Air Transport Leaders Discussed the  Most Pressing Topics Related to Air Transportation at the ATLC in İstanbul
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Air Transport Leaders Discussed the Most Pressing Topics Related to Air Transportation at the ATLC in İstanbul

Issue 20 - 2023
Air Transport Leaders Discussed the  Most Pressing Topics Related to Air Transportation at the ATLC in İstanbul

Sponsored by Airbus, Embraer and JetMate, the Air Transport Leaders Congress (ATLC) has gathered the air transport professionals in Türkiye, Central Asia, and South Europe at the Hyatt Regency Ataköy Hotel, in İstanbul on October 11, 2023 for an intense day of discussions and meetings.

Executives of airlines, airports, aviation industry, service companies, and government regulators have discussed the most pressing topics related to air transportation such as; pilot shortage, pressures on operating costs, global supply chain, global recovery after COVID, passenger load factors, important regional hubs for connecting flights, traffic growth in the region, new opportunities for the region in post pandemic era, why airlines need flight support company and where should we fly? Aviation Turkey Magazine was among the Media Partners of the ATLC. 

One of the differential elements of this international conference is its strong focus on Southern Europe, Caucasus, Central Asia and the Middle East, with some of the key airlines and airports in those growing regions represented in the speaker and attendee list. 

In the three sessions at the ATLC following topics were discussed:

• Prospects for Eastern Europe and Central Asia. Business opportunities

• Expanding horizons. The future of civil aviation

• Green Agenda for Aviation

• Connecting Europe with Asia: Routes, Hubs and Efficiency

• The view of aircraft manufacturers on aircraft of the new generation. Production plans

• Airlines: Business models, strategy, efficiency and profit

• Keeping pace with the leaders: distribution, sales and payments

As an authoritative and independent discussion platform the Air Transport Leaders Congress was conducted in three thematic sessions, first one titled with ‘The New Reality and Visions for the Air Transport Market’ and took place in the morning. Second and third sessions titled with “Connecting Europe with Asia: Routes, Hubs and Efficiency” and “Technology, Innovation and Digital Transformation of Aviation” respectively took place in the afternoon. During Session 2 a panel was also organized under the moderation of Alen SCURIC, CEO of ZAMAaero. Emre PEKESEN, SVP Sales and Network Planning at Pegasus Airlines, Mehmet KEYVAN, CEO & Chairman of KEYVAN Group, Mehmet ATİN, Airport PPP Expert at Turkish State Airport Authority Antalya, Herbert KEFFEL, Head of Competence Center ORAT, Operations & IT at Munich Airport International and Mustafa Cem ARTEKİN, Founder of ARTEKIN Law Firm attended the panel as speakers. Panelists have discussed about whether the Countries of West and Central Asia, the Persian Gulf and India become a New Global Aviation Center and exchanged their views and opinions on what are the main challenges the industry is facing now and What are the main challenges they see and solve in their companies.

Titled with ‘The New Reality and Visions for the Air Transport Market’ the opening session of the conference was moderated by Boris RYBAK, Founder and CEO of Mark Comm LLC. He welcomed the participants and thanked the sponsors of the conference by underlining that without their support these conferences would not be possible. RYBAK also disclosed that they would organize two more conferences in 2023 the first one, a strategy conference, will take place on November 23 and the second one, a financial conference, will be held on December 12 in Dubai.

After the opening remarks by RYBAK, Jared HARCKHAM, Vice President and Managing Director of ICF took the floor and provided a high-level view of the current state of global aviation industry. HARCKHAM started off by saying that besides being a historical and beautiful city, İstanbul is also one of the most important aviation routes on the planet. At the beginning of his comprehensive presentation titled, “Development of the Air Transportation Network: Global Overview”, HARCKHAM underlined that high post-pandemic demand continues in the industry in many places, not everywhere, but since the capacity is not fully restored everywhere, this resulted in high load factors and high fares in many parts of the world. “Good news for airlines. Maybe not so good for the customers,” he added. He pointed out that according to IATA figures Europe and the Asia Pacific (APAC) are expected to fully recover by 2024, while North America and the Middle East will reach recovery in 2023. He also pointed out that in many places airlines and airports are understaffed, may be due to the timing issue or the salary issue, and this caused delays and traveler frustration, which is not good for the industry. At his address HARCKHAM stressed that there is a pilot shortage in the sector and it is causing disruptions. According to HARCKHAM there are actually a lot fewer pilots working in our industry than there were 30 years ago. HARCKHAM pointed out that while there were 574.000 active pilots in 1990, this figure downed (18%) to 470.000 in 2021.

