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The NETWORK Forum has opened new aspects for cooperation between airports and airlines on new routes development and implementation of new commercial projects.
The NETWORK Forum was attended by over 350 representatives of airlines, airports, tour operators, embassies and general consulates from Europe, Asia, Africa and other regions, national and regional public authorities that are involved in the development of air services, international and domestic tourism.
The Forum was hosted by one of the most modern airports of the Eurasian region – Kazan International Airport.
Networking sessions became the key event of the Forum, 3 days of which allowed for over 1000 prescheduled business negotiations to take place, mainly between airports and airlines.
Networking sessions were attended by the key market players, ranging from the farthest point of Western Europe, ANA Airports of Portugal, to the eastern boundaries of Asia, Yuzhno-Sakhalinsk Airport, as well as by the representatives of other regions of the world.
The outcome of successful networking will be the launching of new routes from airports.
Every Forum delegate was able to hold an unlimited number of business meetings by scheduling them in advance via the innovative automated scheduling system, developed by AVIACENTER.
Kazan International Airport held the largest number of prescheduled appointments - over 40 meetings in total.
Krasnoyarsk, Munich, Vnukovo, Zhukovsky, Minsk airports were also actively engaged in networking sessions.
Major airport groups held a large number of negotiations during special sessions: Novaport of Russia and ANA Airports of Portugal, each of which met with many forum delegates.
Top airlines that held the most negotiation were Aeroflot, Pobeda, Air France KLM, Utair, Emirates, AZUR air, Uzbekistan airways and Atlas Global.
Countries and regions that do not own national carriers were also present at NETWORK. For example, the Ambassador of the Republic of Gambia in Russia Jainaba Bah held a large number of business meetings with airlines from Europe, Asia, the Middle East, the EAEU countries as well as with the heads of ministries of transport and tourism of the Eurasian regions.
8 major business events were held as part of NETWORK, among which were the Civil Aviation Strategy Forum, International Conferences on Airline and Airport Marketing & Commerce, workshops, Round-Table Discussion on Air Travel Development for Tourist Destinations, airport and supplier presentations and exhibition.
Representatives of the Eurasian Economic Commission, Government of the Republic of Tatarstan, Federal Agency for Tourism (Rostourism), Center for Strategic Development in Civil Aviation (AVIACENTER), as well as other honoured guests, were keynote speakers at the opening ceremony of the Forum, highlighting its importance for business development for airlines and airports and economic growth of the transport and tourism sectors in general.
Over 100 speeches and presentations on implementing regional and global projects of air transport industry were presented at the Forum, several workshops were also held by the Center for Strategic Development in Civil Aviation (AVIACENTER) on airline and airport strategy planning and route network development.
The main trends and forecasts of civil aviation development in the Eurasian space were highlighted at the Civil Aviation Strategy Forum.
Maxim Asaul, Deputy Director of the Transport & Infrastructure Department, Eurasian Economic Commission, covered in depth the ICAO's main directions and stages of the coordinated transport policy (MDCTP). He noted that compliance with ICAO requirements is one of the guiding principles that secures activities of countries operating international flights. It was emphasized that the road map events implemented as part of the MDCTP include removal of restrictions in frequency, capacity, flight geography, number of designated carriers. Coordinated work of EAEU Member States on elimination of exemptions, limitations and barriers to the functioning of the common air transport service market will promote increased transport activity of the population and affordability of provided services.
In his welcome speech during the Forum opening ceremony, along with the wishes of fruitful work and successful achievement of all intended results, Oleg Safonov, Head of the Federal Tourism Agency (Rostourism) noted: "Tourism is on the rise in Russia. Domestic tourist flow increased 75% over the last 4 years. The number of foreign tourists entering Russia increased more than 100% in 15 years. Compared to 2001 Russian citizens vacation abroad almost twice as often.
All this led to growing demand for passenger air transportation, since most tourist products sold nowadays are based on air travel as the most popular means of traveling to vacation destinations and back home. Last year the country achieved record air traffic: Russian airlines carried over 105 million passengers, which exceeds the 2016 numbers by at least 18%.
