Comment
No need for pessimism
November 1st 2012
A year ago, the heads of the Asia-Pacific’s major airlines gathered in Seoul for the Association of Asia Pacific Airlines (AAPA) annual Assembly of Presidents. This month they convene again, in Kuala Lumpur. Read More »
Little has changed in the intervening 12 months. Fuel costs remain high. No one has been able to convince Europe to drop or suspend its controversial carbon trading scheme. Competition is, if anything, fiercer. Profits are just as hard to come by and the growing fleets of the region’s low-cost carriers remain a serious threat to the market share of AAPA members.
The year ahead looks just as tough. Challenges such as the environmental impact of aviation, the high cost of jet fuel, finding new ways for airlines to do business, bringing more efficiencies to operations and eking out cost reductions are the immediate issues to be managed.
But long-term issues such as the fight by carriers to convince their governments to ease up on cross-border ownership rules that will allow greater industry consolidation also need to be pursued with renewed vigour.
There has been a great deal of liberalization of the region’s aviation markets in past years, but the process has not gone far enough. More needs to be done in order to allow airlines to be genuine players in the global market place, to be free to operate without restraint.
More immediately, it is clear the operating environment is not going to change overnight. The stuttering economies of Europe and the U.S., and the impact this deleveraging has around the world, are going to take a long time to reconcile.
But the region’s carriers must recognize they continue to outperform the rest of the world in virtually every aspect of the business, from profitability to service standards. This is their advantage. Being in the right place at the right time and doing things better than right.
We all know this is a cyclical industry. We also know the Asia-Pacific is the future of aviation and longer-term growth projections remain spectacular, whatever is happening now.
Neither should anyone be nervous about China’s slowing economy, news that is continually hitting the headlines? It is an economy still growing at 7.5% annually.
So whatever the current state of the industry and no matter how many immediate problems there are to overcome, optimism should abound when it comes to the future of Asia-Pacific commercial aviation.
