The CAPA India Aviation Summit 2017 took place recently at the Leela Hotel Mumbai and was a great opportunity to network with key industry stakeholders - senior executives and CEOs from airlines, corporations, suppliers and representatives from airports and local government.
NB This is a viewpoint by Ian Heywood, global head of product and marketing for air commerce at Travelport.
Here are my key reflections from the two days.
Ancillaries are driving innovation
Ancillary services have become an increasingly important source of revenue for airlines, leading to their adopting creative approaches to pricing. For the traveller, the introduction of ancillary services offers choice, while for airlines and their tech partners upsell options and revenue opportunities per airline ticket are improving.
The low-cost carrier (LCC) model has driven a revolution across the entire airline industry, while the arrival of NDC heralds an improved shopping experience that provides richer content and personalisation.
The traditional GDS concept has also evolved to combine open platforms with connectivity in order to provide access to unrivalled content and functionality, delivering a full and rich content retailing experience.
Richer content in the way of more copy, imagery and even video enables the decision-maker to better see and compare the products on offer.
Improving how products are visually displayed on GDS screens, while providing more information about what is included in each fare, is helping airlines to create value for its passengers.
Enabling travel bookers to make decisions based on information other than just rate and availability is helping airlines to increase the revenue they earn per seat sold.
The continuing development of LCC models
Although IATA forecasts passenger demand to double over the next 20 years, the way passengers choose to travel will differ. Budget travel no longer has the stigma of a few years ago as LCCs evolve into "hybrids" to win over new customers including the business traveller.
Importantly, the lines between LCCs and traditional airlines have blurred in the eye of the customer, prompting legacy airlines to adapt. The dilemma for the traditional airlines, particularly on their short-haul and domestic networks, is how to compete with low cost rivals and on long-haul how to compete with each other.
The answer is by differentiating on a product basis rather than purely on price.
The concerns around infrastructure to meet needs of the growing market
IATA predicts 7.2 billion passengers to travel in 2035, a near doubling of the 3.8 billion air travellers in 2016.
As CAPA forecast back in February 2016, India’s domestic market is on track to surpass 100 million passengers in 2017, making India the fastest-growing air traffic market in the world.
However, this accelerated growth also makes India a prime example of how increased growth is putting additional strains on infrastructure.
The predicted increased spending power of the global middle class will provide other opportunities in Asia Pacific. The anticipated growth of LCCs in markets such as Indonesia and China will see international and transatlantic routes introduced alongside domestic flights.
The global nature of this boom in travel means all stakeholders need to think about how their infrastructure will meet demand. Passengers are already feeling the side-effects of growth in terms of congestion at airports.
A large number of new aircraft orders are predicted to come from Indiam airlines over the next 20 years. But this rapid growth in fleets and seats needs a similar level of accelerated investments in terms of airports and runways to accommodate this demand.
Without this in place, growth might stall.
NB1: This is a viewpoint by Ian Heywood, global head of product and marketing for air commerce at Travelport.
NB2: Image by andresgst/BigStock