This year the positive trend continues. For example, the total amount of air ticket sales for June and August compared to the same period of the previous year has increased by 9%, for domestic destinations – by 18%."
Global and regional trends of aviation industry development were reviewed.
"By 2030 the world's scheduled passenger air traffic will double, increasing to 6 billion passengers per year", stated Anton Koren, CEO of the Center for Strategic Development in Civil Aviation (AVIACENTER), referencing a forecast by the International Civil Aviation Organization (ICAO) during the plenary session of the Civil Aviation Strategy Forum at the NETWORK forum.
Furthermore, the ICAO forecasts that in the nearest 20 years the number of flights should increase accordingly from 30 to 60 million.
Anton Koren also added that the ICAO has a similar forecast for cargo traffic, the recovery and upward trend being related to improving global economic situation. The Airports Council International (ACI) also evaluates this sector positively. According to the ACI's estimations, cargo market is growing slower and doubles in 20 years. The ACI forecasts 225 million tons market capacity by 2031, with an average growth rate of 4.5% per year.
Industry development forecasts for 2018 are also positive.
IATA's short-term forecasts were announced during NETWORK's business programme, according to which global passenger numbers will grow to 4.3 billion passengers in 2018. RPKs indicator is expected to rise 6.0% (slightly down on the 7.5% growth of 2017 but still ahead of the average of the past 20 years of 5.5%), which will exceed a capacity expansion (ASKs) of 5.7%. The cargo business continues to benefit from a strong cyclical upturn in volumes, with some recovery in yields. Volumes are expected to grow by 4.5% in 2018 (down from the 9.3% growth of 2017). The boost to cargo volumes in 2017 was a result of companies needing to restock inventories quickly to meet unexpectedly strong demand. This led cargo volumes to grow at twice the pace of the expansion in world trade (4.3%). Cargo yields are expected to improve by 4.0% in 2018 (slower than the 5.0% in 2017).
Revenues from the passenger business are expected to grow to $581 billion (+9.2% on $532 billion in 2017). This is supported by expected robust GDP growth of 3.1% (the strongest since 2010). Cargo revenues will continue to do well in 2018, reaching $59.2 billion (up 8.6% from 2017 revenues of $54.5 billion).
As for the Russian air travel market, Anton Koren emphasized its unprecedented growth. The key growth drivers included macroeconomic stabilization: resumed economic growth with a stronger Ruble and rising oil prices, the 2015–2016 low base effect, resumption of charter flights to Turkey, implementation of the deferred demand in the international tourist traffic supported by the improved disposable income of frequent fliers.
In general, a positive trend of airline industry development is expected globally in the next years and decades, which makes large aviation projects promising for consideration and development, Anton Koren noted.
The Forum gave significant emphasis to air travel development for tourist destinations, development of domestic and international tourism.
A Round-table discussion was organized on the subject, with speeches by representatives of tourism authorities, leading tour operators, airlines and major airports.
The main trends of the Russian tourism market were shared by Natalya Belenko, Deputy Head of the Directorate of State Tourist Projects and Safety in Tourism of the Federal Agency for Tourism (Rostourism), who stated in her report that tourism has a powerful synergetic effect. Tourism received a development boost in Russia in 2014. Domestic tourist flow in 2017 reached 56.5 million trips. It is 125% more than in 2000. The number of inbound trips to Russia has grown by 123% since 2001.
This positive pattern is caused by many factors: the Republic of Crimea becoming a part of Russia, the Winter Olympics in Sochi, introduction of sanctions against Russia by western countries, increasing attractiveness of the country as a tourist destination, partly due to preparation and hosting the 2018 FIFA World Cup. The Development of Domestic and Inbound Tourism in the Russian Federation Federal Financing programme also played an important role.
Natalya Belenko stated that the range of activity holidays for the Russians is expanding. Besides cultural and educational, recreational, beach, culinary, industrial, environmental destinations, military history, patriotic, extreme tourism is becoming popular. Arctic tourism is developing quickly, tours to the Far East and lake Baikal are on the rise.
