA, which is urging the aviation industry and governments to bring an aligned global approach on aviation carbon emissions to the UN Framework Convention on Climate Change conference to be held in December in Copenhagen. Earlier this year, Bisignani (IATA) called on governments to define a sectoral approach in Kyoto 2 with global accounting for aviation’s emissions through the International Civil Aviation Organisation (ICAO).

I will be expanding further on the issues raised in future postings on this blog, and look forward to interacting with the readers and exploring feedback and concerns on the critical topic of Climate Change within the transport industry. 

Key dates and timelines to Climate Change events that were referenced in this blog include: ICAO’s 15-country Group on International Aviation and Climate Change (GIACC) will be producing proposals and targets in preparation for Copenhagen. The fourth and final GIACC meeting was held in May, with a report planned to be presented to the 187th ICAO Council Session on June 29. Ahead of Copenhagen, ICAO has agreed to hold a “High-Level Meeting on International Aviation and Climate Change” Oct. 7-9 in Montreal. The Copenhagen Summit is planned for December 2009.

Nowadays and looking into the future, I believe that there are factors that are changing the shape of future air travel, I believe that environmental and economic factors will drive the cost of air travel up, and the days of cheap flights, that only reflect the economic cost of air travel, are nearing an end. So I wanted to capture the mood out there in relation to shifts in global travel needs and trends within the backdrop of ever gathering clouds of the economic storm; to assess if there were patterns and to try to rationalize what this could mean for aviation, from both airports’ and airlines’ perspectives, but more importantly, what air travel experts, our passengers, are telling us they want.

First and foremost, I would like to thank all the people who took the time to respond to my survey. The respondents come from all over the globe, covering a wide spectrum of demographics and diverging needs, drivers and expectations from air travel.

On the whole, there appears to be a consensus that the need for air travel is alive and well out there. This was a very reassuring message to receive. People want and/or need to use air travel, for both business and leisure. The majority of respondents were Gen Xers (51%), followed by Baby Boomers (46%), predominantly hailing from the West; mainly UK and US.

And whilst using averages is always fraught with risk, I do think that one can distill some key trends or prevailing views, which can help airport operators and airlines to design and shape products and services that are attuned to current consumer needs, expectations and desires.

21st century air travelers are experienced, savvy and they know what they want. This was clear from the responses to passengers’ expectations of airports: 48% expect better, more interactive services and facilities. There was feedback for airlines as well. Here are some direct quotes:

“Airline technology-driven solutions must be matched at the airport”

“Effective delay management”

“Attention to arrivals processes as well as departures”

“Carbon footprint offsetting”

“Customer service must improve/better standards”

“Better integration with local travel services”

“Do not leave me sitting on the tarmac”

“Proper queue management for check-in and at the gate for boarding”

“Hate all exclusives, e.g. Ryanair. We want technological innovations but not to be forced to pay for them”

On the other hand a significant proportion of respondents (52%) ticked the box marked: I only want to be able to access my flight, with no other expectations. This is a missed opportunity for the industry, as airports are infrastructure providers and a critical link in the experience chain. For passengers, even those who only want to access their flights and get moving, airports can truly make or break this experience – the queues at Heathrow during the liquid ban in August 2006 stand testament to this on one extreme. I hasten to add that, in my opinion, regulation is not the answer, as it may detract from customer benefit by driving management focus to meet a regulator’s targets – as opposed to meeting passengers’ needs and delivering service.

I’m an individualist, and complete believer in tailor-made solutions – completely opposed to mass-produced solutions that force all customers to ‘fit a standard mould’. Life is too short for that. From the services and facilities passengers indicated that they would like to see, their answers show that they share this sentiment. Asking for more technology driven services, putting some element of  control over the journey back with the customer, where they can access services on demand. That’s not to say that passengers are looking for exclusive luxurious travel, but reading through some of the quotes the message seems to be flexible, technology-driven solutions married with good value for money products.

The drivers behind each decision are very personal and may seem random, sometimes people make decisions based on an intuition, a hunch, or at other times through careful consideration of  hard facts and figures. More often than not though, it’s a combination of these as well as practical factors and needs. So it was interesting to see what people listed as key factors influencing their purchasing decision:

51% of respondents said that, when traveling for business purposes, they make flight selection related decisions based on carriers/airports that provide the right timetable and high frequency to their destination. 35% said that cost is a critical factor that they take into account when making their decision. Access to lounges was not listed as a critical factor.

When it comes to leisure and kicking back, 53% kept a close eye on cost, with 42% stating that the destination was more important. it was interesting to see that luxury was not a deciding factor.

