Meeting with A4E CEOs
Ref. Ares(2020)3785397 - 17/07/2020
Brussels, 10/12/2019
Commissioner Adina Vălean
Meeting with A4E CEOs
Date 10/12/2019
Offices of Commissioner Vălean
Berlaymont 09/369
Brussels
Member of Cabinet responsible: Gaëlle MICHELIER
Member accompanying:
DG participants: Henrik Hololei, Filip Cornelis, Moumen Hamdouch
Meeting with A4E CEOs
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Meeting with A4E CEOs
Brussels, 10/12/2019
Scene Setter
You will meet with Thomas Reynaert, Managing Director at Airlines for Europe
(A4E), and the following A4E CEOs:
Ryanair: Michael O’Leary, (A4E 2019 Chair)
IAG: Willie Walsh
Lufthansa Group: Carsten Spohr
Air France: Benjamin Smith
easyJet: Johan Lundgren
Finnair: Topi Manner
TUI: Kenton Jarvis
Jet2: Steve Heapy
A4E wants to discuss the following topics: sustainability, Single European Sky,
airport charges and passengers rights.
On sustainability, A4E will look for indications of the green deal content,
taxation of kerosene and revision of the Emission Trading Scheme (ETS) for
aviation.
On Single European Sky, A4E CEOs will push for completing the legal
framework (SES2+). Ahead of the 2 December TTE Council, A4E sent each
Minister a letter urging them to support breaking the deadlock on the SES
legislative framework and calling for an update to the SES2+ proposal in the
most efficient way possible and in close cooperation with industry.
On Air Passenger Rights (Regulation 261/2004), A4E wants a revised legal
framework. Main points for them: compensation thresholds, extraordinary
circumstances, missed connections, the timeframe for re-routing, and the claims
and complaint procedures.
Objectives
Set the scene on the European Commission environmental agenda on
aviation around the expected Green Deal.
Take note of airlines’ CEOs concerns on the different files and reaffirm the
Commission position.
Speaking points
SUSTAINABILITY OF AVIATION
The new Commission is now officially in place and the political guidelines of
President von der Leyen set the way forward.
The European Green Deal will be the first priority of this Commission. For
Transport and Mobility our contribution to the Green deal will focus on:
o Increase the uptake of clean vehicles and alternative fuels;
o Incentivise the right consumer choices and low-emission practices,
including by ensuring that prices reflect the true impact on environment;
o Improve efficiency across the whole transport system.
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To set the framework for this, we will adopt next year a Strategy which will
cover all transport areas (safety, security, internal market etc.) and will focus
on sustainability and digitalisation.
Aviation, as other transport modes, will need to contribute fully to the Green
Deal. There is no silver bullet and we need a basket of measures:
o To increase the efficiency of aircraft and continue the work on international
technical standards which frame the development in manufacturing
aircrafts and engines to emit less;
o As a matter of priority, to complete the Single European Sky – I will come
back to SES in a moment;
o To address CO2 emissions through market based mechanisms: we
already have the ETS for intra-EU flights, the Commission will come
forward with a proposal to reduce free ETS allowances to airlines over
time;
o To implement into EU law CORSIA - we will report to the EP and Council
on the best way to do this in the course of 2020;
o To put in place a framework which will support an increased production
and uptake of sustainable aviation fuels.
I noted your joint letter sent recently to my services, with other associations,
mentioning your European Sustainable Aviation Roadmap work. We will be
very happy to cooperate with you on the topic.
On taxation: we will cautiously follow the review of the Energy Taxation
Directive. We need to be cautious on certain aspects (e.g. kerosene) but we
also see it as a great opportunity to incentivise uptake of sustainable
alternative fuels (e.g. by exempting them).
SINGLE EUROPEAN SKY (SES)
Thank you for your steadfast support of the implementation of the Single
European Sky (SES) and now, for calling for its reform.
We appreciate your involvement as A4E and some member airlines in the
work of the Wise Persons Group, as well as the Airspace Architecture Study,
which provided impetus to this reform, culminating in the Joint Stakeholder
Declaration on the future of SES, to which you are signatories.
