Asia Pacific has been a pioneer in the development of the low cost long haul model, having had such flights for 12 years, or seven years longer than any other region. Nearly 40% of low cost long haul routes touch Southeast Asia and nearly 15% touch Australia, making them the world’s largest low cost long haul markets.

However there are still ample opportunities for growth. LCC penetration rates in most medium and long-haul markets are still well below 10% compared with the 50% of seats LCCs occupy on short haul routes within Southeast Asia and within South Asia. On true long haul routes such as Asia-Europe routes, few airlines operate because of the low yield profile and aircraft limitations.

  • What long haul markets are poised LCC growth?
  • How do rising fuel prices impact the outlook for long haul low cost routes?
  • Why have we only seen two routes to Europe so far by Asian LCCs?
  • How have the Europe-Asia routes by Scoot, Norwegian and Eurowings performed so far?
  • How do all parties improve issues around virtual interlining and ensure connectivity meets travellers needs?
  • Do Asian LCCs need to partner with European short haul LCCs to make Asia-Europe routes viable?
  • Do the European LCCs serving Asia need to partner with Asian LCCs?
  • How can airline’s leverage off partnerships to extend their brand into new markets?

Moderator: CAPA – Centre for Aviation, Chief Analyst, Brendan Sobie

  • AirAsia X, CEO, Benyamin Ismail
  • Japan Airlines, VP Products & Services Planning, Akira Mitsumasu
  • Kiwi.com, CEO, Oliver Dlouhý
  • London Stansted Airport, Chief Commercial Officer, Aboudy Nasser
  • Mango Aviation, Commercial Head, Trevor Spinks
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Latest News Headlines

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SMBC Aviation Capital reported (20-Nov-2018) the following highlights for the six months ended 30-Sep-2018:

  • Core lease revenue: USD490 million up 3.5% year-on-year;
  • Average operating lease assets: -0.5%;
  • Aircraft assets: USD11.2 billion, comprising 231 owned aircraft and pre-delivery payments;
  • 30.6% of portfolio transitioned to new technology assets, up from 15% in 1H2017. Modernisation trend set to continue;
  • Signed LoIs to place 44 aircraft from order book, with all 2018 and 2019 positions placed. LoIs for 12 of these sales were signed after 30-Sep-2018;
  • Completed sales of eight owned aircraft with average age of 7.9 years, profit on disposal of USD11.4 million;
  • Signed contract for the sale of a 29 aircraft portfolio from company's managed fleet;
  • Raised USD700 million in third party financing including a successful USD500 million bond issuance in Jul-2018. [more - original PR]

SITA stated (20-Nov-2018) its '2018 Air Transport IT Insights for China' reported an increased investment and focus in cyber security and baggage in the country. The 2018 report surveyed 70% of Chinese airports and 64% of airlines, finding the following trends:

  • Airports increased IT investment, with the segment accounting for 5.6% of revenues in 2017 and 7.5% in 2018, higher than the global average of 5.7%;
  • 94% of airlines and airports are planning major cybersecurity programs or R&D over the next three years;
  • For 2018, airlines plan to spend 7% of their IT budget on cybersecurity, while airports are forecast to devote 18% of theirs;
  • Chinese airlines and airports are ahead of global counterparts in the field of cybersecurity, when compared across a basket of nine tested areas;
  • For 2019, 100% of airlines plan to have more than 50% of their route network compliant with the IATA 753 Resolution to track baggage at every point of the journey. By the end of 2021, 100% of the airports will have two of the four baggage steps tracked and 94% plan to have all four;
  • Chinese passenger numbers have risen nearly 13% year-on-year to more than one billion in 2018;

SITA VP and general manager East Asia May Zhou stated: "Digitisation is top of mind for both airlines and airports in China", with "100% of airlines and 95% of airports have digital transformation already in place, under implementation, or planned". Zhou also predicted "China is set to lead the world on efficiently managing this process, reducing costs and improving the passenger baggage experience." [more - original PR]

CAAC reported (20-Nov-2018) the following traffic highlights for Sep-2018:

  • Passengers: 50.3 million, +7.9% year-on-year;
    • Domestic: 45.3 million, +7.6%;
    • International: 5.0 million, +10.5%;
  • Passenger load factor: 82.6%, +0.3ppt;
  • Cargo: 663,000 tonnes, +2.3%;
    • Domestic: 457,000 tonnes, +0.3%;
      • Hong Kong, Macau and Taiwan: 20,000 tonnes, -3.9%;
    • International: 205,000 tonnes, +7.1%. [more - original PR - Chinese]

Boeing completed (20-Nov-2018) the 'final body join' for the first 777X test aircraft, bringing together the major nose, mid and aft fuselage sections of the aircraft. The first 777X test airplane for static ground testing was completed in September 2018. Three additional flight test aicraft will be built after the initial flight test. The 777X is due to conduct its first test flight in 2019. The first 777X to enter service will be the 777-9 model, which can seat 400 to 425 passengers in a standard configuration and offer a range of 7600nm. First delivery is slated for 2020. [more - original PR]

JEJU air and Boeing (19-Nov-2018) signed a contract for up to 50 Boeing 737 MAX 8 aircraft, including 40 firm orders and up to 10 options. The contract is valued at up to USD5.9 billion, based on current list prices. It is the largest aircraft order on record for a South Korea based LCC. [more - original PR]

CAPA - Centre for Aviation, in a report entitled: 'Saudia adds lie flat on narrowbody A320ceos and A321neoLRs', stated (14-Nov-2018) Saudia has put into service the first of seven retrofitted A320ceos with 20 lie flat business class seats, becoming one of 11 airlines to globally offer a lie flat business seat on narrowbody aircraft. Saudia is also the third airline worldwide to introduce a lie flat narrowbody product in 2018. The airline plans to offer lie flat business class seats on a new fleet of 15 A321neoLRs, which are slated to be delivered in 2020 and 2021. Saudia's new lie flat narrowbody product significantly improves its position in the European market. The airline should be able to expand in Europe over the next few years by using the product improvements to attract more sixth freedom traffic. Transit accounts for only 4% to 5% of Saudia's total international passenger traffic but the airline expects this will double or triple over the next few years. [more - CAPA Analysis]

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China's Belt & Road Initiative and Aviation

Issue 45
  • A massive global initiative: aviation legacy could entrench liberal market access
  • Airports recovering from airline consolidation
  • Fleet changes as airlines reevaluate
  • Russia’s RoI on USD15 billion World Cup investment
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