Jetrader - Winter 2015 - 14

of all of that data but creating intelligence
and valuable information from which a ROI
can be expected. Analysis for the sake of
analysis can lead to paralysis. It has to
be actionable information that's going to
create ROI for the business.
JT: OAG recently posted a blog about the
Gulf Carriers importance for U.S. airlines. Can you explain how Gulf carriers are affecting U.S. airline networks,
specifically in terms of feed traffic at
gateway airports?
JG: This topic sprung up in the spring
of 2015 with the complaint from the big
three American carriers toward the big
three Middle East carriers. Using our data,

it is quite interesting to see how these
Middle East carriers have done a very successful job of growing new markets and
new business segments from behind their
respective hubs and specifically the Indian
subcontinent for travelers who are connecting to North America. In 2011, there were
about 1.9 million passengers who flew from
the Indian subcontinent to North America
via some other point (for example, London,
Frankfurt, Dubai). By 2014, that had grown
to 2.9 million, and in the last rolling year,
it was near 3.5 million passengers. While
you can accept the fact that these carriers
have been adding capacity relentlessly over
the past five years, they have also been
creating new markets and have been able

to stimulate travel that previously was not
there. In a global economic environment
where we think we're heading into a slowdown in economic growth, that additional
activity, which, in turn, creates economic
wealth, is extremely valuable to everyone.
Of all of the passengers arriving in the U.S.,
more than 55 percent of them have actually
been connecting to a U.S. airline to get to
their final destination.
JT: How will the lifting of sanctions
against Iran affect the market in
that region?
JG: Over the last 10 years, there has
still been a lot of capacity growth from
Iran and Iranian cities to the Middle East
and other markets. It's not as depressed
as perhaps people would think. What will
happen now is that a lot of people will want
to invest and get a part of the economic
activity that will be created by the lifting of these sanctions. A big part of that
will be in the sourcing of new aircraft or
already-operated aircraft that can now
be used by Iranian-based carriers who
can begin fleet replacement programs. I
would not be surprised in the near term
to see Iran Air or Mahan Air looking to
place orders for either fleet replacement
programs or specific aircraft types. I think
it has potential to be a bigger story over
time than perhaps Cuba/U.S. air service
development because there's much more
opportunity there.
JT: What's the impact of a potential slowdown in the Chinese economy on the U.S.
airlines, specifically the legacy carriers?
JG: They will enjoy the benefit of the
lower fuel price, and they will be able to
stay in the market. Demand is suppressed
by recent standards but this is still one of
the fastest growing markets in the world.
And the strength of the U.S. dollar compared to the Chinese yuan doesn't help
that in many ways. Ironically, the U.S.
carriers have the right type of aircraft that
allow them to compete quite effectively
here. The Chinese carriers who tend to be
operating much larger aircraft, particularly
the A380, are both slightly more vulnerable and likely to be more disrupted in
the market by putting cheaper fares into
the marketplace. I see a period of time
where the yields become suppressed while
demand slows.

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Jetrader - Winter 2015

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