Your letter to Transport Ministers ahead of the TTE Council last week was
timely and passed the right message to States on the urgency of the
improvements needed to SES, in light of the capacity and sustainability
problems Europe is facing.
The debate in the Council on the future of SES touched notably upon the way
forward with the legislative package. The SES2+ package proposed by the
Commission dates back to June 2013. The Council’s general approach was
agreed already in December 2014.
Since then, the aviation context has greatly evolved. Ministers understood
that this is no longer a good starting point for discussions with the European
Parliament.
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The Council also requested the Commission to provide detailed background
information and material to justify its proposals and to analyse the potential
benefits and consequences of the proposals.
Based on the information provided, the Council may update the general
approach agreed on SES2+ in 2014 with a view to enter into negotiations
with the Parliament as soon as possible.
I trust that work on this file can progress quickly and smoothly in the New
Year. Rest assured that the aviation industry will remain informed and
involved where possible.
AIRPORT CHARGES
It is important that airport charges are fair and competitive, for both airlines
and airports. A fair airport charge is a charge that, on the one hand, provides
airlines (and ultimately passengers) with cost-efficient services; and, on the
other hand, provides the airport with sufficient resources and right incentives
to improve capacity and quality of service.
The objective of the Airport Charges Directive has been to reduce ex-ante
the risk of airports potentially exploiting their market power by imposing
excessive airport charges. To achieve its objective, the Airport Charges
Directive introduces consultation, transparency and non-discrimination
provisions that apply to almost 90 biggest airports in the EU.
The recent evaluation of the Airport Charges Directive, published in July
2019, shows that while the Directive has been successful in achieving some
of its objectives, the time may be right to further fine-tune it.
My services are therefore assessing – based on the evaluation findings, the
inception impact assessment published in 2017 and ongoing discussions with
stakeholders (such as A4E) – the next steps. We are hoping to be able to
communicate on the next steps in early 2020.
AIR PASSENGER RIGHTS
The current EU legislation on air passenger rights forms a vital part of the
consumer protection measures of the Union but needs a revision. The
position of the aviation industry is well known.
With the help of the Finnish Presidency the Commission has managed to get
the file back on the table in the end of November.
A first round of discussion in the AVIA working party has shown that all
delegations share the view that the revision of Air Passenger Rights should
be pursued.
All delegations can agree on the overall objective to reach a balanced
system, with simple and clear rules, which can easily be applied and
effectively enforced.
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The fact-finding study on the current level of protection of air passengers in
the EU, which is coming to its close, shows a valuable up-to-date picture of
the recent developments on the market. Several of your member airlines
have contributed to the study, which will be presented in a dedicated event in
the end of January 2020.
The Commission will work closely with the incoming Presidency to progress
as much as possible on this important file.
EU Aviation Summits
The Commission co-organises an EU-Arab Aviation Summit on 23-24 March
2020 in Beirut, Lebanon. Most of you should have received personalised
invitations, or will do so shortly.
Your participation in this high-level meeting would be highly valued and I very
much hope that many of you will be available to attend.
A4E and its airline CEOs are also warmly invited to the EU-India Aviation
Summit in Delhi on 21-22 April 2020 (dates not yet published) for which
invitations will follow.
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Defensive points
President von der Leyen declared that she favours reducing the
amount of free allowances available to airlines. How do you
intend to proceed? How does that fit with CORSIA
implementation?
The President made it clear that the aviation sector will have to
accelerate its efforts towards more sustainability, notably via a
reduction of free ETS allowances for airlines. This question will be
duly looked into as part of our CORSIA implementation analysis to
be completed in 2020 with a report from COM to EP and Council. It
is still early to discuss about it in more details.
What could COM propose on Sustainable Alternative Fuels
(SAF) at EU level? Is COM considering a blending obligation for
SAF?
COM is currently reflecting on how to launch the SAF market both
on the supply and demand sides in the coming years. Options such
as a SAF blending obligation could be considered. Of course,
keeping in mind that it should be realistic, gradual and balanced.
And we should further incentivising the use of only those SAFs
which comply with strict and robust sustainability criteria.
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BACKGROUND NOTES
A4E’S PRIORITIES FOR THE NEXT COMMISSION (from the A4E Website)
A Single European Sky (SES) resulting in more direct flight routings and
a minimum 10% reduction in CO2 emissions.
