Moderators: richierich, ua900, PanAm_DC10, hOMSaR
questions wrote:There seems to be a lot of small to medium size airlines throughout the Asia Pacific region. Some have made investments in others. Why do we not see more consolidation? Is cross border ownership prohibited? Is there political pressure to protect the “flag carriers”? While they may be profitable, could consolidation provide greater scale and efficiencies and therefore stronger financial returns?
Examples:
JAL
ANA
EVA
Korean
Asiana
Cathay Pacific
Singapore
Malaysia
Garuda
Vietnam
Thai
Philippine
Virgin Australia
Air New Zealand
questions wrote:There seems to be a lot of small to medium size airlines throughout the Asia Pacific region.
zakuivcustom wrote:...
Another possible consolidation for me would be South Korean LCC market (Yes, Seoul Metro Area itself has as many people as the entire State of Texas, but still, do you really need this many LCCs? Not counting Jin Air (KE) and Air Seoul/Air Busan (OZ) you still have Eastar, Jeju Air, and T'Way, and this is with S. Korean domestic market consisting pretty much of a single route i.e. GMP-CJU).
...
aemoreira1981 wrote:Taiwan had 3 full-service carriers (1 regional) until GE closed in 2016 (although GE was just a regional carrier, albeit with a lot of domestic flights). Japan, despite being so dense, can't really support more than 2 full service carriers. Same for South Korea, although smaller independents in each country do exist that do regional flying.
Vietnam has only two true airlines (given that Vietnam Airlines and Jetstar Pacific share a fleet); VN/BL, owned by the government, and VJ, which is private.
Singapore is unique in that it's basically a city state, but it competes against many other airlines on most of its routes...pretty much all of them except SQ22/1, and has liberalized its aviation market to allow fifth-freedom via SIN even at the cost to SQ/TR/MI.
As for Indonesia, while GA is the major flag carrier, it is hardly a domestic player, with JT/ID being the dominant force there.
Australia may look big, but most of the population is concentrated on its east coast and Perth, and so the market can only really support two true competitors. Had Ansett Australia not gone out of business, would Virgin Australia (then a nascent airline suddenly thrust into position as the #2 airline when Ansett closed) be anywhere as big as it is now?
bolbibug wrote:questions wrote:There seems to be a lot of small to medium size airlines throughout the Asia Pacific region. Some have made investments in others. Why do we not see more consolidation? Is cross border ownership prohibited? Is there political pressure to protect the “flag carriers”? While they may be profitable, could consolidation provide greater scale and efficiencies and therefore stronger financial returns?
Examples:
JAL
ANA
EVA
Korean
Asiana
Cathay Pacific
Singapore
Malaysia
Garuda
Vietnam
Thai
Philippine
Virgin Australia
Air New Zealand
Some of those int he list are state-owned (or part state-owned). I don't think I've ever heard of a state-owned airliner merging with other state-owned airline.
zakuivcustom wrote:Spot on!Which one? B/c the ones you listed are certainly not "Small to Medium Size". The smallest airlines you listed have like 100 airplanes (Once you count all the subsidiries, i.e. MH with MASWings and Firefly, BR with Uni Air, CI with Mandarin Airlines, etc.).
zakuivcustom wrote:Make that 8. All flying ATR-72s. The price is set by the government with discounted rates for Myanmar citizens.BTW, if you really want to see messy air market, look at ... Myanmar (6 airlines on RGN-MDL, again, none of them big).
tmoney wrote:Make that 8. All flying ATR-72s. The price is set by the government with discounted rates for Myanmar citizens.
Of the lot, 4 exist as a front (money-laundering businesses) for cronies/drug lords: Asian Wings, Mann Yatanarpon, Golden Myanmar, Air KBZ. Their primary motivation is not to make money so likely they will never merge.
benjjk wrote:I think this question has come up before focusing on the Pacific islands, which actually does have a smattering of small airlines with insufficient demand for much more. A mega airline here is an attractive idea but you'll run into the same difficulties that others have mentioned elsewhere. It would probably require greater cooperation across governments to harmonize things - for which there is no will to do so. Unfortunately there are already many complaints about perceived price gouging in this region, and whilst consolidation might make an airline more sustainable it does not encourage cheaper tickets. Why would a government go out of its way to make the situation worse?
usflyer msp wrote:Asia is not one aviation market. There would be all sorts of traffic rights problems with Asian cross border mergers.
flylondon wrote:usflyer msp wrote:Asia is not one aviation market. There would be all sorts of traffic rights problems with Asian cross border mergers.
Neither is Latin America, but it didn't stop Latam and Avianca
A388 wrote:bzcat, how do ownership restrictions work in Asia? Looking at several big airlines having multiple subsidiaries in Asia (Air Asia, Lion Air, Scoot, Jetstar), how is it possible that these airlines have set up subsidiaries in foreign countries? Because of these examples, I thought Asia was more liberal with regards to foreign ownership of airlines established in their own countries(?)
Are the majority owners of these subsidiaries a local company investing its own money in those subsidiary, thereby making these subsidiaries "local"?