He continued his speech as follows, “There may be many reasons for that partially better crew scheduling more efficiencies. You know, some older craft require three pilots that’s down to two all that passed away quite a while ago. So, the supply has been declining, fewer students entering in the pipeline to become pilots. This is because the training costs quite high and there's also a high flight hour requirement to be considered by commercial airline and retirement accelerated during the pandemic. So, we have an unmet demand which is resulted in schedule cancellations and flight cancellations. However, the good news is pilot salaries are being increased, at least in the US. Several of the mainline carriers have recently negotiated agreements with increases of 30 and even a 40 percent for the pilot work group so that the motivator. Apprentice programs which means in house training are being restored by carriers. They used to do that and they eliminated that during their hard financial years, so that will certainly be an incentive for younger people to reconsider this. And finally, although it may be controversial and you know maybe someone believe that it will ever happen. But the operation of the air by single pilot instead of two back in the discussion back on the table, don't know when it would happen, but some are viewing that as a solution to the pilot shortage. This chart will attempt to illustrate that issue by region. And if you look at the green line, if you can see that, you'll see a pretty strong downward slope in the last few years that North America, the region most familiar with. But you'll see that other regions are expected to have a decline coming up so North America, Asia and the Middle East are likely to see the biggest shortages- Europe, Africa and Latin America are more stable. But it is a global workforce and people can move around globally.

So, another issue that our industry had confronted and does confront in other regions is airport infrastructure enough to handle the growing demand. The growing flight demand here. A couple of my favorites that are on the plus side of the equation. New airports in India, Navi Mumbai Airport, where I actually visited the construction site a few weeks ago, and the Goa Mopa Airport appears ready to open the terminal. We have this obviously in İstanbul the big story. There is a marvelous new airport here. So, despite the complaints about airlines, about a lack of infrastructure around the world, there are also some good success stories. Another thing that is good is that in many cases financial results are good for the carriers. I said earlier the high fares may not be to the liking of customers, although they seem to be willing to pay them right now. The Europe and North American carriers reported good results last year, many regions and many carriers expecting good results this year. Fuel prices stabilized, at least for the moment, folks seem optimistic. Companies seem optimistic that even a recession or economic slowdown will not slow down the surge in air travel. Although I did hear a quote recently from the CEO of one of the large banks in the US and he said that he thought American consumers are on the sugar high in terms of their spending. You know at some point it has to come crashing down. So, let's see if traveling discretionary travel is part of that.

