Thailand

Bangkok Airways IPO: proving there is still room for an independent full-service short-haul airline

Bangkok Airways is an oddity – a successful independent full-service short-haul carrier that has been able to grow despite competing in a market dominated by LCCs and large aligned flag carriers. Bangkok Airways now seeks another oddity – an initial public offering in a market that in recent years has only seen LCCs and occasional flag carriers go public. The remainder of 2013 will see four Southeast Asian carriers attempt IPOs: three LCCs in AirAsia X, Indonesia AirAsia and Nok Air; and low-profile Bangkok Airways.

If successful with its upcoming listing on the Stock Exchange of Thailand, Bangkok Airways will have the cash to accelerate network and fleet expansion. The carrier, which currently operates 23 aircraft, is well positioned to expand despite facing intensifying competition in most of its markets.

Bangkok Airways’ biggest strength is a wide and growing portfolio of partnerships, which gives it access to high-yield passengers. Several of its partners are growing rapidly at the carrier’s main hub, Bangkok Suvarnabhumi, and need more regional feed.

The A380 becomes mainstream, with 103 now in service: which airlines, destinations, stage lengths?

There are 103 A380s in service as of early May-2013. Emirates has 33 and Singapore Airlines has 19, so when assessing network scheduling, these two and their hubs predominate: of the 1,048 weekly A380 flights, 402 are from Emirates alone. Dubai and Singapore airport see the most A380 flights.

But there are some less predictable statistics. The airport to see the most A380 operators is Hong Kong followed by Paris and Los Angeles. The largest A380 destination that is not (yet) an A380-hub is London Heathrow. The UK and USA are the most common A380 destinations after Australia, Singapore and the UAE. Asia, not the Middle East, sees the most A380 flights; South America sees none. Guangzhou-Shanghai Pudong is the shortest A380 route at 1,202km while Los Angeles-Melbourne is the longest at 12,751km. Qantas and Lufthansa have the highest average sector length while Thai Airways is placing the most number of cycles – about two – on its aircraft per day. Qantas and Air France are placing the least (just over one).

Jetstar Group concentrates on its Singapore hub as Jetstar Asia increases focus on Southeast Asia

This is the third report in a three-part series on Jetstar’s Singapore-based operations, which includes Jetstar Asia, Jetstar Airways and Valuair. The first two reports analysed Jetstar’s position in two key markets, Singapore-Indonesia and Singapore-China. This report looks at other markets and Jetstar’s overall outlook in Singapore.

Over the last year Jetstar has slowed down fleet and ASK expansion from Singapore after a period of rapid capacity growth for all of the country’s major LCCs, intensifying competition and impacting profitability. Seat capacity, however, has continued to grow rapidly as Jetstar Asia has increased its focus on short-haul Southeast Asian markets, particularly Malaysia, while decreasing its focus on medium-haul flights to North Asia, particularly mainland China.

In the coming months Jetstar Asia/Valuair will take two more A320s for a total of 20 aircraft, with the additional capacity once again being allocated to short-haul markets, primarily neighbouring Malaysia and Indonesia.

Singapore Changi traffic growth to slow as Qantas drops hub and AirAsia closes base

Passenger growth at Singapore is slowing significantly, making it very unlikely Changi will expand in 2013 its current streak of three consecutive years of double-digit expansion. Growth in the low to mid single digits will provide some breathing space for authorities to tackle increasing congestion problems. But Singapore authorities should still accelerate airport expansion, particularly the opening of a third runway, because the current congestion has already become an impediment to growth.

In the latest blow to Changi, AirAsia has decided to close its Singapore base. Shifting back to Malaysia the group’s small contingent of Singapore-based crews will have a very slight impact on total passenger figures at Changi. But it signals the challenges Changi faces as its LCC growth figures start to slow down while other airports in the region continue to record rapid increases.

The AirAsia decision follows Qantas moving its transit hub for European services from Singapore to Dubai, leading to a reduction in total Changi capacity of more than 2%.

AirAsia X selection of Bangkok as second base increases pressure on Thai Airways

AirAsia X is close to finalising plans for establishing an affiliate in Thailand, a fast-growing market with favourable conditions for long-haul low-cost operations. The new joint venture project between AirAsia X and Thai partners, which will almost certainly include sister short-haul carrier Thai AirAsia, will put further pressure on the Thai Airways Group.

Thai Airways has already been struggling to fend off increasing LCC competition in the domestic and regional international market, which it has responded to by increasing its involvement in short-haul LCC affiliate Nok Air and launching new hybrid carrier Thai Smile. AirAsia X will bring new LCC competition to some of Thai’s strongest medium-haul markets, particularly Australia, Korea and Japan.

Thai Airways has been studying potential long-haul low-cost options and the launch of an AirAsia X affiliate in Thailand, which will likely commence services within the next year, adds urgency. Thai Airways has already been slightly impacted by Asia’s two other long-haul LCCs, Jetstar and Scoot, but having to compete with a local long-haul LCC represents a much bigger challenge.

Juneyao Airlines continues international expansion in North & Southeast Asia, and seeks partners

China's Juneyao Airlines is continuing the progressive international expansion it commenced in 2012, further diluting its mainland domestic market service (excluding "regional" services to Hong Kong and Macau). Thailand is so far a focus, with the country's leisure nature appealing to the privately-owned, and all-A320 family, operator's target market, of consumers in the high-income Shanghai area seeking a boutique service for leisure needs. Juneyao's 158-seat A320s have 150 economy and eight first class seats. The carrier also sees corporate traffic, but downplays this so as to avoid conflict with the state-owned carriers which receive preference on international routes.

Juneyao had considered services to Japan's resort island of Okinawa, but this has fallen out of favour due to political tensions between China and Japan. Chinese carriers are turning their attention to Southeast Asia as they seek new markets, and the region offers year-round pleasant weather. Juneyao is also expanding in South Korea and is considering a presence in Singapore. Juneyao hopes these services will raise its international profile and attract potential partners to work on international routes or feed passengers onto Juneyao's domestic network based around Shanghai. Juneyao is the 13th largest domestic carrier in China and has a fleet of 29 A320s, of comparable size to Virgin America, which has been able to attract international partners.