Home' Asian Aviation : AAV October 2017 Contents 38 AsianAviation | October 2017
With consumer spending "robust" in developed economies that
include Australia, it notes emerging markets like China "transitioning
to a more service-based economy supporting sustained air-travel
demand into the future"
Airbus describes China as a key market at both regional and
global levels, having seen rapid growth in services and passenger
numbers. "Domestic tra ic has quadrupled in the last 10 years, for
example, with international tra ic more than doubling."
It cites outbound tourism as one such growth source with num-
bers of Chinese tourists having grown rapidly in recent years. "Des-
tinations in Asia --- like Thailand, Korea, and Japan --- figure strongly
in the top 10, unsurprisingly. However, [more-distant points] such as
the USA and Europe are also increasingly popular, especially with
the easing of border procedures in some cases."
The manufacturer reports estimates predicting the outbound China
market to double to over 200 million travellers annually by 2020. "With
a new 'Open-Skies' agreement, China is Australia's fastest-growing
and highest-spending international visitor market. More than one
million Chinese tourists visited Australia [in] 2015-16 (up 22.3 percent
from the [preceding] year)."
Further, these tourists and other travellers
between Australia and China have enjoyed
increased "connectivity" with the number of
airport pairs having doubled since 2014, ac-
cording to Airbus. "It is a similar story [with]
China and the USA, where the number of
airport pairs have doubled since 2013."
JADC expects huge 13.5 percent annual
growth in passenger numbers among Chi-
nese airlines in recent years to "slow to 6.1
percent over the next 20 years, due to recent economic uncertainty
and the [market] maturation"
. Meanwhile, the Japanese organisation
foresees the market retaining strong growth potential, with tra ic
growing some 230 percent by 2036. "Major growth is expected in
South Asian airlines, mainly India, at 8.2 percent [a year], and South-
east Asian airlines at an annual growth rate of 5.5 percent," says JADC.
Boeing says that the ASEAN Open Skies agreement --- fully ratified
in 2016 following implementation that began eight years ago --- has,
like other such arrangements, promoted growth by extending liber-
alisation and higher levels of competition to international and long-
haul markets. " The agreement supports increased competition and
'connectivity' within the region, providing passengers the benefits of
lower fares and higher itinerary and service-level choices."
The US manufacturer attributes "significant expansion" in the
Asian aviation industry to liberalisation, which has enabled the
region's air-travel market to expand beyond national boundaries
and supported operators in implementing new business models.
"Easing of visa policy has also allowed passengers to travel more
broadly in and out of Asia."
JADC points out that ASEAN countries will have economic
growth and expanded demand for air travel in the coming 20 years.
" They will exceed the RPK growth and new passenger-airplane
delivery [rate] of South Asia (mainly India) during this period by
Having warned about the dangers of over-capacity and intense
competition, Embraer identifies the emergence of LCCs as a major
factor. "Countries like India, Indonesia, Malaysia, the Philippines,
and Vietnam have emerged over the last decade among the fastest
growing in the airline industry. Although passenger tra ic has kept
pace with capacity growth, yields (especially on the intra-regional
front) have been pressured downwards.
" The rapid expansion has primarily been driven by the spreading
out of LCCs, which already account for as much as 60 percent of
seat capacity o ered in the region (twice the share held worldwide
by LCCs), and has increased three-fold over the last 10 years, by
approximately 20 percent annually."
Boeing agrees, saying that LCC penetration "in some Asian re-
gions is now more than 50 percent of their home markets"
. It reports
that among Asian airlines seat capacity provided by the LCC busi-
ness model has grown on average by 22 percent annually.
Indeed, Boeing highlights the part LCCs
play in the region's evolving industry. "Dif-
ferent business models and airline strat-
egies are starting to reshape the aviation
industry in Asia. Historically, [LCCs] adopted
a strategy focused on secondary airports,
single-aisle airplanes with a single-class
product, high airplane utilisation, and [min-
imised] airport and cabin services."
The local success of LCCs, especially in
Southeast Asia and South Asia, has seen
airlines extend the model to long-haul routes, says Boeing. "While
limited in the region today, this new model is increasingly capturing
the attention of many operators and investors as they start becoming
profitable and more strategically viable to e ectively compete with
the traditional network carriers."
Whereas a decade ago there were "essentially no widebody jets"
flying in medium-to-long-haul market segments, the manufacturer
says that Asian LCC groups now are flying "almost 100" widebody
jets. They have "many more" on order and continue to [extend] the
average LCC stage length, says Boeing.
"While their [competitors] in Asia are some of the [world's] largest,
oldest, and most well-regarded network carriers, the evolution of
new business models will continue to emerge as a trend in the Asian
market," predicts the manufacturer.
Airbus has observed the Asia-Pacific LCCs' increased average
distance flown, which has grown by over 200km (or 21 percent),
from around 950km in 2002 to 1,150km last year.
The manufacturer sees the diversity of Asia-Pacific evident in LCC
penetration, with Thailand, Indonesia, the Philippines, and Malaysia "at
similar levels to Europe"
. It suggests that China and Japan, for example,
still have room for further development given the right conditions.
Different business models
and airline strategies are
starting to reshape the
aviation industry in Asia.
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