14 SEPTEMBER 2009
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As airlines, airports and the support industries from all over the world congregate for the 15th annual World Routes in Beijing, which follows last week's highly successful Asian Aerospace Congress in Hong Kong, it is perhaps a good time to reflect on just where Asia’s commercial air transport situation is at the present time.
As if the airlines of the Far East haven’t been battered enough by the global economic downturn, along comes H1NI ‘swine flu’ to further stifle demand. In July passenger traffic among the 17-strong members of the Association of Asia Pacific Airlines (AAPA) fell by 7.8% to 11.5 million. In June the dip was an even higher 17%. Falling numbers have meant stiff price competition from low cost carriers and ambitious Middle East ‘clone’ airlines who are moving into Asia. This has resulted in falling yields, noted AAPA Director General Andrew Herdman speaking at Asian Aerospace. He is concerned that several airlines in the region are not doing enough to weather the storm. “This is a battle for survival,” he said.
“This is one of the most challenging times we have ever faced in the airline industry and we just don’t know when the market will pick up,” added Tony Tyler, CEO of Cathay Pacific Airways.
“We have a toxic combination of a collapse in our front end cabin and cargo revenues, plus extremely weak yields in economy class. We are still dealing with volatile fuel prices and this latest influenza is still with us. We keep waiting for the green shoots of recovery, but when we look at the rice paddy we see only one or two green shoots rising out of the watery mud – not enough to fill a rice pool,” noted Tyler.
The Hong Kong event was held at Asia World Expo, part of a huge exhibition and leisure complex adjoining the Chinese autonomous territories air gateway.
The latest flu virus has had a particular impact in Hong Kong, especially on flights to Japan. At the ultra-modern and efficiently run Hong Kong International Airport, the world’s fifth busiest passenger hub, responsible counter staff wear facemasks. Every arriving passenger is required to fill in a form stating personal and travel details should they fall ill. Temperature checks among transiting passengers are performed randomly.
Many of the airlines in the region are pondering what to do to entice travellers, and must adjust their models accordingly if the situation does not improve, especially with the likes of Air AsiaX and Jetstar upping the ante. Cathay Pacific, which is renowned for consistently investing in high product standards, has set up a council to look at this very issue. “We won’t be taking out our first class cabin,” insists Tyler, suggesting that Cathay would be one of the last airlines to give it up. It has studied the feasibility of a fourth service (premium economy) on several occasions, but thus far has not been able to get the numbers to work. No frills is not an option for Cathay nor Dragon Airways, its sister airline and mainland China-based carrier in this high service market. “The majority of Asian travellers expect some pampering and special attention on flights that on average are longer than those in Europe or the US,” Mr Tyler noted.
Tony Tyler will be speaking in London in October at the Aviation Club. It will be interesting to see if he can compare his problems with those of the major established carriers in Europe. By that time the industry would have had time to absorb what it has learnt from Asian Aerospace and World Routes. The figures from Heathrow (see this issue of AERBT) are encouraging but what both the airlines and airports require is steady growth and a more enlightened attitude from governments.
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