Home' Asian Aviation : AAV Sept 2010 Contents Outlook Summit Report
Politicians facing upcoming elections
generally like to atter their audience.
Yet there was some credibility to the
claim by Anthony Albanese, the current
Australian transport minister, that the
Australia Pacific Aviation Outlook
Summit had become one of the highlights of his diary.
e Labor government that took power in 2007
has delivered on its promise to hold a root-and-branch
review of the country's aviation sector, the minister said,
with the resulting 'Flight Path to the Future' white paper
policy document bene tting from some 600 industry
e 130 policy shi s proposed in the white paper
-- some minor, some far-reaching -- will be monitored
closely across the Asia-Paci c region, not least since
Australia has been among the most liberal and reformist
aviation regimes for the past decade. Before that, recalled
Andrew Parker, senior Vice-President of Public A airs
for Dubai-based Emirates Airline, the country had a
perception of being a "hard nut to crack" as ag-carrier
Qantas Airways feared any foreign airline in the market
was "just trying to steal some of the London-Heathrow
Emirates only prospered by convincing Australian
authorities that their countrymen might like to travel to
points in Europe other than London, and that there was
pent-up demand in other markets for travel to Australia.
is message of liberalisation has now been embraced by
the Australian authorities and is slowly being adopted by
more countries around the region.
Singapore-based low-cost carrier Tiger Air ways
competes aggressively on Australian domestic routes,
while domestically run Regional Express Airlines and
British investor-led Skywest Airlines compete with
Qantas Link in the regional markets on the east and
west coasts, respectively. According to Peter Harbison,
executive chairman of the Sydney-based think tank
Centre for Asia Pacific Aviation, this proves that
allowing foreign ownership of Australia-based airlines
is good for competition.
The Gulf Cooperation Council, the Arabian
Peninsula's prototype free trade zone, aims to become
the next region to implement full seventh-freedom
rights within its con nes.
Fathi Atti, head of government a airs at Abu Dhabi-
based Etihad, said that, while there is still speculation
over which countries will join the proposed Gulf single
aviation market, it will come into existence by 2015.
e United Arab Emirates, home to both Etihad and
Emirates, is well-advanced in aviation liberalisation, as
are nearby Qatar, Bahrain and Kuwait. Other states'
participation is less certain, however, Atti said.
Asia is not a uni ed market like the USA, nor is it a
single market like the European Union. City pairs are
further apart and the populations less wealthy than in
those developed markets. ese well-established points
were highlighted at the summit by a succession of senior-
executive speakers from Asia's low-cost carriers (LCCs).
eirs is a di erent market, with di erent rules and
di erent ways of making money, they stressed.
Azran Osman-Rani, the charismatic head of low-cost
long-haul operator AirAsia X, used the conference to
promote the airline's lie- at business class seats. e
carrier has retro tted 12 of the second-hand beds into
its eet with industry trend-bucking swi ness.
Two delegates at the summit had flown on the
business class ser vice from London to Australia via
Air Asia X's Kuala Lumpur hub, paying a little over
US$1000. Osman-Rani pointed to such yers as typical
of his target market: professionals who would consider
premium economy on a full-ser vice carrier and who
value a restful journey.
" e business-class seats symbolise us breaking every
rule in the LCC business," said Osman-Rani. For him,
the LCC norms of operating single-class services,
point-to-point routes and a single aircra type are more
exible than budget-airline pioneers such as Michael
O'Leary would countenance.
Crawford Rix, incoming managing director of Tiger
Airways Australia sees himself as being cut from the
same cloth as O'Leary. He launched a tirade against
frequent yer points, the kind of market distribution
not normally allowed under competition rules, he said.
" e industry loves to give labels to every airline, so
are we a 'low-cost, long-haul,' or a 'hybrid,' or a 'value
full ser vice' or whatever?" he asked. Such tags were
bunkum, Rix ventured, adding that success depends
not on a strict adherence to a prescribed model, but
by e cient execution of the business.
Restrictive bilateral air-ser vices agreements between
Malaysia and some other south-east Asian nations
mean AirAsia X tendered for some route rights by
o ering a fully-inclusive product. "We became a full-
service carrier, with baggage allowance and meals," he
Osman-Rani's counterpart at ai LCC Nok Air,
Patee Sarasin pointed to the carrier's introduction of
ticket distribution and payment via branches of the
convenience store 7-Eleven as another example of
innovation beyond the US-European LCC model,
which stipulates only internet distribution.
In truth, many LCCs around the world have already
broken free of the orthodoxy, mostly by signing deals
with global distribution systems (GDS). Liz Savage,
incoming chief commercial o cer at Australia's self-
styled "new-world carrier" Virgin Blue, recalled her
days at UK budget carrier easyJet, which has made
inroads in the corporate market thanks in part to its
There is a growing realisation in Europe that,
while the on-line sales channel allows airlines to trim
spending on ancillary ser vices, the trade channel still
o ers higher yields, Savage said.
"Successful airlines adapt to change no matter
where they started," she added. n
Airlines, markets evolve in parallel
Market liberalisation and evolving business models were in the spotlight at this year's Australia Pacific
Aviation Outlook Summit, held in Sydney at the end of July, writes Justin Wastnage.
36 AsianAviation | SEPTEMBER 2010
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