Aircraft fuel efficiency levels in Europe have improved by 2% per year.
Further progress can be achieved if current R&D initiatives, such as
electric and hybrid engine technologies and sustainable alternative fuels
were better funded - and if the right political decisions were taken to
remove the existing hurdles in place.
Full implementation of the global aviation emissions offsetting system,
CORSIA, while avoiding regulatory overlaps with EU measures and
potential double burden.
Investment in the development and delivery of more efficient air traffic
management (ATM).
A4E is asking the EU to update the Single European Sky (SES) regulatory
framework and to make it future proof. This means:
A traffic management regulation which is performance-based and
service-driven.
An effective governance structure which also accounts for the needs of
airspace users.
Immediate re-design of the European airspace structure.
Supporting for changes to enable digitalisation and inter-operability.
Consumers
With more than 700 million passengers carried each year, A4E airlines bring
people closer together and support their economic activities in a quick and
efficient manner.
While continuing to improve the unprecedented freedom of mobility aviation
offers, we never compromise on safety and strive to make air transport reliable
and accessible.
In case of disruptions, a high level of passenger protection is important. A4E
urges the Council to proceed swiftly with the revision of Regulation 261/2004 on
air passenger rights in order to establish a clear, proportionate and stable legal
framework on air passenger rights – third parties should not be allowed to profit
on the back of passengers.
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A4E is asking the EU to wait and monitor closely the evolution of the market in
the coming years before undertaking any legislative action on multimodal
transport solutions.
Airport Charges and Investments
Airport charges is a highly debated file between the two groups of stakeholders:
airports and airlines.
A4E openly calls for a revision of the Directive, arguing that the Directive is
neither correctly applied in the Member States, nor is it adequate or effective as
it only deals with procedural aspects, in addition to the non-discrimination
principle (which is anyway enshrined in other pieces of EU legislation). It does
not protect airlines and their passengers from airports abusing their market
power.
Airlines argue that contrary to airlines that operate in a highly competitive
environment (e.g. recent bankruptcies of some EU airlines, increased presence
of non-EU carriers), EU’s main airports or airport groups act as natural
monopolies. They claim that airports with significant market power must
therefore be subject to effective regulation, as they do not have sufficient
incentive to reduce their costs and promote efficiency in their operation or
capital expenditure / investments. Airlines take the view that some Member
States have decided to go beyond the minimum requirements of the Directive,
by implementing effective economic regulation, but this is unfortunately not the
case in all Member States.
A review of Directive 2009/12 on airport charges (ACD) creating a clearer, more
robust regulatory framework should encompass:
Targeting economic regulation at airports with significant market power
(SMP),
Detailed rules on consultation and transparency in the setting of charges
to make the process more effective,
Ensuring Member States have a fully independent and well-resourced
regulator that can effectively intervene as needed.
Concerning airports with significant market power, there are prominent cases
that require action. This is pressing given the trend observed in some Member
States to “lock in” existing systems where charges are determined through long-
term concession agreements or national legislation.
The proposal for a regulation on the establishment of a framework to facilitate
sustainable investment should not restrict investments in aviation infrastructure.
Cost-efficient infrastructure development is essential to the competitiveness of
EU aviation and the EU economy. A new EU framework for sustainable
investments must ensure that aviation infrastructure can also benefit from
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sustainable investment instruments in the years to come. This is needed to
avoid a capacity crunch and to support the industry’s sustainability initiatives.
Taxation
Aviation is under political and public scrutiny to reduce its carbon footprint.
There is a growing claim from the society that aviation does not do enough to
mitigate climate change and is unduly exempted from (kerosene and VAT)
taxation. President von der Leyen proposed a new Green Deal by strengthening
current ETS system and reviewing the Energy Taxation Directive.
Passenger/departure based taxes and charges are levied in several Member
States. VAT or other taxes on domestic aviation exist in 17 Member States.
