At the 2018 APEX Middle East & Africa event, the region’s leading airlines came together to discuss how the unique situation in the Middle East, and in Dubai in particular, fosters innovation in air travel.
THERE’S STILL ROOM FOR GROWTH IN THE GULF
2018 has been very important, said CEO of flydubai Ghaith Al Ghaith during his fireside chat with APEX CEO Joe Leader, as it marks one year since the carrier partnered with Emirates. He commented, “When flydubai was established, our objective was to connect Dubai to the unconnected places which have no flights […] Working with Emirates makes our goal more clear.” Moving forward, Al Ghaith revealed there are 80 unique destinations on which the two airlines can combine.
Al Ghaith said flydubai’s main challenges stem from aeropolitical issues: “I always pick on India as it’s our biggest market potentially, and we only have 2-3% of our capacity with India because our current bilateral agreement doesn’t allow us to operate more flights.” He explained the need for UAE citizens to have visas to travel to many international destinations is also problematic, highlighting that in countries like Georgia, which now grants visas on arrival for UAE residents, flydubai has increased flights from just two per week to four flights a day during peak times.
When asked about what flydubai will look like in ten years, Al Ghaith replied that the airline may well be operating a second type of aircraft. As for the aviation industry, he hopes that it will flourish even further in the Gulf Cooperation Council (GCC). “If we set aside our differences and focus on our business, we can be as good as everyone else,” he concluded.
SEATBACK SCREENS ARE ABOUT TO BECOME PIVOTAL TO PAXEX
During his presentation, Patrick Brannelly, Emirates’ Division VP Customer Experience, IFEC, admitted he was surprised to see the debate regarding seatback and bring-your-own-device entertainment still going. “We’re a service industry,” he said, “it’s not a revelation that people want to be spoiled a little bit.”
With 1200 movies, he claimed Emirates’ IFE offers a “better than Netflix experience,” but he argued that seatback screens are about much more than entertainment. “Every part of our organization is saying “How can I connect to the customer through that portal as well as the airline app?””
Over the next two to four years, Brannelly claimed the focus should be on using connected seatback screens – which are becoming more common – to improve the customer experience, generate ancillary revenue and increase loyalty. In a statistic which he said would be terrifying for a coffee shop, Brannelly revealed, “Any given day, 30% of our customers are new. Our job is to make them come back year-after-year.”
PAXEX IS JUST AS IMPORTANT AS PRODUCT
Etihad Airways is celebrating its 15th anniversary this year and, as such, its head of Commercial Jamal Al Awadhi referred to the carrier as “an adolescent” going through a period of change. Following polls which suggested the brand wasn’t accessible enough, Al Awadhi said Etihad is now working towards being “guest-centric” as opposed to “product-centric.”
Keen to provide a more “end-to-end” experience, Etihad is in the midst of a Retail Transformation Program, one part of which was to go from selling the “three main cabins to an exponential amount of products and offers.” To this end, the carrier is retrofitting its 10 Airbus A380 aircraft to increase the number of extra legroom seats available from 20 to 80. It has also partnered with 3D SeatMapVR to give passengers a more immersive view of what the cabin looks like, something which Al Awadhi says may be introduced for the airline lounge as well as for in-flight meals.
Al Awadhi talked in detail about the improvements made to Etihad’s process when it comes to bidding for upgrades. While previously passengers would receive an email and submit a bid, now they get an “eBay-like” experience, including “a live auction with clear visibility on the number of seats available, number of bidders and your position in the bidding queue.” The airline has also increased the window for bidding to six hours before the flight. Since these changes, Al Awadhi says Etihad has seen a 30% increase in the value of upgrades.
OMAN AIR ON BECOMING A DESTINATION AIRLINE
Oman Air’s Xia Cai stated that as a boutique airline, Oman Air is focused on steady and sustainable growth. While the carrier did introduce extra legroom seats last year, regarding premum economy Cai said, “We’re not big enough to go further in terms of cabin classes. We don’t have that economy of scale.” The same goes for connectivity, which Cai said isn’t yet cost-efficient enough.
