On the second day of the strategy summit, Mike Miller, head of content and industry relations at Routes was probing a distinctive panel on to find the answer to the question we all trying to get our heads around: What drives an airline to open a new route?
The quest for the Holy Grail couldn’t be more timely: Big data is changing the industry, and whilst airlines used to take all the risk, today they are much less willing and able to do so due to fierce competition and the high price of oil.
The result: The onus has shifted to the airports and their communities to put forward a compelling case to help reduce the risk for the carrier to open a non-stop flight that might cost as much as 100 million dollars a year to operate.
Data is still the main factor. Scott Laurence, SVP Airline Planning at JetBlue Airways, reckons that data accounts for 75 per cent of their route decisions, while Hiran Perera, SVP Cargo at Emirates, puts the number at 70 per cent. The airlines stressed that data needs to be of high quality and tailor-made to their needs, in particular data that is hard to come by but might be accessible to an airport with links to the government.
And then there is the “really cool stuff”, as Vincent Hodder, CCO of VivaAerobus put it – data that for instance shows the flow of money from a US city to a community in Latin America, or the number of telephone calls between two cities.
All airline participants were adamant that they expected airports to tailor their offer to their business model. Cargo for instance provides for 17 per cent of Emirates’s revenue and is an integral part of any business case, while JetBlue and VivaAerobus have no cargo capabilities at all, and Virgin is in the middle with 10 per cent. Another example are incentive schemes; according to the panellists, the requirements of a long-haul carrier are different from an LCC.
But data isn’t everything. As VivaAerobus’s Vincent Hodder put it, “it’s data plus art”. A big part of that X-factor comes down to community involvement, which is becoming increasingly important to attract services, in particular for some smaller markets and thinner routes.
Edmond Rose, who used to be deeply involved in many of Virgin Atlantic’s route decisions, gave the Orlando to Belfast 747 service as an example that would not have happened without the persistence of Belfast’s airport, business community and travel agents. JetBlue’s Scott Laurence highlighted their experience in Charlston, where there have been very successful, building on the support of the community.
Finally, there route development is a matter of trust. Says Scott Laurence: “If we screw up, we all look like idiots, so let’s find that quality data together.” Given that different factors drive airlines’ decisions, Mike Miller summed up the advice offered by the panellists: “Ask the airline what they need to take a decision!”
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