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Asiana Airlines is an airline based at Seoul Incheon International Airport with a secondary base at Seoul Gimpo International Airport in South Korea. Majority-owned by one of South Korea's largest conglomerates, the Kumho Asiana Group, Asiana is the second-largest airline in South Korea and an increasingly important player in the East Asian region. The airline serves destinations across Asia, North America, Australia and Europe. Asiana is a member of the Star Alliance.
Location of Asiana Airlines main hub (Seoul Incheon International Airport)
Asiana Airlines share price
943 total articles
Takamatsu Airport: Strong traffic growth on Shanghai route, Seoul traffic decline easing in Oct-2013
54 total articles
Asian carriers continue to pour additional capacity into Myanmar, building on increases which were initially pursued in 2H2012 after the market quickly opened as economic sanctions which had been in place for two decades were lifted. The Myanmar international market will exceed 110,000 weekly international seats in Jan-2014, representing an increase of about 40% compared to Jan-2012 and almost 130% compared to Apr-2012, when Aung San Suu Kyi’s National League for Democracy won landmark elections.
But so far the additional capacity has outstripped demand. International passenger traffic in Myanmar has grown by about 70% over the past two years – an impressive figure but not sufficient to keep up with the capacity increases. As a result load factors to and from Myanmar are significantly below the global average.
Nearly all of the 14 foreign carriers which were already serving Myanmar before Apr-2012 have seen load factors on their Myanmar routes drop over the last year. The nine foreign carriers which have launched and retained services to Myanmar since the market opened have also so far recorded lower than normal load factors – generally in the 50% to 70% range.
The cargo industry has been clear it is suffering from the external problem of weakened supply amid a gloomy economic environment. But less apparent is the fact that the pain is largely self-inflicted: long-haul passenger flights are growing rapidly, increasing 25% on trans-Pacific routes between 2006 and 2013. That also directly increases the amount of belly capacity available for cargo, and the trans-Pacific is the world's largest cargo market.
Increasingly the aircraft of choice across the Pacific is the 777-300ER, which can carry upwards of 18% more cargo volume than the 747-400. And the 777-300ER is displacing the 747-400, with the twinjet increasing its share of trans-Pacific flights from less than 1% in 2006 to 27% in 2013. The 747-400 meanwhile accounted for 40% of flights in 2006 but only 15% in 2013.
This trend is structural and ongoing as carriers look to add trans-Pacific passenger capacity. Northeast and Southeast Asian carriers hold 29% of the 777-300ER backlog, and airframe manufacturers plan for their next-generation aircraft to carry even more cargo. This all brings into focus: just how strong is the future for dedicated freighters?
For the first time since 2009, Korea's main carriers – Asiana and Korean Air – are both in the red for the first half of the year. While Korean Air's non-consolidated operating profit has improved from 1Q2013, Asiana's has deteriorated. As of 2Q2013 Korean Air is at a -1.5% operating margin while Asiana is at -3.2%. The difference is largely due to failure to practice capacity discipline: Asiana grew international ASKs by 7.2% while Korean Air grew its international ASKs only 0.9%. Two of Asiana's markets saw 16% growth, including China, whose current demand weakness is well known. Another weak market is Europe, where Korean Air cut capacity by 6% while Asiana grew by 6%.
Such brash moves from Asiana are perhaps only justified by taking a long-term view that capacity must be put in now to secure a position in the future, but this is a bet. The third quarter is typically the strongest for the carriers, when they can derive upwards of 50% of their annual profits. But unchanged is underlying regional weakness that has seen yields plummet. Capacity discipline is also wanting: Asiana so far is due to grow 5.7% in 3Q2013. Meanwhile a curious hybridisation movement is hatching at Asiana, which will re-configure eight A320s to an all-economy regional layout.
Korean LCCs are increasing their market share, accounting for 10% of the international market and just under 50% in the much smaller domestic arena. But they are still passing up numerous opportunities, and these are becoming more apparent and with greater impact as LCCs increase in North Asia, notably Japan.
Two – Air Busan and Jin Air – are tethered to their full-service parents while independent Jeju Air has done comparatively well and preparing for an IPO to advance growth. But smaller independent LCCs Eastar Jet and t'way are still moving up. They straddle the low-cost and full-service spectrum, being closer to low fare than low-cost airlines. While they argue the Korean market is not ready for LCCs, they know they must move as international competition intensifies. They only need to look at Japan's Peach, which is finding success in another market once thought to be too sensitive for LCCs. AirAsia Japan's failure is a reminder that finding the nuances and achieving balance between management style, market demand and the balance sheet is not easy.
Asian airline costs and efficiencies vary widely. Compared to Europe, the region is home to efficient LCCs like AirAsia, which on a stage length-adjusted basis is more efficient than Vueling or easyjet – but perhaps not Ryanair. Thai Airways is the most efficient of the major full-service Asian airlines, but it is not much more efficient than Finnair, one of Europe's leanest carriers. But Thai is certainly more efficient than many of Europe's full-service airlines, which have similar costs and stage lengths, unlike Asia's full-service carriers that occupy a wide spectrum. At the top end is Japan's All Nippon Airways, which rivals SAS' costs – Europe's most expensive major airline.
These are some of the findings from CAPA's examination of Asian airline costs. Geography and local labour costs only partially dictate total airline costs: three Japanese airlines are the most expensive in this sample. Yet Japan's independent LCC, Skymark is cheaper than any Chinese carrier while one of Asia's most efficient full-service airlines – Singapore Airlines – is from a country with a cost of living closer to the West than other parts of Asia. Many of Asia's full-service airlines need to shape up – and LCCs need to maintain cost discipline for when the cost gap is inevitably narrowed.
Hawaiian Airlines is still awaiting the rewards of network diversification it undertook a few years ago with the launch of several new Asian routes along with flights to Auckland and Brisbane. The effort was designed to offset Hawaiian’s dependence on service to the US mainland, which has become increasingly competitive during the last few years.
The rapid-fire route introductions have been plagued by currency weakness in Japan, retaliatory competitive capacity additions and Hawaiian’s spooling up in understanding the distinctive nuances of each market. At the same time overcapacity in its North American markets – which still comprise the majority of its revenues – continues to pressure Hawaiian’s performance.
As those challenges continue to cast a spectre on Hawaiian’s performance, the carrier has reversed its fortunes within its inter-island network, which weakened during 2012 when Hawaiian made a push from Maui and overestimated the capacity it needed to build a hub in Kahului.
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