Pricing in Aviation: Issues and Innovations
Are prices too high, too low or just right?
Day One - Thursday, 7th November 2019
Morning Session 1
9:00 Welcome to the Conference
Paul Oberhammer, Dean of Law faculty, University of Vienna
Andreas Reichhardt, Austrian Minister of Transport, Innovation and Technology (req.)
Chair: Peter Malanik, Austrian Aviation Association
9:30-10:00 Opening address: The policy context for aviation pricing
Silvia Gehrer, ICAO
The policy context:
ICAO provides guidance to governments on charging policies in aviation, including airport charges, air traffic management charges and some aspects of taxation and other airline charges. ICAO’s policies have evolved in recent years. What are the trends of ICAO guidance on charging principles?
Chair: Peter Malanik, Austrian Aviation Association
10:00-10:30 Keynote Address: The airline ancillary charges pricing revolution
Jay Sorensen, IdeaWorksCompany
Revenue from nowhere
One of the most important innovations in airline pricing has been the development of a range of charges for ancillary services. These have grown in 15 years from almost nothing to over 100 billion US-$, more than three times the total profits of the global airlines. IdeaWorks is well known for its extensive tracking and analysis of airline ancillary charges and other sources of ancillary revenues. What are the trends? What is coming next? Are these charges sustainable?
Chair: Thomas Jaeger, Department of European Law University Vienna
Coffee Break with Poster Session
11:00-12:30 Morning Session 2
Panel discussion: Pricing in an era of ancillary revenues
Does unbundling in airline pricing work? For some airlines, ancillary revenues are approaching 50% of total revenues and globally, ancillary revenues are close to $100 billion however, these revenues are not part of fare data published by governments or airlines. Is the trend towards enhanced ancillary revenues reducing or increasing the cost of air travel for passengers? Is the competition and quest for enhanced ancillary revenues a stabilizing force or a source of disruption in the industry? How have ULCCs changed the traditional capacity based revenue management policies of the legacy airlines? This panel continues the discussion started by Jay Sorensen
Chair: Ian Douglas, UNSW, Sydney
Christiaan Behrens, SEO & Free University of Amsterdam
Gabor Nagy, DG for Mobility and Transport
Jay Sorensen, President, IdeaWorksCompany
Mike Tretheway, InterVISTAS
Matthias Viehmann, Director RM & Distribution Business Development, Lufthansa
12:30-13:30 Lunch Break
13:30-15:00 Afternoon Session 1
IATA’s New Distribution Capability initiative and blockchain. What will new distribution technologies mean for air fares? Evolution or Revolution? The threat/opportunity of block chain and New Distribution Capability
IATA’s 3rd wave of industry transformation has a cornerstone in supporting a fundamental revision in the underlying technology for distribution/sales of the airline product. This is intended to dramatically reduce cost, increase consumer transparency, enable merchandising strategies by airlines and drive major innovation in ticket distribution. Where are we at? What are the initial indications of major change in distribution?
Chair: William Morrison, Wilfrid Laurier University, Canada
Henry Coles, IATA
Benny Mantin, Luxembourg Centre for Logistics and Supply Chain Management
Sanaf Nadeem, SITA
Oliver Lackmann, Chief Executive Officer / TUIfly
Christian Popp, Senior Director Revenue Management & Distribution Strategy and Business Intelligence, Lufthansa
Afternoon Coffee Break with Poster Session
15:30-16:00 Current Business Environment and Market Outlook
Jason Bender, The Boeing Company
16:00-17:15 International Transport Forum at OECD Session
Have airline Joint Ventures resulted in higher air fares and reduced service? Will increased intervention by competition authorities on both sides of the Atlantic encourage more competition?
Airline Joint Ventures require the approval of relevant competition authorities, but for some time on the North Atlantic approval has been almost routine, a different situation to the one which prevailed during the early years of JVs when one JV took some 13 years to obtain approval. What has been the impact of this apparently more relaxed approach on competition and the level of air fares? Are the competition authorities about to adopt a more rigorous approach, possibly under pressure from new entrant airlines? If so, what will be the impact on JVs and airline competition, and on consumers?
Chair: Barry Humphreys, Aviation Consultant, BKH Aviation, UK
Jagoda Egeland, ITF by video
Leo Basso, Universidad de Chile
Peter Lewisch, University of Vienna
Daniel Boeshertz, EC DG COMP
Pieter Cornelisse, Vice President Mainport Strategy, KLM Royal Dutch Airlines
Are the new airline pricing strategies contributing to financial sustainability of the industry
The history of the airline industry has been one of a stead 2% per annum reduction in real air fares, facilitated by improved technology and deregulation/liberalisation. But this has been accompanied by a record of poor airline profitability. If the airline industry is ever to be 'normalised', with a sustainable financial model, is it necessary to achieve sustainable rates of return to investors? How can this be done? Are the new pricing policies economically efficient?
Chair: Andreas Papatheodorou, University of the Aegean
Jody Kositsky & Mike Tretheway, Intervistas (pro/yes) versus
Andrew Charlton, ATM Policy Institute & Bill Hemmings, Transport & Environment (con/no)
Conference Gala Dinner (Palais Pallavicini, Josefsplatz 5, Vienna)
Award Ceremony: European Prize in Aviation Economics and Management