The representative of Rostourism marked significant influence of the transport service sector on the tourism industry development. Improving aviation route network on popular tourism destinations is very important for the development of domestic and inbound tourism. An air service between Simferopol and Sochi was named a typical example. This route covering two popular regions became another attractive opportunity for tour operators to create combination tour offers.
Charter air travel is a promising area for increasing cooperation between the tourism and air travel segments. It was stated that charter flights are the key component of package tours.
The importance of passenger air travel state aid programs in the development of domestic tourism was also mentioned, particularly on such traditional tourist destinations as the Crimea, Sochi, Mineralnye vody and others. The fact of increasing the number of subsidized air routes to the Crimea to 63 in 2018 was named a positive example. It encouraged the growth of the tourist flow to the region.
Natalya Belenko also pointed out a pattern when the increasing tour demand has a positive influence on the development of air travel industry infrastructure, which in its turn helps to expand the travel geography.
The 2018 FIFA World Cup in Russia gave a strong boost to tourism development. Airport infrastructure was modernized, air accessibility and comfort for tourists - improved, a network of scheduled flights between host cities of the Mundial – expanded. As a result, the total number of tourists and fans who visited host cities of the World Cup during matches was about 6.8 million people, among whom over 3.4 million were foreigners. Consequently, 11 host cities received over 40% more tourists than during the same period last year. During the FIFA World Cup the inbound tourist flow increased in these cities by over 50%. The total tourist flow in June 2018 compared to the last year increased 4.9 times, and inbound – 19 times. The FIFA World Cup provided a long-term effect for the Russian tourism industry. Its heritage will continue to work, encouraging the growth of domestic and inbound tourist flows, – Rostourism presumes.
Opening a bridge over the Kerch Strait has become a milestone event for the development of domestic tourism. It marked the creation of an Integrated Southern Beach Tourism Cluster of the country. The facility makes it possible to lower prices of construction, fuel, goods and services on the peninsula, which will affect the prime cost of the Crimean tourism destination, – Rostourism forecasts.
A bill approved by The State Duma in the third reading, that allows holders of FAN IDs to enter Russia visa-free until the end of 2018, will be instrumental for increasing the volume of inbound tourism. Such a decision will have a dramatically positive impact on tourism development in Russia and lead to larger inbound flows, – states Rostourism.
The leading charter air carriers and tour operators AZUR air, Ellinair and Mouzenidis group shared their experience of air travel development for tourist destinations with the Forum participants.
Anastasia Matyushina, PR Director at AZUR air, shared the success story of air travel organization, as well as the main success factors of interaction with a tour operator. "Destinations served by AZUR air are primarily determined by the entity ordering flights – the tour operator who is the carrier's strategic partner. An alliance of two fast growing companies – an airline and a tour operator, equally committed to improving the quality and level of provided services, is definitely an engine of mutual development and, accordingly, the development of the tourism sector", Anastasia Matyushina noted.
It was also observed that the airline develops not only charter but also scheduled flights. Scheduled flights have been opened from Moscow to Cuba, the Dominican Republic, China, Vietnam and Cyprus. Making flights to some destinations scheduled allows tour agencies to expand their product range, become more attractive and client-oriented; it's not a secret that some tourists prefer scheduled flights either as part of a tour package or as a chance to organize their own journey.
Presentations of tourism potential of Russian regions were also held during the Forum, introducing projects of new regional tours of Kaluga region, the Mari El Republic and Vladimir region.
In particular, unique places of interest of Kaluga region were presented along with a rating of the main kinds of tourism in Kaluga region. Tatiana Kaledina, Head of Kaluga Region Tourism Development Agency, mentioned that according to the tourist flow data, culture tourism ranks first, followed by religious, event, agro-tourism, active, business, ecological, health and industrial tourism.
It was also noted that Kaluga region is the home of over 100 museums, tour operators have developed over 130 routes throughout Kaluga region, 20 of which are the most popular.