Fuel is generally exempt from excise duty in international aviation. The 1944
ICAO Chicago Convention requires tax exemption of fuel on-board when
landing, whereas fuel delivered to aircraft is exempted through most existing air
services agreements (be at EU-level or bilateral between Member States and
third countries). Against this background, the Energy Taxation Directive
provides for a mandatory exemption of such fuel, while permitting Member
States to tax fuel for domestic flights or flights between Member States, on the
basis of corresponding agreements between them. The US, Canada, Australia,
Japan and Hong Kong tax fuel on domestic flights.
In its strategy to decarbonise aviation, the EU relies on a “basket of measures”,
including Market-Based-Measure (EU ETS for aviation, CORSIA), enhanced
ATM operations, R&D and deployment of technology for more efficient aircraft
design, and the introduction of Sustainable Aviation fuels (SAF). Among those
measures, SAF clearly is untapped potential. Measures to decarbonise should
carefully be planned as it could negatively affect connectivity, lower European
competitiveness and may either stimulate other forms of non-sustainable travel
or deviate traffic to neighbouring countries.
The Commission registered a Citizens' Initiative calling for introduction of
kerosene tax on 10 May 2019. The Commission found it acceptable and the
petitioner will have to gather 1 million signatures with minimum thresholds
reached in at least seven countries until 10 May 2020. In case such number of
signatures are collected, the European Commission must decide whether or not
to take action.
Nine EU countries (France, Germany, Italy, Belgium, Bulgaria, Denmark,
Luxembourg, the Netherlands and Sweden) called for proposals for cleaner
aviation in Europe on 7 November 2019 calling for a specific pollution tax.
Germany announced a raise of passenger tax for flight departing from Germany
as from 1 April 2020. Similar actions were announced by France (from 2020)
and the Netherlands (from 2021).
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Single European Sky (SES)
The Single European Sky (SES) initiative was launched in 2004 with the goal of
improving the performance of the European ATM system in terms of safety,
capacity, cost-efficiency and environment. The SES initiative has delivered
improvements in all of these areas and much has been achieved, especially in
the field of technological innovation through the SESAR (SES ATM Research)
modernisation project. Naturally, the landscape of European aviation has also
evolved considerably and new challenges are on the horizon. It is clear that the
ATM system in Europe as it operates today has reached its capacity limits.
Recent growth in air traffic is resulting in air traffic delays of a magnitude not
seen for more than a decade, to the detriment of the environment and major
inconvenience of air passengers.
Delays in 2018 and 2019 were double those of 2017.
Every fourth passenger now faces a delay of 15 minutes due to air traffic
flow management.
In addition, more flights are cancelled and connections are missed.
Passenger compensation claims have soared. The overall economic cost
of the delays was estimated by the European Network Manager at
17.9bn euro in 2018.
The serious congestion situation would have produced an estimated
additional 5-6 million tonnes of avoidable CO2 emissions in 2019, which
have been partly mitigated by the re-routing measures taken by the
Network Manager and a number of air navigation service providers.
Air Passenger Rights
The revision of the Air Passenger Rights (APR) Regulation 261/2004 tabled in
2013 has failed to progress in Council for more than six years and was put on
hold pending the resolution of its application to the Gibraltar airport. The
Commission still stands by its proposal, a revised Regulation being the best
way to provide the legal certainty that both passengers and the industry are
expecting.
The dossier is now expected to move forward in the Council, with the support of
the incoming Croatian Presidency, which expressed recently its view to
continue the discussions that have just restarted under the Finnish presidency.
Meanwhile and to support this endeavour, the Commission launched a new fact
finding study on the current level of protection of air passengers in the EU in
December 2018, which aims to identify the recent developments on the market.
The final report of the Study is in its very final phase. It will be made public soon
and will be presented to stakeholders on 30 January 2020 (date tbc).
The Finns did not want to restart Article by Article but rather resume the debate
more generally by discussing problem areas and possible solutions first. The
Croatian presidency is expected to launch discussions along the same lines.
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There has been a clear support from stakeholders to resume the file (and not to
withdraw it and start from scratch again). An active support is now needed from
the Member States in Council, but also from the stakeholders in order to swiftly
relaunch discussions and to achieve tangible results soon. A General Approach
under Croatian Presidency would be an achievement.
Council and Parliament would have a very different approach to the
Commission proposal very likely; it is expected that the trilogue would be
difficult.