This is a history and forecast of airline profitability by region. Again, it’s from my office so I will leave that to our industry colleague to talk about more. But if you look at the black bars there you can see what I mentioned before. The Europe and North America achieve profitability last year and part of the Brown Bar and the black is expected to do well this year. the only exception being Asia Pacific, the slowness in the Chinese opening and one thing I wanted to mention is in Asia Pacific. These regions are kind of big and that region includes India and India as you probably know is booming in terms of its aviation sector and so in India Indigo, the large Low-Cost Carrier (LCC) reported a profit last through the year through March of this year of over 300 Million Dollars. So, even though that Asia Pacific shows a slower recovery, there are bright spots even in that region. Aircraft in the fleet, the global fleet. This is a nice forecast. What we've seen is that total aircraft in the global fleets basically returned to 2019 numbers this year will obviously continue to see growth coming in all the categories of aircraft except one and on the right side. You can see that white body jets are expected to grow roughly two percent turboprops, the only negative, with a slight decline of one percent regional jets with a nice growth of 2.3 and the largest growth category would be narrow bodies over three percent. We'll hear more about I'm sure from the Airbus and Embraer later. But because of the change in profiling capability of these narrow bodies they can do more things than they could before and therefore they can fly missions that white bodies previously did not surprising that they would grow at a faster clip. This is kind of whether it is a piece of artwork or chart, but the big left-hand side. You can see that as a result of the pandemic and all the changes that went on in fleet, we still have a smaller percentage of the registered commercial fleet in the world in service than we did before. and this has to do with long term storage. Short term story still and retired aircraft have been replaced. The right-hand side of this chart is a forecast and the good news there is that you see the black bar on the right-hand side. That’s showing that by 2030 almost 16 percent of the global fleet will be efficient, next generation aircraft. More fuel efficient, less emissions, all the good things, the industry and the planet want and then declining obviously percentages of older types of aircraft. From a commercial standpoint these are game changer aircraft. Whether it’s the Airbus A321LR/XLR, the A220 and the 737MAX aircraft and even longer range smaller widebody (787 and A350) are doing things that were not possible by narrow bodies previously which is all good. This is a whole bunch of stuff ranges of those aircraft as stated by the manufacturers, but the interesting part, if you look at the map on the right you can see the range that A321XLR (8.700km) can reach. So, if it is flying from here, İstanbul, and literally it could reach almost New York and Tokyo. Once limited to the 757-200, today many new narrowbodies are capable of serving routes over 7.000km, with the A321XLR further. It shows the flexibility these aircraft will provide the airlines...

There are other technologies coming down the pipe, Supersonic Aviation as you know raised its head again. Some people claim that this is really not going to happen. There is a company called ‘Boom’ one of the companies actually with supersonic passenger aircraft in development. Boom company has begun its FAA certification this month, so it's serious. Japan Airlines have invested in Boom, other carriers, with a serious interest, also working on those aircraft. The inaugural supersonic flight by Boom is anticipated in 2026. The other thing that is real at this point is the eVTOL, Electric Vertical Take-off & Landing Aircraft that use electric power. These are small, they probably really more air taxis and aircraft, but this is just the beginning and both the United Airlines and American Airlines have ordered these mostly to fly from city center to their hub, airports that are outside of those cities where they operate. And that's only two years away. So, there's a lot of interesting fun stuff that’s going to mix up the aircraft. 

In terms of capacity and route networks, this is just what I call fun facts 2019 versus 2023. To see what business model is gaining and losing in terms of share of the industry. Looks like the full-service carriers are declining further as a share of the industry operating eight percent fewer seats right now, then 2019, whereas the global low-cost carriers are operating seven more seats and have increased their share of the global industry just a bit. I don't think it is surprising and I don't think it really has to do with the pandemic. It’s a trend been going on for a long time… 