Trying to distill a few clear messages to take away from this survey, I can see two main areas: for one, the public needs to learn more about climate change and aviation’s external costs (but more on that in my next blog); for another, I would say that in their fight over market share and market domination, the airlines have fallen prey to over-specialisation; flagship carriers focussed on premium, going to the extent of creating a strange hybrid product called ‘premium economy’, and low cost carriers have gone to the other extreme where anything beyond the ‘seat’, including basics such as checking in a bag, is deemed ‘an extra’. This has marginalised the average passenger or family, who are looking for value for money, and not necessarily ‘cheap’ air travel. The results of the survey clearly demonstrate that a relatively large proportion of users feel that customer service is failing in the aviation industry, and would like to see improvements made on this front. It was interesting to see several comments to the effect that low cost should not mean low quality, which I wholeheartedly endorse.

BA’s record loss announcement last week indicates that relying on one ‘cash cow’; premium, point to point, doesn’t always pay, and there may be some lessons for all stakeholders in aviation to take away from this, in that it may be time to consider providing good value for money, extending high levels of service across all cabins equally.

For those that have not read the article entitled “Harvard’s Masters of The Apocalypse”, the author lists a number of ‘infamous’ Harvard MBA graduates and firmly lays the blame for the current economic crisis at their feet. The list, which only details high-profile, male graduates, in my eyes just confirms that there are always exceptions and that anyone can manipulate data in order to make broad generalisations, that are meaningless.

For me, although I cannot comment on Harvard’s MBA that the author of the article holds, one of the best decisions I have ever made was to invest in putting myself through the MBA programme and I genuinely believe it has provided added-value to both my employers and the aviation industry as a whole.

My career in aviation, as detailed in my biography, started in 1994, when I joined British Airways’ new operations in Jordan. I rose quickly through the ranks through hard work and dedication – a personal trait that spurred me on to undertake the MBA programme as I knew it would help broaden my horizons.

I was certainly not disappointed with the programme as it introduced me to what has become a lifelong passion – Sustainability, Business Ethics and Corporate Social Responsibility – which influenced my decision to undertake my dissertation on Aviation Sustainability and has, in turn, shaped my future career path.

And I was not the only one whose career approach was influenced by this module alone, many of my colleagues within the aviation industry that have completed MBAs and MScs have taken career paths towards sustainability – a significant area that will support the long term, environmentally-balanced, development of the industry. These new directions in aviation management were made possible through the undertaking of higher education qualifications, learning and bringing back the wealth of knowledge into our industry.

With this in mind, I feel that the article’s failure to acknowledge the good achievements of MBA graduates around the world actually serves to undermine the integrity of an entire education system that has helped people, industries and communities to move forward and progress. Placing the responsibility of the global economic failure squarely on the shoulders of a post-graduate degree is ridiculously simplistic and completely fails to place the accountability where it belongs. At the risk of of falling into the same trap, I will qualify what I am about to say by acknowledging what is commonly known; that the economic downturn is the result of several factors, but in my opinion, organisations played a leading role. Organisations have corporate visions, with supporting strategies and objectives that are set to achieve those visions. Their recruitment strategies are based on their corporate visions and strategies. If the organisation’s sole focus is on appearing to make significant profits, whatever the cost, then that is the type of graduate they will be seeking to employ.

I was really pleased to receive an email from Jeannette  Purcell, Association of MBAs CEO, to advise that the association have organised an event to meet with Mr Delves Broughton in a panel debate to address the absurd propositions he makes in his article. Here’s a link with more details.

I think really, the key question that potential MBA and postgraduate students should ask themselves is what is driving their  motivation to enter into higher education and how can they add real value to their industries through that higher education, as in this day and age, the key criteria for success in business is the need to meet the three sustainability standards  – economic, environmental and social.

This blog will focus on creating educated debate about those issues from an informed perspective, bringing to light the challenges that face both consumers and the industry alike and, hopefully, providing a platform for both to have a voice.

One key area that interests me is how the airlines service their diverse customer spectrum, especially in the tough economic climate.

The economic downturn has impacted dramatically on the airline industry and with increasing costs and environmental responsibility being taken by the carriers, I can understand how difficult it is for the airlines to differentiate themselves from the competition and attract customers.

The past decade has seen the industry focus on providing low budget options for customers, which has made air travel more accessible, but has impacted on service and created a greater void between the economy and business class experience.

Now, it has been reported that some airlines are to further increase this void by providing business travellers with buy-on-get-one free opportunities to the US.

My view is that this approach is not appropriate and that actually now is the time when the airlines should be focussing on providing a better service to all.

I do understand the rationale behind the idea of providing exceptional service to more wealthy clients being seen to possibly have a greater financial benefit. But, improving general levels of service to all customers would have an even greater return in terms of brand loyalty and customer satisfaction – overall reducing the investment needed to deal with customer complaints and refunds.

In doing this airlines would be able to re-inject the notion of ‘experience’ back into air travel to provide opportunities that are supported by a quality, rather than quantity assurance and reduce the divisions that seem to be reinforced on a daily basis.

In a recent online survey on travel trends that I carried out, certainly many respondents came back with comments demanding that airlines bring good customer service back into the economy cabins. Passengers are calling for good value for money, this clearly seems like a good a business opportunity for airlines that wish to differentiate their product and attract customers on board their aircraft.