Asian aviation must face up to LCC challenge - CAPA
(Singapore: 23 January 2007) Centre for Asia Pacific Aviation (CAPA)
Executive Chairman, Peter Harbison, today warned that Asia¹s major incumbent
carriers risk becoming irrelevant, or even face extinction, if they fail to
grasp the changes in the market occurring due to LCCs.
Opening the Low Cost Airline Congress in Singapore today, Mr Harbison stated that an aviation revolution is taking place.
The aviation world will never be the same. Any new entrant MUST be low cost and any existing airline not heeding this message will become an ex-airline. We havent yet seen a major international airline shut down in this region although Ansett Australia¹s collapse was contributed to by the entry of LCCs domestically but it will happen, stated Mr Harbison.
Mr Harbison observed there are now a variety of airline models in Asia, where previously all were similar department store airlines.
Hybrid models are evolving with characteristics specific to their own environment, like Virgin Blue, while others are taking on a special Asian characteristic, like AirAsia X and VIVA Macau. We are also seeing the rapid development of low cost long-haul models, like Oasis Hong Kong and Jetstar.
These hybrids are defying many of the basic rules. But they have one common ingredient - a passion for cost reduction, said Mr Harbison.
Mr Harbison predicts that there will be twice as many Asian international airlines in five years than today. Talk of the coming consolidation among airlines is a nonsense, stated Mr Harbison.
Who is going to consolidate? Not Singapore Airlines and Thai Airways? There will certainly be some market exits, but large scale consolidation won't happen it's just too difficult and the market is expanding too fast, he said.
Mr Harbison stated that 2007 will be an important year for liberalisation of aviation access by governments, but he warned of a growing logjam caused by government inertia.
As governments recognise the political and economic benefits of liberalising, it is more a question of how we get around the sticky cobwebs of the bilateral system. ASEAN 2008 is just around the corner and most states have so far paid it little more than lip service. It needs concerted action and quickly.
It's wake up time. The only thing preventing economic expansion for hundreds of thousands of people, especially in regional centres, is the dead hand of government aviation policy. We need to shout that message at every opportunity, concluded Mr Harbison.
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