However, the airline is still investing heavily in its onboard product with a view to selling Oman itself as a destination. For example, the new ARIA IFE system, powered by Thales, on the airlines’ new Dreamliner features a graphical user interface (GUI) that shows rolling shots of Omani landscape. “I’ve observed that passengers sometimes don’t watch the movies, they just watch the screensavers because they can’t believe it’s a GCC country.” Despite introducing new products, Cai is adamant that Oman Air’s warm, humanistic approach to hospitality will remain consistent.
Now that Oman Air has become part of a holding company and the cargo and catering businesses have been separated from the airline, Cai says she has more time to work with the Ministry of Tourism on packaging small holidays to encourage passengers to take a 48-hour stopover, and explained that more affordable hotels for the “everyday traveller” are being built for this very reason.
DWC IS BEING EXPANDED TO MANAGE DUBAI’S GROWING AIR TRAFFIC
Khalil Lamrabet begun his presentation on the newly expanded Dubai World Central (DWC) Airport, also knows as Al Maktoum International Airport, with a statistic that demonstrates the country’s need for extra capacity outside of Dubai International Airport. “In 2017, Dubai handled 89.1 million passengers, which is more than double the passengers handled in the previous decade,” he said. And while there’s a misconception that most of the traffic through Dubai is international transfer traffic, Lamrabet said 50% of the traffic is actually regional.
By the end of 2018, DWC will have grown its capacity to 26m passengers across 140,000 square meters, including 24 boarding gates, 40 immigration counters, 5 smart gates and a state-of-the-art baggage system which can handle up to 6,000 bags per hour. Lamrabet emphasized the importance of the expansion not just for the residents of Dubai (80% of which live within 90 minutes of DWC), but also for visitors to the World Expo, which is being held in Dubai in 2020. Throughout the event, Dubai is expecting to welcome 25 million visitors, 70% of whom will be international, Lamrabet said.
CREATING AN ENTIRELY NEW TRAVEL ECOSYSTEM
Hackmasters is the company behind the “Microcosm of Dubai” concept created as part of Dubai 10X, an initiative that calls on the city’s government entities to embrace “disruptive innovation.” Together with a number of multi-disciplinary partners, Hackmasters founder Saher Sidhom and his team came up with the idea of a “wearable app that controls time.”
Sidhom explained that the wearable would allow some of the 46 million passengers that transit through Dubai International Airport each year an opportunity to see the city. If their stopover was for more than four hours, he said they could leave the airport. Then, if they were having a good time, they could dial up the number of hours they wanted to spend in Dubai on their wearable device and, because the device is connected to the travel ecosystem, it could automatically rebook the passenger on a later flight.
The benefits of “transit becoming tourism” would be numerous, said Sidhom. “It would give you a ton of new data about how people spend their time in the city.” He continued that it would also benefit the city financially: “The current spend during an airport transfer is about 9 AED, but during the same amount of time in Dubai City the average spend is 966 AED.
BRINGING A “TRUE” LCC TO SAUDI ARABIA
Saudi Arabia is fairly unique: 80% of its population is under 40 years old and the average person owns two mobile phones, on which they spend at least 2.5 hours using social media. Sudeep Ghai, flyadeal’s chief customer and commercial officer, said these factors are what allowed flyadeal to become the world’s first “100% digital” airline. When it launched, flyadeal decided to only take credit card payments. One year on and 94% of its bookings are made online (60% of which are completed using mobile devices).
As a “true” low cost carrier “more comparable to a Spirit or an easyJet than any other airline in the region,” Ghai said flyadeal will never install seatback screens. Its aircraft do have in-seat power as well as tablet holders to enable passengers to use their own devices, but flyadeal also said it won’t provide content. Why? flyadeal did consider streaming entertainment, but Ghai explained that getting a Saudi edit on the content to make sure it was culturally appropriate, and getting Arabic subtitles, meant the content was “exorbitantly expensive.”
