asia pacific airline training symposium the business of aviation training: set for takeoff (? or !)...
TRANSCRIPT
Asia Pacific Airline Training Symposium
Why invest in training? (Answer: To prepare for the unexpected and uncertain)!
8 Sept 09 APATS 2009 Hong Kong 2
Source: http://www.pilotfriend.com/humour/jokes/cartoons.htm
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Aviation Training covers a wide spectrum of disciplines, in an ever-changing environment
8 Sept 09 APATS 2009 Hong Kong 3
Safety & Security
Technical Skills
Commercial Skills “Soft Skills”
Pilot Training
Maintenance Eng.
Customer Service
Aircraft Leasing
Revenue Management
Airline/Airport Management
LeadershipFares and Ticketing
ITAir Traffic MgmtAviation Law
Cabin Crew Training
Safety Management Systems
Sales
Airport Charges
Airline Finance & Accounting
Industry Health
Industry Health
RegulationRegulation
Cost
PressureCost
Pressure
Industry
LearningIndustry
Learning
EnvironmentalEnvironmental
Societal Trends
Societal Trends
Aviation Mgmt1 wk
Aviation Mgmt1 wk
Training caters to different markets, from more expensive, regulated training for the few to short
courses for the many
8 Sept 09 APATS 2009 Hong Kong 4
Cou
rse
Cos
t/Len
gth
Potential No. of Students
CPL Pilot Ab Initio 1 ½ yrsCPL Pilot Ab Initio 1 ½ yrs Lic. Aircraft
Maintenance Eng 2 yrs
Lic. Aircraft Maintenance
Eng 2 yrsATCO Ab Initio 10 mths
ATCO Ab Initio 10 mths
Aviation Degree3/4 yrs
Aviation Degree3/4 yrs
Cabin Crew 3 mths
Cabin Crew 3 mths
Pilot Type Rating 3 mths
Pilot Type Rating 3 mths
Fares & Ticketing
1 wk
Fares & Ticketing
1 wk
Regulated
Airport Operations
3 mths
Airport Operations
3 mths
The industry which supplies training is also fragmented from traditional in-house to external
8 Sept 09 APATS 2009 Hong Kong 5
In-houseIn-house
Advantages of In-house:• Core to product/reputation• Control over quality• Instant access• Lack of scale external providers• Scale provides low cost• Ability to in-source work for revenue
Arguments against In-house:•Do not need to own and run, LCC’s•Not always best quality in-house•Cost of instant access, breeds waste•3rd party providers growing scale•Larger 3rd party volume reduces cost•Lack of commitment, marginal pricing
OEMsOEMs
Specialist TrainingOrganisations
Specialist TrainingOrganisations
ServiceOrganisations
ServiceOrganisations
GovernmentsGovernments
Universities/Trade Colleges/ Academies
Universities/Trade Colleges/ Academies
In-sourceIn-source
After a period of strong growth, the aviation industry responded with unprecedented aggression to the crisis
8 Sept 09 6Source: ICAO, IATA
1971 1975 1980 1985 1990 1995 2000 2005 2010f
Traffic Change
Capacity Change
2008 – 2010 forecast
APATS 2009 Hong Kong
DifferentialTraffic-Capacity
Emerging markets grew strongly in the past decade in line with their economies
8 Sept 09 APATS 2009 Hong Kong 7
CAGR%2000 - 08
10.5% pa10.2% pa
14.5% pa
7.3% pa
Source: Centre for Asia Pacific Aviation Analysis, Boeing, IMF, Indian DGCA
China RPKChina GDP Indexed
India RPK
India GDP Indexed
Emerging markets are strongly represented in recent aircraft deliveries
8 Sept 09 APATS 2009 Hong Kong 8
Source: Centre for Asia Pacific Aviation, Ascend Jun 09, CAT Magazine Annual Training Survey Apr 09 (all sims)
China
India
Brazi
l
UAE
Mex
ico
Training industry development in emerging markets lag their aircraft deliveries
8 Sept 09 APATS 2009 Hong Kong 9
Note: Proxy for training industry development, sims per aircraft ordered from Jan 06 – Jun 09; Does nottake aircraft/sim type into account
Source: Centre for Asia Pacific Aviation, Ascend jun 09, CAT Magazine Annual Sim Survey Apr 09
China
India
Brazi
l UAE
Mex
ico
However, LCC’s accounted for almost all growth this decade, 22% in 09 vs 7% in 2000
8 Sept 09 APATS 2009 Hong Kong 10
Source: Centre for Asia Pacific Aviation and OAG
Se
ats
m
A recovery in confidence looks well established, for example in the US
8 Sept 09 11
US Leading Economic Indicators Jan 06 – Jul 09
Source: Conference Board
USA Leading Economic Indicators
APATS 2009 Hong Kong
And Asia is recovering strongly
• World Bank President Zoelick said he now expected China’s economy to grow by nearly eight percent in 2009 … higher than the World Bank’s official forecast of 7.2% AFP, 2 Sept 09
• Hong Kong’s exports and economy may ‘fully recover’ by the middle of next year as global growth resumes, said Edward Leung, the chief economist at the government backed Hong Kong Trade Development Council
Bloomberg ,3 Sept 09
• Bank of Japan Governor Masaaki Shirakawa said on Monday the Japanese economy is showing signs of recovery, though uncertainty over the outlook remains high Reuters, 31 Aug 09