Tourism opportunities of the Mari El Republic were presented to the Forum participants by Lidia Batyukova, Minister of Youth Policy, Sport and Tourism of the Mari El Republic. Her presentation highlighted unique tourist attractions and projects of the Republic, also stating that in 2017 it was visited by over 650 thousand tourists.
Tourism opportunities of Vladimir and other regions were also presented at the Forum.
“Airline Marketing and Commerce” Conference, devoted to strategic development, marketing and commercial activities of airlines, took place as part of the Eurasian route development forum NETWORK.
Cutting-edge digital technologies, challenges and opportunities for airlines and the tourism segment were presented at the Conference, professional approaches to airline marketing strategy development, airline brand development, financing and taxes, innovative formats of in-flight services and entertainment and many other issues were discussed.
At the Forum, Amadeus presented a new Live Travel Space ecosystem.
Leonid Marmer, General Director Amadeus IT, presented new solutions and opportunities for adapting the transport industry to service standards of tomorrow.
‘The role of technology in the development of air transport sector can hardly be overestimated. But even despite the variety of available IT products, the value of technology is determined by its seamless integration with other solutions.
Amadeus is creating a Live Travel Space ecosystem, where all participants of the travel and air transport industry are partners and can cooperate productively through the use of integrated Amadeus Travel Platform, which is connected to all types of travel content via NDC, API, EDIFACT and so on’, - stated Leonid Marmer at the Forum.
A special report on airline brand development a case study of Utair, was presented by Alina Scherbinina, Vice-President Marketing, Utair.
In 2017 the airline started a rebranding that involved all its products and services. To illustrate the values of the new brand, in April Utair launched the Go Where You're Loved advertising campaign. The airline chose a simple and realistic image for it – a typical Soviet-style building that can be found in any Russian city. It was a bold decision triggering emotions of the audience. People were grateful to Utair for being honest and confessed they missed the places where they spent their childhood.
‘Utair's priority task is developing regional accessibility. The company not only launches direct regional flights but also supports major events in Russian cities. For customers a strong brand is one of the key decision-making factors, that's why it's important that they know about Utair's values throughout the country’, stated Alina Scherbinina, Vice-President Marketing of Utair.
The representative of Emirates airlines shared with the Forum participants their experience of route network development and interaction with airports.
Global prospects and anticipated changes in tax changes within the territory of the European Union were presented in a report of KPMG Ireland.
In his report, among other issues, Brian Brennan reviewed a document signed in June 2017 (OECD) as part of measures to regulate double taxation and prevent tax manipulations, which must be considered by airlines, leasing companies and other financial institutions that plan deals involving aircraft.
Provisions of this Act for different taxation areas will become effective in stages from January 1, 2019, and January 1, 2020.
The report also included a review of the European Council's directive against tax avoidance practices (EU ATAD). In accordance with this directive, changes to European Council tax legislation will be introduced in stages in the period from 2019 to 2024.
The I Eurasian Route Development Forum NETWORK was attended not only by representatives of air carriers and airports, but of associations promoting air passenger rights.
David Malovani, the President of International Air Transport Passengers Association (IATPA), pointed out the main problem areas for air passengers, typical for all regions of the world: a ticket can't be transferred to another person, full cost of the ticket is not refundable if a trip is canceled by the passenger, no compensation is due for canceled flights and overbooking.
David Malovani is sure that a passenger must be the central figure of the entire aviation activity.
"We stand for recognizing the fact that a purchased air ticket is the property of the passenger. Hence at the insistence of the Association, the corresponding agencies of the European Council are currently considering a draft bill that would allow to transfer the prepaid ticket to another passenger and get 100% compensation of its cost."
Ilya Zotov, All-Russian Association of Passengers Deputy Chairman stated that work to secure air passenger rights is in progress in Russia as well, and on a number of issues the national legislation is more focused on passenger interests than in some other countries. The speaker also stated that potential amendments to the Air Code, allowing to impose fines on air carriers for overbooking are currently considered at government level. These changes might take effect before the end of 2018.
Main trends in airport marketing were discussed by the NETWORK Forum delegates on the final day of the Forum at the conference devoted to airport aviation and non-aviation commercial activities, Airport Marketing and Commerce – 2018.
