North Asian aviation 2014 outlook: cracks in the wall of inertia - but it is yet to fall

North Asia is home to many of the world's most visible airlines based on size (China Southern), market capitalisation (Air China), profitability (Japan Airlines) and prestige (Cathay Pacific). The region's airlines face an encouraging 2014, and can certainly fare much better than European peers. The singular uniting theme for long-haul North Asian carriers is the strong market to North America, where corporate and premium travel is up while competitors are fewer than to Europe, for example.

Elsewhere the characterisation is that of nuances. Currency exchange rates are sharply impacting Japan, where the yen is down about 17%, while helping Chinese carriers with the appreciating yuan. Regional tensions continue to plague bilateral markets like Japan-Korea and China-Japan. There is growing sensitivity about unprofitable short-haul routes: Asiana will use a new single-class configuration while China Airlines and TransAsia expect to have new LCCs, adding more dual-brand strategies to the region, which otherwise lacks the vibrant LCC market of Southeast Asia - or Europe. Except in Japan, liberalisation has occurred more slowly in North Asia.

2014 will be a reflective year for liberalisation in the region. Jetstar Hong Kong continues to press for a licence while AirAsia is exploring Korea for new subsidiary options. Foreigners fear Taiwan's newfound pro-LCC attitude is only for LCCs established with an existing Taiwanese airline. And China, potentially the world's largest market for possible airline investments, shows no signs of receptiveness to foreign capital, which could be a game-changer on the global stage, although new airlines are being ushered in as part of government-led reforms. The wall is starting to show some cracks.