• “…official data showed India's economy grew 6.1 percent in the three months to June, signalling the country was emerging from the negative effects of the global downturn AFP, 2 Sept 09
• Economists more upbeat… In the second quarter, Singapore emerged from a recession, posting a 20.7% jump in GDP Straits Times, 2 Sept 09
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The slowing rate of decline in passenger traffic is starting to look like a sustained trend…
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13
Source: Centre for Asia Pacific Aviation and IATA
ACI total passenger number growth: Jul-08 to Jul-09
International demand, capacity & load factors:Aug-2008 to Jul-2009
Source: Centre for Asia Pacific Aviation and ACI
The Middle East has maintained growth reportedly at weak yields
8 Sept 09 APATS 2009 Hong Kong 14
IATA airlines RPK growth by region: Jul-08 to Jul-09
Usually a lead indicator, the rate of decline for freight traffic is also slowing, albeit at poor yield
8 Sept 09 APATS 2009 Hong Kong 15
Source: Centre for Asia Pacific Aviation and ACI
ACI total cargo volume growth: Jul-08 to Jul-09
A recent survey by CAPA found the majority saw profitable growth returning in 12-18 months
8 Sept 09 16
Fastest Growth next 12 months:•China (85%)•Middle East (76%)•India (43%)•Rest of Asia (33%)
Slowest Growth next 12 months•North America (72%)•Western Europe (64%)•Eastern Europe (36%)•= Africa (36%)
Source: Centre for Asia Pacific Aviation Survey, Sept 09
APATS 2009 Hong Kong
Current priorities are not a surprise: demand, cash and costs
8 Sept 09 APATS 2009 Hong Kong 17Source: Centre for Asia Pacific Aviation Survey, Sept 09
Over the medium term, people and environmental issues are added to demand, cash and costs as key issues
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Source: Centre for Asia Pacific Aviation Survey, Sept 09
Over the long term, Asia Pacific and the Middle East will see the greatest growth in traffic and fleet size
8 Sept 09 19
Source: Boeing Current Market Outlook 2008 to 2028; Centre for Asia Pacific Aviation Analysis
APATS 2009 Hong Kong
Urbanisation, the motor of Chinese growth, is set to continue to drive growth
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*
*
205020452040203520302025202020152010200520001995199019851980197519701965196019551950
13% 14% 16% 17% 17%17% 19% 23% 27% 31% 35% 40% 45% 49% 53% 56% 60% 63% 66% 70% 73%Urbanisation % 13%13%
Ch
ina
: T
ota
l Po
pu
lati
on
(00
0’s)
Chinese Urbanisation
(1950 – 2050f)
Source : United Nations, World Urbanization Prospects: The 2007 Revision
And the BRICS countries will climb up the rankings of aviation nations over the next 20 years
8 Sept 09 APATS 2009 Hong Kong 21
Source: ACI Sept 08
Take the Indian example: even with current surplus capacity, the skilled manpower requirements are
significant. How strongly will demand ‘snap back’?
8 Sept 09 APATS 2009 Hong Kong 22
Source/Note: CAPA Analysis, Personnel numbers DGCA 2009, IMF GDP forecasts to 2014. Assumes 3% attrition rate for pilots and maintenance personnel and 8% for cabin crew, 2% per annum productivity improvement (or outsourcing) in maintenance personnel
2008 Complement
Additional reqmt2014 in high growth case
Additional reqmt2014 in low growthcase
Company positions are rewritten during a downturn with new winners emerging
8 Sept 09 APATS 2009 Hong Kong 23
Source: Corporate Executive Board
As we look towards recovery on the horizon, how prepared are you?
• After the biggest shock to the aviation industry ever, growth will return and with it, the skills shortage
• Choices ahead:– Impact of the changing business models and strategies as legacy carriers evolve
• No longer the traditional “lifelong airline man”; different backgrounds, skills• Narrowing the scope of proprietary vs open or shared, cf R&D• Challenging the autarky to keep up with the LCCs• Constrained capital
– Realign to respond to growth shifting to emerging markets (especially BRICS countries)• Need for cost effective models, eg the $2,000 Nano car?• Is the ‘export model’ of training sustainable?
– Renewed focus on employability• Great marketing emphasis on self-funded students?• Degree courses, continuous learning? non traditional career pathways? internationally recognised accreditation? Greater mobility
– Evolving regulatory environment, eg • EASA, MPL• Impact of the “Environmental New Age”
– Need for greater scale, broader discipline and market coverage to provide more compelling offer to major airlines
• Functional silos or broader training service provider covering more disciplines?• Further consolidation, cross border activity?
8 Sept 09 24