One size does not fit all: Niche carriers
“We stay in our niche,” stated Lim Kim Hai, the Singapore-based CEO of Australian regional carrier REX. Responding to a question on its plans for growth, he rejected the conventional wisdom that safety is in mass by responding: “We’re a small airline, but you don’t need to be big to be profitable.”
Similarly, Air Arabia’s CEO Adel Ali said that his carrier learned that LCC orthodoxy regarding Internet distribution also did not apply to his company. “There’s no rule that says you have to sell 99% of your tickets over the Internet,” he said. “We’ve discovered that trash transactions with a travel agent actually cost us less than online sales, which require us to pay credit card receipts.”
Adam Air Chief Executive, Adam Suherman, dismissed the notion that international access if critical to success for a Southeast Asian LCC, saying: “With a population of 250 million people, only one-tenth of whom fly, there is plenty of potential in our home market. Plus by concentrating on Indonesia, we are able to maintain our very low costs, which benefit from the Indonesian operating environment.”
Closing the panel, which was moderated by CAPA Consulting Chief Executive, Andrew Miller, was the CEO of Silk Air, Mike Barclay. Commenting on the idea that low costs were necessarily the key goal of every local airline, Mr Barclay noted that Silk Air’s increased profitability was linked to its offering a higher-end service. “We grew our business class revenue by 125% last year.” This growth in premium revenue, he said, helped Silk Air prove that a full-service short-haul carrier can coexist in a home market with two low cost carriers.
Outlook 2007 is the Centre for Asia Pacific Aviation’s annual examination of the prospects for the Asia Pacific airline industry. Convening in Singapore with the participation of 30 CEOs and 380 vital stakeholders from all components of the aviation sector, Outlook 2007 and the CAPA Aviation Awards for Excellence is the year’s premier gathering of the region’s aviation decision makers, providing a forum for dialogue between leaders from the airline, airport, supplier and regulatory communities.
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