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The many sides of airlines
Sim Kok Chwee
 

 

With the help of some experts, Sim Kok Chwee takes stock of the most headline-worthy happenings across Asia’s aviation scene in 2012

 

 

 

 

 

 

 

The good, the bad & the ugly

 

LCCs in full flight

Budget carriers have flourished even as full-service airlines struggled to stay profitable. 

 

Executive chairman of the Centre for Aviation (CAPA), Peter Harbison, said: “LCCs in Asia are really making a difference to the entire scene, generating new travel opportunities, innovations and spreading economic activity into regional centres. This year, they even penetrated the arcane Japanese aviation system.” He believes that there are still “massive opportunities” for expansion in North-east Asia.

 

Some LCCs have also notably been able to undermine rigid international regulations through their cross-border joint ventures, while the hastened evolution of LCCs in the region has yielded longhaul budget airlines such as AirAsia X, Jetstar International and Scoot. 

 

 

Incheon, Narita cut operating costs 

Against a backdrop of economic uncertainty, South Korea’s Incheon International Airport and Japan’s Narita International Airport are cutting airline operating costs and improving their competitiveness. 

 

Reductions at Incheon will result in savings of over US$15 million, while Narita will see operating costs slashed by more than US$35 million per year. 

 

 

Air Koryo enters the digital age

North Korea’s national airline, Air Koryo, came closer to catching up with the region when it began offering an online booking service in August. Despite teething problems – slow response and dropped bookings – it is nonetheless a bold step forward. 

 

 

Preparing the next generation for take-off 

This year, a total of 99 students pursuing aviation courses at Singapore’s Temasek Polytechnic took up internships at various airlines operating at Singapore Changi Airport and aviation-related companies such as Changi Airport Group, Civil Aviation Authority of Singapore, Dnata and SATS. The internships placed them in positions ranging from cabin attendants to ground/traffic and operational staff, nurturing the upcoming generation of aviation professionals. 

 

 

 

The good, the bad & the ugly

 

Airport capacity trailing demand

The lack of airport capacity poses an issue in certain Asia-Pacific countries, said IATA’s regional vice president for Asia-Pacific, Maunu von Lueders.

 

“(At) the top of the list would be Bangkok, which urgently needs to expand Suvarnabhumi; Manila, which needs a new airport to replace Ninoy Aquino International Airport that is not 100km away; and Mumbai, which desperately needs to move forward with its Navi Mumbai project,” he said. 

 

 

The free-rider effect

Protectionism continues to hinder attempts to liberalise Asian skies. Some governments are prepared to share the benefits of access to other markets while restricting access to their own, lamented CAPA’s Harbison, who said such old-fashioned protectionism had “no place in the Asia of the future.”

 

 

Cathay pacification

Chinese passengers appear to have acquired a penchant for staging sit-ins each time a flight is delayed, with cash compensations the ulterior motive, even when delays are weather-related. 

 

On a few isolated occasions, passengers burst forth from the aircraft to take their protests to the airport’s ramp and taxiway. Airlines are left with little choice but to keep beefing up the compensations paid out, which does nothing but encourage the trend. 

 

 

 

The good, the bad & the ugly

 

Kingfisher Airlines’ fortunes nosedive

Kingfisher Airlines takes the cake for failing to pay its staff for consecutive months, as far back as April 2012, even as the airline continues to sponsor a Formula 1 Grand Prix team and its owner, Vijay Mallya, swans to various races via his corporate jet or luxury yacht. 

 

Furthermore, Kingfisher’s mountain of debt to airport operators and aircraft leasing companies led to the trimming of its fleet and eventual abandonment of international services. By October 2012, the Indian government had suspended Kingfisher’s aircraft operating certificate citing safety concerns. As of December 1, the airline remains grounded. An estimated minimum of US$500 million is required to recapitalise the company. 

 

 

The ETS U-turn

When the European Union (EU) forced airlines from around the world to subscribe to its Emissions Trading Scheme (ETS), it was met with forceful resistance from China, Russia and the US. IATA threw its weight behind the International Civil Aviation Organization (ICAO), calling on the EU to suspend ETS while a solution was prepared. 

 

“What could be more ugly than the EU’s unilateral attempt to legislate environmental rules for the whole world with its ETS? Even if the basic idea is right, the airline industry is already actively targeting reduced fuel costs and improved efficiency,” said CAPA’s Harbison. 

 

The EU has since relented and suspended ETS for a year. The ball is now in ICAO’s court and it should waste no time in making a concerted push for a permanent solution. When the one-year grace period is up, it should hopefully have reached this objective – or at least, achieved measurable progress to convince the EU that the ETS should be burned and buried. 

 

 

Ridiculous rates at India’s airports

IATA’s von Leuders’ vote for ugly happening of the year goes to New Delhi and Mumbai’s airports. New Delhi has increased charges by a whopping 346 per cent, while Mumbai has proposed a mind-boggling increase of 881 per cent!

The Airports Economic Regulatory Authority has tentatively decided to “moderate” Mumbai’s proposal to 151 per cent, but more can be done to reduce charges further. 

 

 

 

 

My good, bad & ugly

Industry bigwigs tell S Puvaneswary what caught their eye this year 

 

 

Andrew Herdman 

Director general

Association of Asia Pacific Airlines (AAPA)

 

The good The global aviation industry has seen growth over 2011, despite concerns of political uncertainty and the risk of the break-up of the eurozone. Asian airlines have witnessed a 7.5 per cent increase in passenger demand. European airlines have also posted passenger growth despite pressure in terms of cost. So profit margins are squeezed. 

 

The bad Fuel prices are stubbornly high due to political risks and concerns in the Middle East. 

 

The ugly There’s nothing ugly in the aviation scene this year. It would be ugly had passenger growth followed the cargo business, which saw a four per cent dip in volume over last year. However, this is not the case as passenger traffic, accounting for 80 per cent of airline business, has seen growth. 

 

 

Patrick Yeung

CEO

Dragonair

 

The good It has been an unprecedented year for Dragonair. Ten new destinations were launched this year, within Asia and China. We also had four new Airbus A320s delivered. 

 

The bad Oil prices are still up, which result in higher operating costs. 

 

The ugly There’s nothing ugly I can think of. This has been a very good year for us, with the expansion of our network. 

 

 

Jurriaan Stelder

Regional general manager

South China Sea

Air France-KLM

 

The good Air France has announced it will commence thrice-weekly services to Kuala Lumpur on April 22, 2013. I am very excited about these flights, as it is an opportunity for us to contribute good results to the company. For the Malaysian travelling public, this is also great news because now they can buy a seat to London and also get two other cities in Europe (Paris and Amsterdam) at no additional charge, provided they are on flexible fares. 

 

The bad Air France-KLM’s overall financial results this year were not good, and have not been for quite a while now. Air France-KLM’s staff will have to make sacrifices in the coming years to restore the health of the company. 

 

The ugly The economic crisis in Europe has been putting a strain on the results of all European airlines, including ours. 

 

This article was first published in TTG Asia, December 14, 2012, on page 12. To read more, please view our digital edition or click here to subscribe.

 

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