Michael Kerkloh was the head of Munich Airport for almost two decades and has – at least officially – retired. But does the fascination with aviation end when you retire? Definitely not with him.

The former top manager sits on the Lufthansa Supervisory Board and is also involved in a wide variety of projects in the industry, including the Aviation Event. In an interview with Aviation.Direct, the aviation expert talks about, among other things, why he believes flexible tickets will remain permanent, the effects of the Ukraine crisis on the industry and why the products of low-cost and network carriers on short and medium-haul routes are becoming increasingly similar .

Aviation.Direct: Mr. Kerkloh, you have what feels like a century of experience in aviation and you were head of Munich Airport for many years. How do you assess the demand and the development for the summer of 2022?

Michael Kerkloh: Of course, if we could understand passenger psychology, it would be much easier for the industry. Many factors can influence the booking situation, for example the Ukraine crisis caused a slump. I believe that this is also a crisis of confidence, because many people are waiting. That is also understandable. Tourism is less affected by this, because summer tourism mainly takes place in other directions. However, many regions will also have to cope with the loss of tourists from Russia and Ukraine. There will certainly be a rebound effect in Germany and the EU, but I am skeptical about the forecasts made so far. The summer of 2022 will most likely be stronger than last year, because the desire to be more mobile again is great, but the level of summer 2019 will not be reached this year. Trust and security is important. It has to come back altogether at the end.

Aviation.Direct: In your opinion, what impact will the Ukraine crisis have on tourist traffic in summer 2022?

Michael Kerkloh: This cannot be seriously assessed at this time. Standard summer destinations like Mallorca will certainly remain, but everything that develops around them depends heavily on the political decisions of the holiday countries. For example, last year Greece was the big winner, actually having more tourist arrivals than before the pandemic. Some markets could be severely affected by the loss of tourists from Russia, and other places are already in such high demand that capacity could become scarce.

Aviation.Direct: In the course of Corona there was also the comeback of flexible tickets without extra costs. Do you think it will stay that way?

Michael Kerkloh: I believe that flexible rebooking options are also the key to success. And why? Quite simply because it creates trust in the market if you can rebook and/or cancel if the worst comes to the worst. There's a much higher chance that someone will book a ticket that can be changed without a fee if something goes wrong at the destination, or simply because travel plans have changed. Airlines that waive rebooking fees have better sales than those that do not offer it. In my opinion, it could become the norm that the tariffs remain flexible to a certain extent in the long term. For a reputable provider, it is simply part of the behavior that you behave in this way and then it is perhaps also a USP for airlines and tour operators.

Aviation.Direct: And what would you book? Do you prefer flexible or rather fixed?

Michael Kerkloh: I prefer and recommend the flexibility.

Aviation.Direct: On short and medium-haul routes, the differences between network airlines and low-cost airlines are becoming smaller and smaller in economy class. Paid catering is becoming more and more popular. What is the reason for this development?

Michael Kerkloh: The primary concern here is the cost. Compared to low-cost airlines, network carriers have a much higher complexity and therefore higher costs. In the past, money was made from long-haul flights, but that is currently not possible on the scale that we knew before the Corona pandemic. Money still has to be earned and the network carriers have gone through a certain learning curve and copied a lot from the concepts of the low-cost carriers. The business models continue to differ greatly, because the low-cost airline specializes in transport from A to B and customers don't expect much on a one-hour flight. On a longer journey from A via B to C, more is expected for the money. The question is: What can and do you want to offer the passengers? It goes in the direction of added value, but at an additional cost and no longer included. Examples of this are paid catering, but especially the premium economy class. Except for a few Americans, no one would have thought ten years ago that this would one day work really well. But in the end, like in other industries, aviation is always like this: There is a first mover (Southwest in the USA, Ryanair in Europe) who then observed by its competitors. If the product is successful, the competition will quickly follow suit.

Aviation.Direct: You managed Munich Airport for a long time, but have been a member of the Lufthansa Supervisory Board for some time. Are airports too expensive?

Michael Kerkloh:  In my opinion, airport charges are infrastructure costs and therefore part of the total expenditure on air traffic. Of course, one can argue about the amount, but it is often overlooked that these costs are regulated by the state at many airports. The airport operators have significantly improved their infrastructure cost management in recent years (already out of self-interest). They know that they can only be competitive together as a system partner. For the airlines, by far the biggest cost driver is currently fuel. Many airlines have secured themselves through hedging transactions, but at what price can airlines buy their fuel after the contracts expire? This is currently causing headaches for many managers and it is currently not foreseeable how the already high oil price will develop. However, it will not decrease in the foreseeable future.

Aviation.Direct: The Transrapid was never built in Munich. Aviation is repeatedly branded as a "climate sinner". Alternative drives are currently being developed and SAF is also becoming socially acceptable. How fast does the “energy transition” in aviation have to go?

Michael Kerkloh: It has to happen as quickly as possible, but realistically speaking, the conversion process will take many years and is incredibly expensive. In my opinion, aircraft will still be powered the same way in 20 years' time, albeit with a high proportion of SAF. It may also be possible to switch completely to SAF. The current generation of engines has no problems with synthetic fuels, but the problem lies somewhere else in my opinion. How climate-friendly is it if the primary energy for the production of sustainable fuels is currently fossil and remains so for a longer period of time? Apart from a few reference systems, this is just the beginning. By 2030, the SAF share should (only) be 10%. The task is therefore enormous, the share of renewables must be massively expanded within the framework of a global location policy. Without incentivising state and supra-state aid, we will not achieve the goals that our industry has set itself. Alternative drive technologies such as hydrogen and electric drive still need a long time before they are available for large-scale aviation.