So, the final big topic to touch on sustainability, its everywhere you know we have to address as an industry. This chart I find interesting, it's from the EU and its greenhouse gas emissions by industry set and if you can see the wiggly lines that are more or less horizontal. Those are other industries, agriculture, commercial industry and waste. And they mostly stayed about flat in terms of their share of you know whether they've grown or not in the last 30 years in terms of producing emissions, some of them have actually began decline. Our industry (commercial aviation) because of its robust growth over the years is actually double where we were 30 years ago in terms of emissions, not in terms of the percentage of emissions that are reported, but certainly in terms of the actual emissions. So, what we need to do is get back on track to reach the reduction targets (95%) set by many entities around the world by 2050 of the solutions there as I'm sure you've been reading SAF, Sustainable Aviation Fuel, which is a fuel that can be used by engines and aircraft as they exist today. So that's very good news. There are two difficulties, one is the cost of producing it. It is still significantly higher than other traditional AvGas. So, how do we deal with that? You know could be government incentives or incentive support for the producer of the SAF could be support to the airline as they purchase it. So, there are there are ways to deal with that, but we want to be sure they have. And you know, airlines are getting the news quite a bit for their use of SAF routes headlines all the time. But we also want to be careful that there is an expression called greenwashing that you know airlines or any other users are not getting the news because they flew a route with SAF. You know what we need is significant progress in terms of the use, but there's another obstacle and that's the ability to produce SAF. You know it is expensive. It requires facilities, refineries to be built and in 2020 the industry were only producing about a 0.05 million tons of SAF. In 2030 industry would need 11.4 Million tons (US 3 Billion gallons) of SAF. By 2050 the scale of SAF production will be increased by 8.000 times (around 400 Million tons). So, imagine the capacity that needs to be built to meet that demand. It is going to be tough, so we need government support. We need a whole bunch of things, but we need to look for other solutions as well. And again, this may be a little bit more of the real future science fiction almost but it is actually being developed now about electric and hydrogen propulsion aircraft. The electric has started with the eVTOL that I mentioned, but we do see other larger electric aircraft being tested. There is a company called Heart Aerospace and they develop a regional aircraft and it is expected to enter service in five years and a number of full-service carriers expressed interest in that. And then you know, the real elusive magic bullet is hydrogen, there's also there are a couple of companies actually testing hydrogen aircraft. Actually, ATR-72 is flying and testing configuration with hydrogen. But, hydrogen itself has a lot of difficult things to overcome. The actual costs and well the emissions created producing hydrogen fuel and transporting it to air airports can be you know significant so maybe offsetting a good bit of the benefit of having hydrogen fuel instead of carbon fuel. But the good news is that these things are being developed, they're being worked on and you know our industries, an industry of innovation and meeting needs and fully believe that you know these technologies will eventually come to help us reduce carbon footprint and do our part…” 

The program continued with the presentation of Rachel Yuting FAN, Senior Economist at the International Air Transport Association (IATA). In her presentation titled “West and Central Asia, the Persian Gulf and India: Region Outlook”, FAN first underlined that according to IMF World Economic Outlook the macro economic content is returning to normal and it is expected that the world to slow down from 3.5 percent in 2022 to 3 percent in 2023 and 2.9 percent in 2024. Commenting on the pressures on operating costs of the airlines she underlined that both labor cost and fuel cost are huge chunk of operating cost for airlines. According to FAN, fuel cost takes about 25 percent to 30 percent on average and it decreases the profit space of the airlines. “Since the Russian invasion into Ukraine, oil price has been increasing sharply and even recently between June and September, global crude oil prices increased by 25 percent due to extended supply. Just very recently yesterday (October 10, Tuesday), price increased by 5 percent due to the new conflict in the Middle East. Hopefully the good news is that the market is still expecting the crude oil price to converge to the equilibrium price at around 75 Dollars per barrel by the end of the 2026. In the meantime, the credit spread between the jet fuel price and a crude oil price has also reached the 40 dollars per barrel recently that also add pressure to the operating costs. In that sense, the European Airlines have relatively good advantage compared to the rivals in the America because many Europe airlines had against the oil price so they are relatively more protected from the volatility in oil price,” she added. At her address FAN pointed out that according to recent figures the global inflation has been decelerated recently and the core inflation excluding energy and food price, has also decelerated more gradually. According to FAN, the global economy has returned to normal and global supply chain is recovering as output slows. She stressed that recovery remains on track despite headwinds. She also pointed out that global passenger load factors reached pre-pandemic levels in 2023. She shared following information on the global passenger load factors via slide number 12: “Load Factor is another indicator that we monitored closely and as you can see in this chart 2019 is represented by the blue line, 2023 is represented by the red line. You can see that even the orange line in 2022 has already close the gap between the pre-pandemic at the end of the 2022 and starting this year we're closely following the path of 2019 and the load factor globally averaging to around 85 percent.”

She underlined that according to air traffic data based on the first half of 2023 there is a uneven recovery globally and added, “We are expecting the air passenger traffic in the ATLC region to increase from 577 Million number of passengers to almost triple by the end of 2040. Among one of the biggest increase comes from India. This is driven by the demographic growth and income growth we are expecting India to more than triple between 2019 and 2040. For Türkiye to increase at 3.3 percent annual rate, it will almost double for the next 20 years and for Persian Gulf countries also, we're expecting it to almost double between now and 2040.”

