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May/June
, 2005 |
13th
International Airline CEO Conference Summary
By Elizabeth Collins, Squire, Sanders & Dempsey
The 13th International
Airline CEO Conference, with the theme "Turnaround Time", was held
at the famous Fontainebleau Hilton Resort in Miami Beach, Florida
from Sunday, May 8 through Tuesday, May 10, 2005. The Conference
began Sunday afternoon with the annual golf tournament, which was
held at the Miami Beach Golf Club. Delegates then enjoyed an opening
cocktail reception and dinner at the Fontainebleau on Sunday night.
Michael Allen, CEO of BACK Aviation Solutions, opened the Conference
on Monday morning by providing delegates with statistical confirmation
that it is indeed "Turnaround Time" in Latin America. He especially
highlighted the movement by the established U.S. carriers into Latin
America, a trend that will almost certainly continue.
The General Session
Bobby Booth began the General Session by welcoming the 21 CEOs and
approximately 200 delegates in attendance. He advised delegates
that this year’s Conference would feature an exciting departure
from the normal panels of speakers: a talk show format to encourage
dialogue both among the panelists themselves and with the audience
The reviews are in and the new format was a huge success.
Marshall S. "Sandy" Sinick, Chair of the CEO Conference, then delivered
his opening remarks. Mr. Sinick echoed Michael Allen’s view that
the necessary ingredients are present for a turnaround in Latin
America. He encouraged the Latin American airlines to embrace new
opportunities and expansion and liberalization particularly in view
of the many serious problems U.S. carriers are now facing. He also
encouraged the airlines to consider regional alliances and to put
aside many of the nationalistic tendencies, which only perpetuate
the inefficiencies associated with the status quo.
Patricia Thorp, Vice Chair of the CEO Conference (another departure
from previous years), also delivered her opening remarks. She noted
that this year’s trend in marketing is consolidation, which can
result in some unusual combinations. She advised airlines that have
consolidated to develop a strong brand to gain the loyalty of current
and potential passengers. This is particularly important when an
airline is expanding into different countries and in different capacities.
Key Note Speaker: Jeffrey Shane, "Turnaround Time"
The delegates were extremely fortunate to have as the key note speaker
Jeffrey Shane. Under Secretary for Policy of the U.S. Department
of Transportation. Mr. Shane spoke about the Department of Transportation’s
open skies initiative and the benefits of increased liberalization.
He noted that restrictive aviation agreements impede a country’s
ability to respond to the demands of the international economy.
He believes that liberalization is essential since the aviation
industry carries 40% of the world’s goods in terms of value. Mr.
Shane stated that the U.S. is interested in treating its Latin American
partners with a bolder and more innovative vision, such as a regional
multilateral agreement. Such an agreement could eliminate restrictions
like those pertaining to ownership and cross-investment, as the
Multilateral Agreement on the Liberalization of International Air
Transportation ("MALIAT") does.
Speaker: Bernardo Dominguez Philippi, "Future Civil Aviation Development"
The next speaker was Bernardo Dominguez Philippi, Secretary General
of the Civil Aeronautics Board in Chile. Mr. Philippi explained
that free trade and open skies aviation agreements have played major
roles in Chile’s economic success. He believes that greater integration
and better facilitation of travel are two important issues facing
the aviation industry today Greater integration, such as easy flight
connections, higher aircraft utilization, and reduced paperwork,
will lead to more efficient operations. Facilitating travel, such
as reducing the amount of time that passengers spend at the airport
will allow airlines to operate more successfully. Mr. Philippi stated
that Chile provides no special financial incentives to encourage
start-up carriers but that many new carriers have found Chile to
be an attractive market because of the absence of any restrictions
He believes that new airlines will enter the market as long as there
is sufficient infrastructure and demand.
Speaker: Abdul Wahab Teffaha, "Land of Bliss & . . . Uncertainty"
For the first time, the Arab aviation world was represented at the
CEO Conference by Abdul Wahab Teffaha, Secretary General of the
Arab Air Carrier Association, who gave delegates a fascinating insight
into the Arab aviation industry. Mr. Teffaha stated that although
the Arab region is full of potential, it is short on political and
economic stability. He believes that the Arab carriers have specific
challenges, which are not unlike those faced by Latin American airlines
today: fuel, labor and distribution costs; making the achievement
of higher yields more important than higher load factors; and formulating
a vision of their place in the global transportation market. He
believes that the Arab people’s desire to change economically and
politically and the Arab world’s evolving relationship with Europe
will be major influences on how the Arab aviation industry grows.
Speaker: Jorge Fernandez
The next speaker was Jorge Fernandez, VP International and Alliances
for Delta Air Lines. He shared with delegates the turbulence and
transformation that airlines are currently facing. He noted that
airlines historically have not been run like traditional businesses
that achieve a real return on capital. However, the aviation industry
is now changing because low cost carriers have entered and achieved
significant market shares. The legacy carriers, therefore, have
been required to figure out how to survive and thrive in an even
more competitive environment. Customers have also caused a change
in the industry because of their increasing price sensitivity, which
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