Macau Airport

Air Macau takes encouraging steps to support the Macau market as "resort" tourism balloons

Air Macau's history is not illustrious. It has long sat on an effective monopoly as flag carrier, without exploiting its advantage, yet other airlines have been precluded, greatly upsetting the local tourism and hospitality industries.

But signs are emerging the carrier is beginning to take steps to have a more positive role in Asian aviation. For years Air Macau focused as a transit operation for passengers between mainland China and Taiwan, where direct flights were prohibited until mid-last decade. In doing so, it ignored its hometown market, a tiny enclave that quickly grew this century to be Asia's gambling capital. Inertia cost it market opportunities, especially in Southeast Asia, where agile low-cost carriers moved quickly.

Aircraft were wet-leased to part-owner Air China but now Air Macau's fleet is due to expand in a long-overdue bid to support Macau's growth. Target markets are mainland China and North Asia, but the carrier also hopes to make inroads in Southeast Asia. Air Macau is advantaged with Macau's gradual diversification from just gambling, as well as its concession agreement that runs until the turn of the next decade. But there are challenges, operationally and also being a subsidiary of Air China, which has larger priorities across the region.

SkyTeam's Greater China airline members to form regional alliance in high-yielding market

A proposed regional alliance amongst SkyTeam's Greater China members – Taiwan's China Airlines, China Eastern, China Southern and Xiamen Airlines – may appear to be a niche strategic move in the small but highly profitable and expanding Taiwan-mainland China market.

Yet the alliance is also indicative of the growing trend for North Asian airlines to combine their strengths against imposing competitors, namely Air China and Cathay Pacific.

The alliance would account for about half of the capacity between China and Taiwan, a valuable market which is continuously expanding under tight control and route delegation. Its share on certain key business routes, like Taipei-Shanghai, would be even higher. Further airline strength and capacity will pressure Hong Kong-based carriers, which once had a healthy business of carrying passengers between China and Taiwan via their hub.

Thai Smile strategy tweaked again as new hybrid continues to move upmarket

Thai Airways has again adjusted the strategy of its new hybrid unit Thai Smile as the group struggles to determine the ultimate product mix and network. The latest changes include a dedicated business class cabin, which will be introduced in 2013 following delivery of Thai Smile’s seventh A320, and plans to convert the unit into a full subsidiary. Thai Smile also continues to tweak its network, dropping earlier plans to launch services from Bangkok to Hyderabad and Phuket to Singapore.

As Thai Smile represents an experiment for Thai Airways and the overall Asian market, it is not surprising to see almost continual changes to the operation. But all the changes reflect flaws in Thai Smile’s initial business model, which falls between low-cost and full-service. Thai Smile will likely evolve from a hybrid into more of a pure full-service regional subsidiary similar to Singapore Airlines’ SilkAir and Cathay Pacific’s Dragonair. 

Asia's LCCs increasingly see room to serve both Macau and Hong Kong in the booming Pearl River Delta

AirAsia Philippines' two new international routes launched on 19-Jul-2012 were notable in that the services were to Hong Kong and Macau, 20nm apart and previously considered too similar to warrant service to both. But regional Asian carriers, and LCCs especially, are increasingly finding they can support service to both cities. Also on 19-Jul-2012, Asiana LCC subsidiary Air Busan opened a route to Macau, complementing its Hong Kong service.

While Hong Kong and Macau may be geographically close, the division by the South China Sea dictates different catchment areas, with Hong Kong also serving Shenzhen in mainland China while Macau can serve the mainland's Zhuhai, whose airport is only for domestic flights. The regions are not equals, and only Thai AirAsia has more capacity into Macau than Hong Kong. But as Asia's population and economy continues to grow, the Pearl River Delta's airports will be Asia's equivalent to the London, New York City or Sao Paulo airport networks.

Thai Airways unit Thai Smile seeks to prove itself as a new type of carrier for Asia

While Thai Airways' new unit Thai Smile is now settling in to its second week of operations, the carrier remains in the vanguard and is seeking to prove its hybrid model as suitable for the Asian market. Thai Smile has undergone many revisions since being established just over a year ago and continues to, with the carrier now planning to split future capacity evenly between the domestic and international markets rather than have a majority of international capacity.

Thai Smile launched services on 7-Jul-2012 with an international route to Macau but in Aug-2012 will launch domestic services. So far besides Macau only five domestic routes have been announced but more international routes will come as part of a later phase, including possibly from second-tier Thai cities, breaking Thai Airways' focus on Bangkok and, to a lesser extent, Phuket. But the new unit's higher cost base than a LCC will ultimately limit its growth potential.

Thai Smile settles on unique hybrid model with premium economy and mixed network

New Thai Airways unit Thai Smile is gearing up to launch services on 07-Jul-2012 following a unique hybrid model aimed at allowing it to compete against LCCs at the back while meeting the needs of premium passengers, including those connecting from Thai-operated flights, with a light premium economy type of product at the front. Thai Smile’s initial network will feature a mix of new destinations for the Thai Airways Group and existing destinations, where the new carrier will look to supplement existing Thai Airways-operated service.

Thai Smile’s first destination, Macau, will be international but managing director Woranate Laprabang tells CAPA that about 30% of the new carrier’s capacity will be allocated to domestic routes. Mr Laprabang now expects to be managing a 20-aircraft all-narrowbody operation by the end of 2015.