Rachel Yuting FAN concluded as follows: “So, to sum up, I hope I have brought you some inside of the industry development and outlook. We see that the world economy has returned to normal. The air passenger traffic has almost fully recovered, even across different regions and demographic shifts, we're expecting it to shift the industry gravity center to Asia, especially India, we're expecting and would be interesting to observe how our ATLC region play a more and more important role in connecting the world. So, it’s a very exciting time to be in this location at this time in this industry. Thank you very much.”

At the Question and Answer (Q&A) Session responding to a question whether as a senior economist, does she forecast a new scenario where things can be even worse in the Middle East after an armed conflict between Hamas-led Palestinian militant groups and Israel Armed Forces broke out on October 7, 2023. FAN underlined that it is early to assess the impact and how long it will, how long it will last and added, “We already observe the increase in oil prices which will add cost industry and according to the research the area will add to inflation on the world and will also be a factor in driving low of the growth rate in the near future. And as we all know that the growth rate will be, the economic growth rate will also be reflected in the inner passenger traffic that will be a negative driving, but we don't have any quantitative result at this point.” 

Then the floor was opened to the sponsor keynotes, which were delivered by Johan PELISSIER, Vice-President Sales Airbus Commercial Central/Eastern Europe and Central Asia and Pawel SKUTELI, Regional Director Airline Marketing, Embraer Commercial Aviation.

In his presentation titled “Airbus Market Outlook: Supporting traffic growth in the region”, Johan PELISSIER first shared some facts to show the growth of İstanbul in terms of the carrying capacity for passengers (ASK) and said, “In less than 15 years, İstanbul has been going from 50th and now today is number 7 in the world. In only the past five years we have seen a growth of 33 percent in ASK (Average Seats Kilometers). I think when we are reaching İstanbul and we are welcome by saying welcome to the meeting point of the world, cannot be a better definition for qualifying İstanbul.” PELISSIER noted that İstanbul is not only a major route as of today, but is also designed in order to actually welcome much more traffic capacity. “When you look at the infrastructure of the airport it is really designated in order to welcome much, much more capacity,” he added. He stressed that as Airbus they see some big growth and big plans and ambitions from the carriers in İstanbul, including Turkish Airlines (THY) and also low-cost carriers such as Pegasus, which was indeed performed a big growth in the very just past few years. Pegasus Airlines took delivery of its 100th aircraft, an Airbus A321neo, which landed at Istanbul’s Sabiha Gökçen Airport on September 30, 2023. Named Cumhuriyet (‘Republic’) in honour of the Turkish Republic's centenary, the aircraft, bearing the tail sign TC-RDP, is the ninth of the 16 new aircraft scheduled to join the Pegasus Airlines fleet in 2023, marking the 100th aircraft so far and the 75th aircraft to be delivered as part of the Airbus order signed in 2012, which, through additional agreements over the years was extended to a total of 150 aircraft. In July 2023 Pegasus Airlines signed an agreement to purchase 36 new A321neo model aircraft, in addition to the existing aircraft orders placed under the 2012 Airbus order. The delivery of the 36 newly ordered aircraft, in addition to its existing orders, is planned to be completed by the end of 2029. As a result, the original order for 100 A320/321neo family aircraft, placed by Pegasus with Airbus in 2012, has now been extended to a total of 150 aircraft. Among these, 108 are A321neos.

PELISSIER underlined that showing a lot of resilience to this market, to COVID and to the crisis Türkiye has a very high level of growth and recovery and Airbus is continuing its journey into selling this region. “I'd like also to mention the very first of the recovery which was done also by the airline in Türkiye, which is Pegasus” he added. Airbus is supporting the traffic growth in Türkiye in 2023. In this context, Airbus recently secured +10 A350-900 order from Turkish Airlines. 14 A350-900 already in THY service since 2020 and 16 already in backlog. PELISSIER went on saying, “So, we are very part of being a partner here in Türkiye of the two main airlines operating but also in Central Asia. I think the growth that we have seen the next years is quite amazing. In the past 10 years we've been going from 200 aircraft to nearly 400 aircraft in the region, the region here on Türkiye and Central Asia. To be clear we have a market share which is actually 52 percent in this part of the world. So, very proud of the trust that all the airlines are putting into Airbus.”

