Winning combinations29 June 2018
The decision-making process behind the launch of a new route involves a complex matrix of factors. Jenny Southan speaks to Dwight James, senior vice-president (transatlantic) for Delta, about how the volatile but buoyant growth in demand has helped planners commit to enlarging established routes and launching new destinations.
Airline route networks make the world a smaller place, pairing up cities and stimulating economic growth, new business opportunities, social ties and tourism. They can also be a reflection of improvements in international relations.
For example, at the end of May, Delta announced that it would be renewing a regular service to India from the US in 2019, following agreements between leaders in the US, UAE and Qatar regarding the subsidising of Middle- Eastern state-owned carriers flying to India. Dwight James, senior vicepresident (Transatlantic) for Delta, says “This will be a milestone for us as we reconnect the US with one of its strongest trading partners.”
Back in 2016, British Airways made headlines when it relaunched services to the Iranian capital of Tehran from London Heathrow. At the time, Sean Doyle, BA’s head of network and fleet, said, “The recent lifting of sanctions has also effectively allowed Iran to reopen for business and has paved the way for commerce to reconnect with Iran’s economy, which is the second largest in the Middle East and North Africa, with a diverse range of businesses and industries.”
More recently, Singapore Airlines made a splash by announcing the “world’s longest commercial flight” – at 16,700km – from Singapore to New York Newark non-stop. Arriving in October, it will be plied three times a week with a new A350-900ULR (ultra long-range) aircraft. The carrier had run the service from 2004 to 2012 before closing it due to low revenues. On the occasion of its reopening, Singapore Airlines’ CEO, Goh Choon Phong, said in a statement, “Singapore Airlines has always taken pride in pushing the boundaries to provide the best possible travel convenience for our customers, and we are pleased to be leading the way with these new non-stop flights using the latest technology.”
How do airlines decide which destinations to start flying to? Analysing a wide range of factors – from seasonality to city regeneration – is essential to identifying markets with good potential demand, as well as keeping an eye on what the competition is doing. A spokesperson for ANA says, “In order to expand international routes, the decision is mainly made judging from traffic demand and supply. For example, Mexico City was not served for many years [but had] high demand. Many people were flying to Mexico City by transiting, so we decided to establish a direct flight from Tokyo Narita in February 2017.”
An insider view
A blog on easyJet’s Business Hub explains how the low-cost carrier goes about starting a new route: “Externally, we receive a lot of suggestions from our customers about which destinations they want us to fly to. Internally, [our] focus is on maintaining and building upon the strength of our pan-European network strategy, by deciding which new airports will be popular and convenient for both our leisure and business customers.”
Next, the airline has to assess the operational feasibility of a potential new route. easyJet explains: “As a short-haul point-to-point carrier, with a fleet made up of only Airbus A319s and A320s, destinations need to be within a certain distance of the departure airport so that we can fly directly and efficiently. Some routes are disregarded if the airport does not meet our requirements, [for example] an airport may have a runway that is not long enough for our aircraft to land. The team then creates a route assessment for the identified opportunity, which collates all relevant data from other departments, such as airport costs, block times, turnaround times, the availability of slots and any necessary crew training.”
What makes a new route viable? Delta’s James says that, put simply, it’s all about profitability. “This is where leveraging our global network is key – where we can connect customers on partner airlines and vice versa. This increases the value proposition to the customer and really speaks to an overriding strategy as a hub-and-spoke global carrier. Our recently launched Indianapolis-Paris route is a good example – we have a partner hub at Paris CDG with Air France, which allows customers beginning and ending their trips in Indianapolis to access more than 80 destinations beyond Paris with one connection at CDG,” he says.
While investment in a new route is always required, James says that “any risk associated with opening a new route is carefully calculated to make sure we are taking full advantage of everything at our disposal.” And savvy decision-making has delivered continued route growth for Delta. “In the UK, we have grown from three routes at London Gatwick ten years ago to up to 11 daily flights from three airports – London Heathrow, Edinburgh and Glasgow – this summer. When you include our partnership with Virgin Atlantic, we offer up to 39 daily flights,” says James.
“Thanks to the partner network we’ve established, we can fly customers to every corner of the globe. That’s quite a change from being a primarily domestic carrier at the turn of the century. We’re now the largest US carrier across the Atlantic and the only one to fly non-stop to Africa. We also have developing partnerships with WestJet in Canada, Korean Air and Aeromexico that support our plans for growth in these key markets in the coming years.”
Next March, Delta partner Virgin Atlantic will launch a new Manchester to Los Angeles route. In a statement, Shai Weiss, chief commercial officer at Virgin Atlantic, said, “We’ve always said that Manchester is an important base for us and this latest expansion really cements that. We’re delighted to be able to provide the best possible service to the US by welcoming a new route to Los Angeles and doubling the amount of flights to Las Vegas. By using our aircraft on the New York, Atlanta, Boston and now Los Angeles flights, we can maximise connectivity via our partner Delta, allowing more customers to take advantage of over 200 US connections.”
Julian Carr, aviation director at Manchester airport, added, “The airline’s commitment and growth clearly demonstrates the role we play at connecting the North to key global destinations and the demand to fly direct from Manchester. I am sure the extra services and new route will prove incredibly popular with the 22 million passengers in our vast catchment area.”
In December, Ethiopian Airlines is launching B787 services from the capital of Addis Ababa to Manchester. Ethiopian Airlines CEO, Tewolde Gebremariam, says, “The socio-economic implication of the new flight is immense. With investment and trade potentials between Africa and the UK, the flight holds the promise of boosting trade, investment and tourism with business opportunities for investors and business people from both regions.” The new route will also unlock connections to more than 58 cities across Africa.
Other long-haul routes Manchester has welcomed in recent years include San Francisco (Virgin Atlantic), Houston (Singapore Airlines), Muscat (Oman Air) and Beijing (Hainan Airlines). According to Andy Bounds’ article in the Financial Times in November 2017, “the launch of direct flights between Manchester and China has helped double the spending by Chinese tourists in the region and almost triple exports to China during the route’s first year.”
Smart decisions about new route launches can make a huge difference to the success of the airline too, of course. A spokesperson from Air France’s network planning team said, “After a few stable or declining years, Air France has returned to growth by launching leisure destinations and redeploying its offers in an agile way by playing on market seasonality and optimising its aircraft utilisation. This summer, Air France and its subsidiary, HOP!, launched 42 routes – of which 27 were summer peak routes – producing a 4% increase in ‘available seat kilometres’ compared with summer 2017.