Ghai admitted international operations were a “no-brainer” and that flyadeal is set to make an announcement regarding a 50-strong aircraft order in the coming weeks, with 30 firm orders and 20 options. “We are able to address worker traffic, business traffic, leisure traffic and religious traffic. You’d think that the market would have been saturated by now, but what we found was that the pricing in the region wasn’t dynamic. We’ve tried to simplify and break down what ‘low-cost’ is.”
WHY AIRPORTS SHOULD BE TREATED LIKE THEME PARKS
Etisalat Digital, a new business unit created by Etisalat towards the end of 2017, has already helped Dubai Parks, Dubai Safari and IMG Worlds of Adventure to create “smart theme parks.” Jorge Carrasco Troitiño, the unit’s digital channel solutions director, said that the thinking behind these programs also applies to airlines, which themselves are “resorts” of a certain kind, offering shops, hotels and entertainment activities under one roof.
To succeed when working on such a large scale, Troitiño said airlines need to create a homogenous omni-channel experience using “a flexible IT solution composed of several different but integrated capabilities.” For example, he suggested that an airport mobile app could be used for a number of things, from viewing queueing times to terminal navigation, but also for entertainment. “If an airport is a set of services, why don’t we put some gamification into that, so that people discover new services in the airport?” he proposed.
INMARSAT MAKES THE CASE FOR IFC
Although Neale Faulkner, market development director for MEASA at Inmarsat, begun his presentation by pointing to research that said by 2026, 65% of global commercial aircraft would be equipped with in-flight connectivity, indicating that IFC will soon become the norm, he acknowledged that airlines can’t build a business case for IFC on passenger demand alone. Instead, Faulkner said airlines need to concentrate on the other benefits, such as having a competitive advantage, increased opportunities to generate ancillary revenue and a new way to improve fuel efficiency.
According to its Sky High Economics report, Inmarsat believes broadband access fees will account for over 50% of the revenue associated with IFC, but recognizing that having to pull out a credit card and enter payment details puts passengers off, Neale said Inmarsat is working towards making connecting to in-flight Wi-Fi more seamless. “We’re actually introducing new functions where you can use Apple Pay or you can connect automatically with your roaming service through Etisalat […] Another thing Emirates has done quite successfully is make it so that first- and business-class members and premium Skywards members just need to enter their Skywards number and password to get free Wi-Fi.”
Faulkner also noted that the move towards “unlimited” plans rather than airlines and passengers paying per MB means there’s less chance of a “bill shock,” and that the cost per MB has fallen significantly over the past five years.
INNOVATION IN THE CABIN: COST CENTER OR REVENUE GENERATOR?
Taco Stouten, manager of Cabin Market Insights at Airbus, told delegates that since 2010, the aviation industry has seen a 188% increase in ancillary revenue to $82.2 billion in 2017, and drew attention to the fact that between 30-40% of that figure was generated in the cabin, whether through food and beverage, seat upgrades or the purchase of overhead bin space. Stouten said that segmenting the cabin was another way to maximize revenue, using the concept of the “family zone” offered by Qatar’s QSuite and Airbus’ own partnership with Paperclip design on the Butterfly seat as examples.
For Daniel Kerrison, VP Inflight Product at FlyDubai, the cabin represents a major investment focus as well as a revenue opportunity. Indeed, in the nine years since the airline first launched, Kerrison said it has had five different cabin interiors. The latest iteration, created for its 737 MAX 8, features highly customized lie-flat Thompson Vantage business-class seats, which is highly unusual for a narrowbody aircraft. In order to make this product a reality, Kerrison said they had to take delivery of “empty tubes” from Boeing, fly the aircraft to an MRO and install everything there. “We do it ourselves because we need the speed to market […] It was ten months from the time we decided to add business class until the first flight […] If we went to the airframers, they would have laughed at us.”
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