Even though the airline industry is facing many challenges, including fuel costs, environmental issues, and consumer complaints, according to two CEOs of major international airlines, the industry is managing just fine.
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Montie Brewer, CEO
Air Canada |
During the Airline CEO Panel at the 2008 NBTA International Convention & Exposition, panel moderator, Emmy award winning journalist, and NBC Today Show Travel Editor Peter Greenberg asked the panelists – Richard Anderson, CEO of Delta Air Lines; and Montie Brewer, CEO of Air Canada – about the current fuel crisis, referring to it as the “big, bad guy” of the industry.
“The industry has managed quite well to find ways to offset this,” said Brewer after reminiscing about the days when oil was only $28 a barrel. He went on to say that Air Canada in particular is hedging fuel, has raised fares, and has gone through many aircraft weight reduction audits, looking to limit items such as magazines and water.
While both CEOs admitted to hedging fuel, they were sure to point out the fact that hedging is not a panacea to fuel woes. “Essentially, you are diluting yourself about the economics of your business model,” said Anderson. “Hedges are temporary. Your underlying business has to operate at what the input cost is.”
Hedging “just buys you time,” said Brewer, “and time is what you need to manage your business.”
The panelists also discussed airport capacity, congestion and delays, repeatedly reiterating the fact that these problems were not to be blamed on the airlines, but rather the weather and ultimately the government. “Congestion impacts us all,” said Brewer. He said that airlines are upset that they “can’t deliver a product that customers expect and deserve.”
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Richard Anderson, CEO
Delta Air Lines |
Anderson encouraged the audience to urge the U.S. government to move forward with the development and implementation of an updated air traffic control system. “When you’re sitting on the ground, it’s because of what’s going on in the air,” he said. “The government has not fixed the air traffic control system, and you should demand that they do.”
NBTA has for years been supportive of renovating the U.S. air transportation system, serving on the board of the Next General Air Transportation System institute Management Council and working with the Joint Planning and Development Office to find solutions to complex challenges that may affect progress. Bill Connors, NBTA Executive Director and COO, said, “If we are to maintain a growing economy, we must have a transportation infrastructure that can accommodate that growth, or the U.S. will lose an important competitive edge in the expanding global economy.”
When asked about the future of travel and its culture, Anderson said that travel has become an essential component of business, and the industry’s globalization has led to more options and opportunities. “Businesses are expanding thanks to initiatives like ‘Open Skies’ and free trade agreements,” he said. “Travel will remain strong because we live in a global environment.”
Return to Connecting News August 2008