BOC Aviation CEO Robert Martin, speaking at CAPA's Financing the Asian Aviation Revolution conference, stated (07-Sep-2012) the Asia Pacific region needs to enhance the number of cross-border leases. Excluding Japan, Asian banks tend to lease within their country, Mr Martin said. Notable exceptions include the inroads Cathay Pacific and Emirates have made in Singapore. Critical to improving this is the need for local cross-border currency swap markets.
Asia must have greater cross-border leases: BOC Aviation
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Qantas achieves financial sustainability, now takes on Singapore Airlines and Cathay Pacific
Qantas on 24-Aug-2016 delivered its second consecutive AUD1 billion annual profit, indicating that the long restructuring under the tenure of CEO Alan Joyce has not only worked but created a stronger Qantas. The group has weathered the boom and bust of the Australian resource economy and times with Asian LCC JVs; has turned Gulf and Chinese competitors into partners; and has risen above a key competitor's influx of foreign shareholding, which fuelled an unsustainable capacity and product war.
The question for Qantas is what next. Domestic has returned to a comfortable duopoly and growth is on the wane, while international partners will contribute higher growth by putting passengers onto the domestic Qantas network. Loyalty, a stable business, is growing and profitable but does not capture Mr Joyce's passion. Internationally, North America is Qantas' anchor. The continent accounts for one third of Qantas' now profitable international capacity. Qantas and its proposed partner American Airlines dominate, holding 42% of the Australia/New Zealand-North America market. It is a profitable but not very emotional business, although it could move to new 787-9 routes to Dallas or Chicago. Where Qantas remains strategically keen is to Asia and Europe, where its historical deficiency helped rivals Singapore Airlines and Cathay Pacific to rise to their powerhouse status.
The competition with SIA and Cathay is longstanding but reinvigorated: SIA has reiterated its desire to operate between Australia and the US, while Qantas blames Cathay for squashing the proposed LCC Jetstar Hong Kong. Qantas may not be able to beat SIA and Cathay entirely, but for the first time in its history Qantas believes it can compete with them on cost. Qantas seeks mainline and Jetstar growth to and within Asia. Qantas is weighing a European restructuring that could result in the launch of 787-9 flights between Perth and London – the first nonstop flight between Australia and Europe. Qantas may not be as big as it used to be, but it is smarter, more agile and more profitable. Qantas has evolved, but its competitors appear less stable. This is a time to seize momentum and rebuild Qantas' flagship status.
Virgin Atlantic seeks new partners in Asia and other eastbound markets, but imminent deals unlikely
In an interview with Bloomberg on 15-Jun-2016, Virgin Atlantic CEO Craig Kreeger said that the airline was open to "accords" that would complement the North Atlantic joint venture with its 49% shareholder Delta. These would be "most likely focused on Asia and other eastbound markets" where Virgin reduced its exposure after the Delta deal.
Although 'Asia and other eastbound markets' are both the world's largest and fastest-growing aviation markets, Virgin has reduced its exposure to Asia Pacific and Middle East since Delta acquired a 49% stake in the UK airline in 2012 and subsequently formed its North Atlantic JV in 2013. Virgin withdrew from Mumbai and Tokyo Narita in 2015, after dropping its Australia route in May-2014.
Mr Kreeger also said that Virgin was looking at adding to its existing seven codeshare partners, which are Air China, Air New Zealand, All Nippon Airways, Delta, Flybe, Jet Airways and Singapore Airlines. This report considers which airlines in "Asia and other eastbound markets" might make attractive partners for Virgin Atlantic, whether through new JVs or codeshares. Mr Kreeger may be open to JVs in the region, but he will first need to increase Virgin's very small online presence in Asia. Imminent new deals seem unlikely. In reviewing likely attractive enhanced relationships, Delta's interests will form one ingredient, but Virgin Atlantic remains an airline in its own right.