Managing breakneck growth is key to Asia’s aviation future

The facts and figures showing Asia becoming the center of the world’s aviation universe are clear and unarguable

10th Mar 2016


 

Managing breakneck growth is key to Asia’s aviation future

 

The facts and figures showing Asia becoming the center of the world’s aviation universe are clear and unarguable, but with that breakneck growth come problems that, depending on how they’re resolved – or not – will determine if the industry can please the traveling public and at the same time earn a buck or two.

 

At  Routes Asia in Manila, airline and airport executives said the “disconnect” between the region’s infrastructure needs, and the capacity growth of the airlines – and the supercharged growth in low-cost carriers – will need to be addressed by the industry and governments as well.

 

Michael Miller, the head of content and industry relations a show sponsor for Routes UBM live, says LCC carriers are responsible for 53 percent of all flights in Southeast Asia but only 5 percent in China, a figure that is expected to grow exponentially as the LCC model catches on in the mainland.

 

Executives noted the Asia-Pacific region needs to improve infrastructure, but more importantly the region needs to coordinate the growth in flights and passengers with critical infrastructure improvements because of the mismatch that currently plagues the industry.

 

The growth in LCCs is not being included in the models with billions of people having access to disposable income and who want to travel but who are also very price sensitive and try to save every dollar.

 

Andrew Cowen, the CEO of LCC HK Express, said regional players needed to “double your plans for infrastructure and cut the time to devleop that infrastructure in half.”

 

Andrew Herdman, the director general of the Association of Asia Pacific Airlines industry group, said the lack of coordination with capacity increases and infrastructure “is not a linear game” and regional players have to plan for it. He also said private industry cannot go it alone because of all the approvals needed for airports, air traffic management and other public improvements. He also said the region needs capital efficiency when it allocates funds for development.

 

Conrad Clifford, the regional vice president for the International Air Transport Association, said at the event’s opening panel discussion, that the region is expected to see 100 million new passengers come into the market in the next 20 years, which will cause massive problems unless infrastructure is improved.

Cowen at HK Express, added that “what we are all seeing, understand and accept is the low-cost carriers in general creating a lot of new demands that’s not really picked up in these bigger forecast models for future infrastructure. We really need to address that.”

Another LCC CEO, Joy Caneba, at AirAsia Philippines, said better infrastructure would allow the airlines to operate more “effectively” while Alexander Lao, vice president at Cebu Pacific, concurred with the other panel members but also said, airport officials need to rein in costs and keep the fees they charge airlines to a minimual.

“We do want to see a lot of private investors in airports but we do stand against commissions and runway fees and its becoming more expensive to operate,” Caneba said.

Lao added that it was crucial for airports to develop secondary facilities and not just focus on the gateway or primary airports and that doing so would allow airlines to keep costs down for the flying public.

Andrew Harrison, CEO of Mactan-Cebu International Airport in the Philippines, said airports could keep costs down by having more commercial options at the facilities, among other things.

Harrison told another panel that his airport was working to build additional revenues by setting up “one-stop shops” for overseas foreign workers from the Philippines who can stay at domitories at the airport, use visa services provided by third-party operators and use Cebu as their origin for trips to their jobs in the Gulf states like the UAE. Emirates Airlines recently started a round-trip service from Dubai to Clark and Cebu in the Philippines with figures showing thousands of overseas foreign workers using the flight to travel back and forth for their jobs.

 

Asian Aviation at a glance