Home' Asian Aviation : AAV April 2014 Contents 8 AsianAviation | APRIL 2014
As the search for Malaysia Airlines MH370
continues in the southern Indian Ocean, the
implications for the aviation industry are still
The Malaysian authorities have come
under heavy criticism for their handling of
the crisis, and mistakes have undoubtedly
But Andrew Herdman, director general
of the Association of Asia Pacific Airlines
praised the "unprecedented" level of
international collaboration, adding that
the Malaysians were "fully engaged in
embracing any expertise."
There are many misconceptions about various
technological aspects of the case, he added.
"People think that radar is ubiquitous -- it's not."
Pilots need the option to switch off ACARS
and transponders in case they need to be
isolated in case of fire, for instance. "It's
necessary to disable any system to keep the
aircraft flying -- that's more important than
communication," he said.
Systems such as ACARS and even ADS-B
rely on ground stations, while aircraft still
fly between waypoints. This is due to the air
traffic management (ATM) systems rather than
the aircraft, he points out, with some aircraft
retiring having never used their full capability.
A move to satellite tracking and effective self-
navigation is a "big shift" he says. Consumers are
used to ditching old technology when something
new comes out, whereas that is impossible for
an integrated network such as ATM, he added.
Meanwhile, the effect on Malaysia
Airlines is also unclear, but the carrier
was struggling well before this crisis. A
government bail out is extremely likely, but
the bigger issue may well be fleet renewal.
There was talk of a 100-aircraft order
shortly before the crisis, which presumably
would have to be funded by the Government
given the flag carrier's perilous financial
state. Whether the Government has the
appetite for that now is very much open to
question. -- Colin Baker
Implications of MH370 still unclear
Tigerair has cancelled its order for nine
Airbus A320s due for delivery over the next
two years and replaced it with a purchase
agreement for 37 A320neo aircraft that will
arrive between 2018 and 2025.
The agreement also gives Tigerair options
on 13 additional aircraft and to convert the
A320neos into the larger A321neo model.
The LCC has selected Pratt & Whitney's
geared turbofan engine for the order.
K Ajith, analyst at UOB Kayhian, estimates
that at least half of the aircraft will be for fleet
replacement. Aviation analysts IBA estimate
the deal at just over US$1.8 billion (see
table), significantly above the Group's market
Tigerair recently sold it Philippine operation
to Cebu Pacific and is scaling back in
Indonesia -- Tigerair Mandala has recently cut
nine of its 20 routes and reduced frequency
on two others.
The LCC also recently agreed a joint venture
with China Airlines to launch a budget carrier
in Taiwan, taking a 10% stake. This is a
possible destination for some of the aircraft.
Tigerair's Group CEO Koay Peng Yen,
said, "We have re-calibrated our strategy
and taken the necessary steps to re-position
Tigerair for a brighter future. This deal
effectively dissipates some concerns over
a potential capacity overhang in the next
couple of years. It also allows us to continue
building on our leadership position in budget
travel at a measured pace." -- Colin Baker
Tigerair puts back A320 delivery
IBA GROUP - ASIA PACIFIC ORDERS
Order Status Order Options IBA s CMV Each IBA s CBV Each IBA s CMV Deal Value (Based
on Firm orders and MOUS) IBA s CBV Deal Value (Based
on Firm orders and MOUS)
A319-100 Tibet Airlines
US$ 36,120,000 US$ 38,220,000 US$ 36,120,000
A320neo China Eastern Airlines MoU
US$ 49,400,000 US$ 49,400,000 US$ 3,458,000,000
37 13 US$ 49,400,000 US$ 49,400,000 US$ 1,827,800,000
737 MAX 8 SpiceJet
US$ 50,700,000 US$ 50,700,000 US$ 2,129,400,000
Total (Inc. Options)
Source: IBA Group NOTE: Asia-Pacific aircraft orders since Singapore Air Show up to March 25. CMV = current market value. CBV= current base value.
NEWS IN BRIEF
China Eastern neo order
China Eastern has ordered 70 A320neos --
the first order for the re-engined aircraft from
the Mainland. The aircraft will be delivered
between 2018 and 2020.
Spicejet goes for MAX
Indian LCC SpiceJet has ordered 42 Boeing
737 MAX 8s. The order was previously listed
as unidentified on the manufacturer's orders
& deliveries website.
BOC Aviation profits
Lessor BOC Aviation achieved a record net
profit after tax in 2013, marking an unbroken
run of 20 years of profitability since it was
founded in 1993. For the financial year
ended 31 December 2013, the Company
earned US$277 million in net profit after
tax, 23% higher than the previous year. Total
assets were US$10.2 billion, rising 12% from
US$9.1 billion at the end of 2012.
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