Pavel Hodalov, Head of Special Projects, Kazan International Airport, shared best practices of organizing aviation and non-aviation activities during FIFA 2018.
The speaker talked about infrastructure and airport staff preparations, as well as about particularities of interaction between the air gateway services with other entities facilitating the World Cup in accordance with the Operational transport plan. Routes of client groups, teams and VIPs were thoroughly elaborated in advance. Autonomous terminals allowed to distribute fan groups efficiently.
Pavel also stated that during the preparation stage the Mobile Apron system was used to model peak loads. On the basis of the collected data, company resources were planned for the entire period of the games. During the FIFA Kazan International Airport served 415 846 passengers, 171 777 of whom were on international destinations. Most guests came via Moscow – 168 381 passengers.
During the peak time of the quarter-final game from 6 July to 7 July the daily passenger traffic reached 26 153 people, 15534 of them on domestic routes and 10619 on international. 271 flights were performed in 24 hours.
4004 charter and scheduled flights were performed during the World Cup. All 3 terminals of Kazan Airport were busy, additional checkpoints were opened.
The Transport Clearing House presented a report on implementing M2: Multilateral Interline Closed Fare project.
Andrey Larchenko, Vice-President, TCH, said that Multilateral Interline Closed Fare project (M2) has been implemented by the Transport Clearing House (TCH) to increase the effectiveness of commercial cooperation between airlines and airports in Russia. The project is intended to create a network of connection routes via a hub airport where through rates are applied, without showing fares on travel segments operated by different carriers. Applying the fare does not require special passenger and baggage handling technologies.
The project has been implemented in 12 national airports: Domodedovo, Vnukovo, Zhukovsky, Pulkovo, Koltsovo, Tolmachevo, Emelyanovo, Kurumoch, Platov, Irkutsk, Roschino and Ufa. 26 Russian airlines and 12 international carriers participate in the project, including Utair, Ural Airlines, Nordwind, RusLine, UVT Aero, IrAero, Yakutia, Uzbekistan airways, Belavia, Georgian Airways, Flydubai.
Andrey Larchenko noted that implementing the M2 project promotes the development of regional travel through airports, expands airlines' connection network, improves accessibility and geography of transfer flights for passengers.
‘The trilateral M2 Agreement is concluded between a hub airport, airlines that operate via this hub and are ATSS participants, and the TCH. Benefits for airlines include no need to conclude and support interline agreements, enhanced transfer passenger traffic received without extra costs via the TCH accredited agency network, and increased seat occupancy rate on airline's own flights from attracting transfer passengers from regions and cities not served by the airline. It is also possible to build a route network customized for a particular airport and use a simplified routine for connections/transfers creation in CRS with the help of the Schedule & Tariffs Centre (STC), a subdivision of the TCH, coordinating airlines' activities regarding the development, maintenance and update of domestic and international flight schedules’, Andrey Larchenko emphasized.
The experience and plans on airport infrastructure development and prospects of opening new routes were shared by international airports in their presentations: Munich, Kazan, Abakan, Yuzhno-Sakhalinsk.
Veronika Aktasheva, Strategic Development Director of Kazan International Airport stated during the business programme of NETWORK that according to statistical analysis, top 10 destinations by the number of transfer passengers from Kazan include Paris, Tel-Aviv, Milan, London, Munich, Berlin and other cities.
Hence, Kazan International Airport plans to open flights to these destinations as well as to such Asian cities as Teheran and Beijing. Soon to be opened domestic destinations include Astrakhan, Irkutsk, Krasnoyarsk, Chelyabinsk, Grozny, Murmansk, and other cities.
Nikita Polonsky, Director General of Yuzhno-Sakhalinsk International Airport, presented the prospects of development and new opportunities for route network development from Sakhalin's main air gateway.
Yuzhno-Sakhalinsk International Airport is the main air gateway of Sakhalin region. The airport actively implements modernization projects. The aerodrome has one runway 3400x60 meters. In July 2017 Yuzhno-Sakhalinsk Airport gained clearance to operate six modifications of Boeing-747 and the world largest cargo airplane An-124-100 on a regular basis.