PELISSIER continued his speech as follows:

“Let me now focus also on Central Asia we have in our outlook on 46 percent as of today in Central Asia, which shows that this increased capacity is really a sign of confidence in this market, but also affection of the booming economy and resilience in terms of trade in those countries. We have noticed that the top 10 airlines flying to Central Asia of having a lot of capacity to name a few; THY 70 percent capacity if I compare 2019 to 2023, Fly Dubai 73 percent and Pegasus more than 200 percent in this part of the world. So, we are foreseeing more and more traffic in this region and we surely, I think, will prepare for this social growth. When we look at the top international flows from Central Asia to other parts of the world. Obviously, Türkiye and Russia are only increased following the situation in Ukraine, but also we see a significant growth in the Middle East and I think what is striking here and we had got to crated in the presentation just before is the fact that there are actually a lot of connecting paths from Central Asia to other parts of the world and this missing somehow direct flights are again an opportunity to develop and move air transport capacity in Central Asia. 

We will need more hubs and we need to increase the capacity and to develop the connection between Central Asia and the world. Moving into Airbus possibilities would say still lots and markets which are not yet addressed from the start of the world. I'd like to focus number one probably from İstanbul to Australia or to Americas with the A350 -1000 which is ideal aircraft in order to perform these flights. Thanks to the reaching capacity of this aircraft, we can definitely unlock new markets from Istanbul or from Central Asia to very far countries.

Growing number of low-cost carriers (LCC) which definitely stimulated demand which are taking now a big part of the traffic between Central Asia and from Central Asia to the rest of the world. We are currently 60 airlines operating in Central Asia and the top airlines include many locally based carriers but also some major operators such as Turkish Airlines. And the low cost carries definitely contribute to the growth from Türkiye. We can mention A-Jet, Pegasus and SunExpress… So, those LCC’s growth is definitely also a driver of the demand stimulation in this region just to give you some facts. 10 years ago in 2013 there were 70 LCC aircraft out of a fleet of around 500 aircraft. As of today out of 800 aircraft in this part of the world we have more than 220 LCC aircraft. So, definitely a big growth and that's a stimulus, but also a way to address the demand.” 

In concluding, Johan PELISSIER stated: “I think as Airbus we are very pleased as the others to be involved in such a booming region when you look at facts and figures as of today, but also in the next 10 years we see this region being very resilient and with a lot of long term growth and we believe that as Airbus we have the right portfolio to address such a growth and obviously we are also partnering with various airlines and countries in this part of the world in order to keep up the future and new generation aircraft, which is to really address the sustainability targets together.”

After PELISSIER, Pawel SKUTELI, Regional Director Airline Marketing, Embraer Commercial Aviation took the floor and shared Embraer’s perspective on market and market developments in the region today. In his presentation titled “The Outlook of the Region: New Opportunities in a New Time”, SKUTELI underlined that the Middle East has been growing very dynamically over the last about 20 years and aviation in the Middle East is contributing a lot to the economies, it is creating a lot of jobs, it facilitates tourism, attracts trade and for some countries it really became a pillar of the development of the economy of the economic model of the growth. He also stated that the Middle East region as a whole was one of the fastest growing growing regions in the world over the last two decades. According to SKUTELI, the airlines in the Middle East, with a global reputation for service and excellence, have left an important and permanent mark on the aviation industry in general. He pointed out that Emirates, the biggest international airline in the world by Revenue Passenger Kilometres (RPK), Qatar Airways ranked the 4th and the THY ranked the 5th. He underlined that the aviation center of gravity is moving eastwards, “It's not a surprise. I mean air traffic is fueled by two factors by population and first and foremost by money.” he said.

