High expectations push airline innovation | Fin24
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High expectations push airline innovation

May 27 2014 09:44
Carin Smith reporting from Toulouse
Toulouse – There is no time for complacency in the airline industry as consumers are becoming more and more demanding about what they want from their flight experience, said Airbus marketing manager Kwame Bekoe.

According to Bekoe c
ommercial aviation is one of the big drivers of the world economy today, and complacency is one of the dangers in the airline industry.

"If you have a best selling product, you cannot just sit back. That is why we innovate constantly," he told Fin24.

"(Consumers) want everything in the air which they have on the ground. They want to sleep well, eat well, have Wi-Fi and great refreshments."

Those travelling in business or first class also want to lie completely flat and not just at an angle. That is why there is a rapid growth in the technological advancement of airline products.

Talking about trends in the industry, Bekoe said more airlines are opting to lease aircraft rather than purchasing them.

Another trend is the increasing importance of ancillary revenue options to boost an airline’s revenue stream. These options can include charging customers for food, extra luggage and online access and selling more products duty free.

As an example, he mentioned a low cost European airline which receives about 30% of its revenue from these ancillary sources.

Low cost doesn't mean cheap

"It is a misconception that low cost equals 'cheap', because public confidence and perception plays a big part in an airline’s reputation. Therefore, look at the bottom line and the costs involved.”

He also pointed out the importance of understanding the market, and using different categories of aircraft for different markets.

"Aircraft are highly customisable products.

"An airline’s fleet must, therefore, be very adaptable and flexible," said Bekoe.

Since the global economic downturn, the trend has been for airlines to offer a better business class rather than also including the very niche first class option.

It has also led to the launch of premium economy sections – a compromise between economy and business class. This section currently has the best revenue potential for an airline.

Bekoe mentioned the new Airbus A350 XWB (which stands for xtra wide body) as an example of what the company calls the "Brics flyer" – an aircraft that can meet all the non-stop long distance requirements of the Brics countries (Brazil, Russia, India, China and South Africa).

Economic factors top the list of important criteria when purchasing an aircraft, research shows.

"The direct operating cost is the most important, followed by the aircraft price," said Bekoe.

Other important criteria include fuel and maintenance costs, and the costs to train the cockpit and cabin crew.

He said a craft like the new A350 XWB is estimated to save up to 44% fuel and have lower maintenance costs.

"For instance, we at Airbus believe that an airline like South African Airways could save up to $173m per year by using these more efficient aircraft," said Bekoe.

He said the airline industry in Africa is much more bullish than elsewhere in the world, which makes fleet planning, maximising the use of aircraft and smooth transition periods doubly important.



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