A4E's position on the COM proposal for revision of Regulation 261/2004
The Commission services have been meeting on several occasions with
representatives of A4E. They have recently been involved in two workshops
organised in the framework of the Fact Finding Study.
The Commission services are well aware of A4E's position on the revision as
outlined in its position paper.
Overall, A4E agrees with the objective to make air passenger rights clear and
simple to implement. A4E considers the revision of Regulation 261/2004
extremely important in terms of legal certainty and a fair balance of consumer
and industry interests; the current Regulation 261/2004 is too detailed and
prescriptive and, at the same time, too vague on essential points.
A4E sees several positive elements in the 2013 COM proposal including the
trigger points (thresholds) for compensation after long delays, a list of
extraordinary circumstances, attempts to limit the financial liability for airlines as
“insurers of last resort”, and the principle of the right of redress.
In A4E's view a high degree of protection should not be sought solely in the
right to compensation. Compensation is a last resort when the actual
inconvenience cannot be prevented or minimized, while the main goal is to
prevent disruption, delay and inconvenience for passengers.
In addition to compensation thresholds and extraordinary circumstances A4E
views as essential points still to be worked on: missed connections, the
timeframe for re-routing, and the claims and complaint procedure.
The Commission notes positively that A4E share the common objective to make
the rules simpler and clearer and improve their applicability and enforceability.
The new Commission fact-finding study (2019)
The fact-finding study on the current level of protection of air passenger rights in
the EU has been carried out by the consultancy “Steer” through 2019 and is
currently being finalised.
The study provides an up-to-date overview on the implementation of Regulation
261/2004 and aims at giving reliable and concrete data to assess the current
level of APR in the EU and also to make an informed decision regarding the
proposal for a revision.
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The following issues are covered: (1) Level of disruption experienced by
passengers (cancellations, long delays, denied boarding); (2) Expectations of
passengers regarding their rights; (3) Air passenger rights from the perspective
of airlines and airports; (4) Monitoring and enforcement of Regulation 261/2004
(national enforcement bodies); (5) Other means of redress and claim agencies;
(6) Development of air passenger rights outside the EU; and (7) Airline
insolvencies from an air passenger rights perspective.
The study emphasises the high complexity of the system for passengers (to
know and enforce their rights) and the fact that it is increasingly costly for
airlines, as well as burdensome for the national enforcement bodies (drivers
being increased traffic, increased disruptions, rising claim rates, etc.). Concerns
have also emerged from the analysis regarding the impact of airlines insolvency
and the increasing role of claim agencies.
EU Aviation Summits
Positive engagement with other regions is crucially important in aviation, notably
to address the many shared challenges in this sector, such as mitigating its
environmental impact. The Commission therefore decided to co-organise an
EU-Arab Aviation Summit with ACAO (Arab Civil Aviation Organization) on 23-
24 March 2020 in Beirut, Lebanon. This event will be followed by an EU-India
Aviation Summit on 21-22 April 2020 in Delhi, India.
Most A4E CEOs as well as Thomas Reynaert from A4E have already received
their invitations to the EU-Arab Aviation Summit or will shortly receive them.
Carsten Spohr (Lufthansa) and Anne Rigail (Air France) and Pieter Elbers
(KLM) have also received invitations to speak in panel discussions. Mr Spohr
and Ms Rigail have not yet accepted the invitation, and Mr Elbers has had to
decline the invitation (we consider inviting Johan Lundgren, CEO of EasyJet in
his place). Formal invitations to the EU-India Aviation Summit will follow.
Annexes:
- Draft programme of the EU-Arab Aviation Summit (
internal)
- First announcement of the EU-Arab Aviation Summit (
public)
Contacts (Aviation): Philippe Lenne (DG MOVE E1), tel.: 61958, Elfa Kere (DG
MOVE E3), tel.: 80859
Contact (Air Passenger Rights): Guenther Ettl (DG MOVE B5), tel.: 99378
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ANNEX 1: CVs of Participants
Thomas Reynaert, Managing Director at Airlines for Europe (A4E)
Managing Director of A4E since 2016.