SKUTELI continued his speech as follows:

“Despite all the successes and all the all the achievements by the airlines in the region, Middle East is still an emerging market. You can say, leading emerging market. Maybe because the propensity to fly is above the trend. And of course, there are many policies of looking at the averages, especially when you are looking at the regions of diverse Middle East. You have some of the wealthiest countries in the world here, but you also have a lot of countries that are relatively poor, underdeveloped right. But all in all, the Middle East is an emerging region. So, the question is, how do we transfer? How do we transition from this to a fully developed fully mature market like the US or North America or Europe?

So, is there a need to change anything in the Middle East? Because when you look at the pace of the traffic grow, we can see that some signals of the growth potential running out of steam were visible already before the COVID pandemic. So, there was a steady decrease in RPK growth rates in the region, and it happened even at times when the economy was growing. Which is something rather unusual because there is a correlation between the RPK growth and the GDP growth. And naturally, the economic geopolitical situation didn't help. we've seen a lot of turmoil, a lot of disruptions in the region. It was the only reason one of the defining features of the of the success of the developments in the Middle East in recent years with the development and appearance of the big hubs, especially the three big Gulf Hubs. And after a period of very rapid grow from 2011 to 2016, when the traffic almost doubled, we reached the point that looked may be as a limit, but we could notice that for three consecutive years there was a traffic decline and it happened already before the COVID pandemic. And then we have the Pandemic hitting the whole industry and the hubs like Dubai and Doha, they were particularly hard because of the reliance on the long-hauled traffic. They didn't have the domestic traffic to compensate and also when you look at the pace of the development of different segments, we know of course, that the first traffic to recover from the domestic and the regional and then the long-haul is the traffic flow that is going to recover. So, even after the end of the pandemic there will be more headwinds in the market… 

So how can you transfer from this emerging market to fully mature market? I want to use as a benchmark as a comparison, the US market or more precisely the continental US market. and when you look at the US and the Middle East and Türkiye. You can see that those regions have roughly the same or similar geographical area and similar population. Of course there is a big difference in the level of the economic development. This is also somehow compensated by the fact that Middle East has a bigger population. But what I want to focus on is the fact that they are also using the different business models and different models to serve the regional markets. And when you look for instance of the infrastructure coverage, you can see that it looks completely different, especially in the US. We really have a lot of very, very big hubs but also smaller airports and what is important to those big hubs with more than 25 Million passengers per year, they are very often focused on the domestic traffic. You can notice that the mature hubs in Western Europe and especially in the US are serving more destinations and the bigger frequencies compared to the ones in the Middle East and Turkiye. And also coming back to the point that I made in the beginning that maybe you see too many big aircraft in the Middle East. When you look at the average size of the aircraft flying in the Middle East, serving the intra Middle East routes, its about 180 seats, which is almost 50 percent more than an average base for the aircraft serving the domestic flights in continental United States and intuitively, this is not something you would expect right because if you have a market it is not as mature. Most of the markets are finer. You would expect that it will be reflected in the smaller size of the aircraft. This is also reflected by the number of airports serve and the number of city per. The connectivity to get in the end because you have access to the smaller aircraft that can serve more routes than the big aircraft because of the difference in the cost for three. Historically no other region will so dependent on the intercontinental traffic as the Middle East. It's almost 90 percent of the traffic. The regional traffic was relatively very small and this became a challenge during the COVID Pandemic. But because of the impact of the COVID pandemic and general transformation of the market, we expect those headwinds to persist even in the post COVID era.” 

During his address SKUTELI also underlined that they are seeing an appearance of at least an interest in ultra-long-haul point to point flight. So new aircraft that will be in a position to serve the markets like Australia to UK directly without the necessity of connecting hubs. “So, there will be a lot of challenges. And also important thing is that the Middle East has been under performing financially when comparing to other regions” he added.

Pawel SKUTELI concluded his presentation as follows: “Slowdown of global hub stratgey was already a challenge, the pandemic further weekend demand an is promoting development of new strategies. Future growth lies within: Over-exposure to long-haul, intercontinental traffic is a liability for the future. Fleet flexibility will be essential to explore underserved short-to-medium haul markets” 

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