AirAsia X reportedly suspended plans to launch Kuala Lumpur-Manchester service due to the UK Government’s plans to increase its Air Passenger Duty (APD) (Airwise, 25-Oct-2010). Manchester Airport's Head of Government and Industry Affairs, Brian Conway, stated the carrier had been in talks with the airport for “many months” but chose to launch services to Paris Orly Airport instead due to the government tax being too high. UK Transport Secretary Philip Hammond responded stating the government is aware it is making UK airports and airlines more highly taxed than competitors, but it needs to meet its twin goals of cutting the deficit and meeting aviation growth while also meeting climate change targets. He added the government has started developing a new national aviation policy, to be introduced by the end of 2012. Mr Hammond said the new policy would encourage growth at regional airports.
AirAsia X drops plans for Manchester due to tax
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Malaysia Airlines restructuring Part 1: 40% capacity cut to Australia is harsh - but sensible
Malaysia Airline (MAS) is cutting capacity to Australia by over 40% in Aug-2015 as it drops Brisbane and reduces capacity to Adelaide, Melbourne, Perth and Sydney. But Australia remains an important market for MAS and the flag carrier will remain one of Australia’s 10 largest foreign airlines.
The reductions are sensible as for the most part they simply reverse earlier expansion that was overambitious and unsustainable. MAS does risk leaving an opening for competitors, particularly Malaysian rival AirAsia X, but in the current challenging phase of its history it cannot be worried about market share.
This is Part 1 in a series of reports on MAS capacity cuts and the potential impact on the Malaysian and broader Asian markets.
This report focuses on Australia, where the upcoming MAS cuts follow significant capacity reductions made in early 2015 by AirAsia X.
Airlines feel the impact as Chinese tourism preferences shift from Southeast Asia to Northeast Asia
The much-celebrated growth of Chinese tourism is not occurring evenly. An additional 3.8 million Chinese visitors travelled to core Northeast and Southeast Asia in 2014 compared to 2013, representing 19% growth. But this growth was concentrated exclusively in Northeast Asia while Southeast Asia actually contracted. This excludes Thailand, which is earning its "Teflon Thailand" reputation: after flat performance over much of 2014 due to political uncertainty, Chinese visitors have sprung back up to all time highs. Its neighbouring countries are far less fortunate. It is little wonder Korea, Thailand and Japan are the largest growth markets for Chinese airlines.
Despite weakness in Southeast Asia, foreign airlines are typically not planning to further reduce capacity. As one example, Singapore Airlines instead plans to link outbound China traffic with other markets, such as Australia.
Rapid growth within Northeast Asia now means that Chinese visitors have come to define tourism profiles: they accounted for 18% of all visitors to Japan in 2014, 43% to Korea and 40% to Taiwan. Such high shares become contentious locally – and risks that countries and airlines need to carefully manage.