Professional Experience
President of the United Technologies (UTC) International Operations
(Europe)
Leader of the government relations and regulatory affairs team for Nortel
Networks in Europe, Middle East and Africa (EMEA)
Director of EU public affairs for Lucent Technologies (today: ‘Alcatel-
Lucent’)
Member of the Supervisory Board of the UTC Company OTIS
Management (2008-2014)
Chair of AmCham EU’s Security and Defense Committee (2011-2015)
Member of the Strategy Advisory Board of the Buildings Performance
Institute Europe (BPIE) (since 2014)
Member of the European Advisory Committee of the Public Affairs
Council (PAC) (since 2014)
Member of the Executive Committee of the European Centre for Public
Affairs (ECPA) (since 2015)
Michael O’Leary, A4E 2019 Chair, CEO at Ryanair
Born in 1961 in Ireland, CEO of Ryanair since 1994.
Education
Economic and Social Studies, Trinity College, Dublin
Professional Experience
1994-
Chief Executive Officer, Ryanair
1991-1994
Chief Operating Officer, Ryanair
1988-1991
Deputy Chief Executive, Ryanair
1986-1988
Financial Advisor to Tony Ryan
1984-1986
Tax consultant, KPMG
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Willie Walsh, CEO of IAG
William Matthew "Willie" Walsh (born 25 October 1961) is an Irish airline
executive. He is CEO of International Airlines Group (IAG).
Education
Master's degree in management and business administration from Trinity
College, Dublin
Professional Experience
CEO of IAG
CEO at British Airways
CEO at Aer Lingus
Chief Operating Officer (COO) at Aer Lingus
Pilot at Irish flag carrier Aer Lingus
Carsten Spohr, CEO of the Lufthansa Group
Carsten Spohr (born 16 December 1966) is a German airline executive. Since
May 2014 he has been the chairman and chief executive officer (CEO) of
Lufthansa.
Education
Degree in industrial engineering from the University of Karlsruhe
Commercial pilot's license at Lufthansa Flight Training
Professional Experience
2014
CEO of Deutsche Lufthansa AG
2011-2014
Lufthansa Executive Board
2007-2011
CEO of Lufthansa Cargo
1998-2007
Head of various regional partnerships at Lufthansa
1995-1998
Personal assistant to the CEO of Lufthansa
Earlier
Deutsche Aerospace AG
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Benjamin Smith, CEO at Air France
Benjamin "Ben" Smith (born August 27, 1971) is a Canadian businessman and
airline executive. He is presently CEO of Air France-KLM, a position that he has
held since 2018.
Education
Bachelor of Arts in economics from Western Ontario University
Professional Experience
2018-
CEO of Air Franc-KLM
2014-2018
President of Air Canada group
2013
Launch of the low-cost company Air Canada Rouge
2007-2013
Air Canada executive management team
2002-2007
Managing Director of Tango
1999
Consultant for Air Canada
1992-2000
Founder of a retail corporate travel agency
1990-1992 Customer sales and service agent at Air Ontario
Johan Lundgren, CEO at EasyJet
Johan Peter Lundgren (born 4 October 1966) is a Swedish businessman and
the chief executive officer of the British airline easyJet since December 2017.
Education
Programme for Executive Development at the International Institute for
Management Development (IMD) in Switzerland in 1996
Professional Experience
2017-
CEo at easyJet
2011-2017
Deputy chief executive of TUI Group
2010-2011
Managing director of TUI Travel UK & Ireland
1986-2009
Fritidsresor, a Swedish travel operator
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Topi Manner, CEO at Finnair
Manner has been CEO of Finnair since January 2019.
Education
Master’s degree at Turku School of Economics & Business
Professional Experience
2019-
CEO at Finnair OYJ
2018
Exec VP/Head:Personal Banking at Nordea Bank Abp
2016-2018
Exec VP/Head:Personal Banking at Nordea Bank AB
Kenton Jarvis, CEO at TUI
Jarvis has been CEO of TUI since December 2018.
Professional Experience
Since 2018: CEO Aviation & Business Improvement at Tui AG
Director Controlling/Financial Director: Tourism at the Tui AG
Steve Heapy, CEO at Jet2
Heapy has been CEO of Jet2 since 2013.
Professional Experience
Since 2013: CEO at Jet2holidays Ltd and Jet2 Com Ltd, Executive Director at Dart
Group PLC
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