Nikita Polonsky informed that by 2020 Yuzhno-Sakhalinsk will be able to receive guests of the island in a new spacious (39 000 square meters) and modern terminal. The new terminal has the capacity of handling 550 passengers per hour (can be potentially increased up to 900 passengers per hour) on domestic flights and 250 passengers per hour on international flights.
Currently the airport regularly serves flights by Aeroflot, Rossiya, Aurora, Yakutia, S7, Globus, Nordwind, Azur Air, Asiana Airlines, as well as flights of the cargo carrier Air Incheon.
Yuzhno-Sakhalinsk International Airport was the title partner of Airport Marketing and Commerce – 2018 Conference that took place as part of the NETWORK forum.
The highlight of the Forum was the Eurasian Aviation Marketing Awards Ceremony.
Eurasian Aviation Marketing Awards for airports, airlines and civil aviation companies of the Eurasian region have been founded by the Center for Strategic Development in Civil Aviation (AVIACENTER) to recognize leaders and companies that showed outstanding performance in aviation marketing.
Award laureates are determined through objective assessment of measurable criteria and quality indicators of commercial and marketing activities of airlines and airports.
The judges performed a complex expert assessment and awarded the Airline of the Year to:
• in group A (passenger traffic over 5 million passengers per year) – Ural Airlines;
• in group B (passenger traffic from 1 to 5 million passengers per year) – Globus Airlines;
• in group C (passenger traffic from 500 thousand to 1 million passengers per year) – IrAero Airlines and Azimuth Airlines
• in Charter Airlines Group – Nordwind Airlines.
Winners were also chosen in separate categories where the judges distinguished SCAT Airlines, Uzbekistan Airways, Air France-KLM, and Emirates.
Kazan International Airport received the award as the fastest growing airport in the region with passenger traffic over 1 million passengers per year, showing an impressive 37% growth in the previous year.
AVIACENTER Airport Benchmarking of 2017 was also used to determine the winners in the Airport of the Year category: Yuzhno-Sakhalinsk International Airport and FSE Airports of the North.
The judges of the Eurasian Aviation Marketing Awards also recognized the achievements of the following airports and airport groups in other categories: Vnukovo International Airport, Mineralnye Vody International Airport, Irkutsk International Airport, Emelyanovo International Airport, Minsk International Airport, ANA Portugal Airports, Zvartnots International Airport, Munich International Airport and Voronezh International Airport.
A special Contribution to Industry Development Award was given to Airports of Regions Management Company and Simferopol Airport for implementing ambitious airport development projects.
Professional workshops on airline strategy development and airport marketing were held at the Forum every day by the leading AVIACENTER experts.
A tour of the capital of the Republic of Tatarstan – one of the largest economic, political, religious and scientific cities of Russia – was also organized for the Forum participants. It included a visit to the famous Kazan Kremlin, a tour of one of the ancient cities of Volga Bulgaria – Bolgar, a welcome reception with a bird's-eye panoramic view of the sunset and nocturne Kazan, an evening networking party Sabantuy including a tour of the Tatar Village museum complex, a formal gala dinner and a range of other informal events.
The NETWORK Forum was organized by the Center for Strategic Development in Civil Aviation (AVIACENTER).
The managing director of the Center Anton Koren stated: "The NETWORK Forum was attended by over 350 industry professionals. Most of them represented airlines and airports. All delegates pointed out the efficiency of the networking sessions, almost every participant mentioned establishing new business contacts in air service development. Considering the high demand for such events, we are going to hold it every year in different cities of the Eurasian region."
Organizers of the NETWORK Forum are especially grateful to the host of the Forum, Kazan International Airport, for their professional approach to organizing the reception and hospitality, to Yuzhno-Sakhalinsk International Airport for supporting Forum events, to all speakers and delegates of the Forum for productive participation, professional speeches and valuable practical experience.
The Organizing committee of the NETWORK Forum also thanks media partners for professional information support and coverage of the Forum events.