A388
A388 wrote:bzcat, how do ownership restrictions work in Asia? Looking at several big airlines having multiple subsidiaries in Asia (Air Asia, Lion Air, Scoot, Jetstar), how is it possible that these airlines have set up subsidiaries in foreign countries? Because of these examples, I thought Asia was more liberal with regards to foreign ownership of airlines established in their own countries(?)
Are the majority owners of these subsidiaries a local company investing its own money in those subsidiary, thereby making these subsidiaries "local"?
A388
usflyer msp wrote:A388 wrote:bzcat, how do ownership restrictions work in Asia? Looking at several big airlines having multiple subsidiaries in Asia (Air Asia, Lion Air, Scoot, Jetstar), how is it possible that these airlines have set up subsidiaries in foreign countries? Because of these examples, I thought Asia was more liberal with regards to foreign ownership of airlines established in their own countries(?)
Are the majority owners of these subsidiaries a local company investing its own money in those subsidiary, thereby making these subsidiaries "local"?
A388
They are not subsidiaries, they are franchises. They use the AirAsia/JetStar trade names and IT/Marketing infrastructure but maintain primarily local ownership.
A388 wrote:bzcat, how do ownership restrictions work in Asia? Looking at several big airlines having multiple subsidiaries in Asia (Air Asia, Lion Air, Scoot, Jetstar), how is it possible that these airlines have set up subsidiaries in foreign countries? Because of these examples, I thought Asia was more liberal with regards to foreign ownership of airlines established in their own countries(?)
Are the majority owners of these subsidiaries a local company investing its own money in those subsidiary, thereby making these subsidiaries "local"?
A388
zakuivcustom wrote:usflyer msp wrote:A388 wrote:bzcat, how do ownership restrictions work in Asia? Looking at several big airlines having multiple subsidiaries in Asia (Air Asia, Lion Air, Scoot, Jetstar), how is it possible that these airlines have set up subsidiaries in foreign countries? Because of these examples, I thought Asia was more liberal with regards to foreign ownership of airlines established in their own countries(?)
Are the majority owners of these subsidiaries a local company investing its own money in those subsidiary, thereby making these subsidiaries "local"?
A388
They are not subsidiaries, they are franchises. They use the AirAsia/JetStar trade names and IT/Marketing infrastructure but maintain primarily local ownership.
It's both - AirAsia in particular usually have minority ownership (Usually the maximum allowed by the country's law, so usually 49%) in most of its subsidaries, with majority ownership provided by some local investors. Thai AirAsia, for example, is a joint venture between Shin Corp. and AirAsia. Jetstar Japan, as people have already mentioned, is a 50-50 venture between QF and JL.
Well, either that, or Jetstar/AirAsia just buy up another existing LCC in the country. Examples are Jetstar Pacific (It existed for many years as Pacific Airlines, owned by Vietnamese gov't for awhile, before it was partially sold (30%) to Qantas so that they can put the "Jetstar" name on it, then VN brought the rest of the gov't shares (70%)), and the former AirAsia Zest in Philippines (Formerly Asian Spirit then Zest Airways then AirAsia Zest, before finally being merged with the separate AirAsia Philippines). AirAsia also tried to purchase Batavia Air to expand Indonesia AirAsia, but that fell through (and Batavia went out of business). Those airlines are more similar to "franchaising", using the AirAsia/Jetstar name.
Ultimately, cross-investments and codesharings are the path forward for now - much easier than having to deal with all the ownership laws and also, eventually have to answer the question "who gets what".
jcancel wrote:If anything Singapore Airlines and Malaysia Airlines split after Malaysia expelled Singapore.
zakuivcustom wrote:usflyer msp wrote:A388 wrote:bzcat, how do ownership restrictions work in Asia? Looking at several big airlines having multiple subsidiaries in Asia (Air Asia, Lion Air, Scoot, Jetstar), how is it possible that these airlines have set up subsidiaries in foreign countries? Because of these examples, I thought Asia was more liberal with regards to foreign ownership of airlines established in their own countries(?)
Are the majority owners of these subsidiaries a local company investing its own money in those subsidiary, thereby making these subsidiaries "local"?
A388
They are not subsidiaries, they are franchises. They use the AirAsia/JetStar trade names and IT/Marketing infrastructure but maintain primarily local ownership.
It's both - AirAsia in particular usually have minority ownership (Usually the maximum allowed by the country's law, so usually 49%) in most of its subsidaries, with majority ownership provided by some local investors. Thai AirAsia, for example, is a joint venture between Shin Corp. and AirAsia. Jetstar Japan, as people have already mentioned, is a 50-50 venture between QF and JL.
Well, either that, or Jetstar/AirAsia just buy up another existing LCC in the country. Examples are Jetstar Pacific (It existed for many years as Pacific Airlines, owned by Vietnamese gov't for awhile, before it was partially sold (30%) to Qantas so that they can put the "Jetstar" name on it, then VN brought the rest of the gov't shares (70%)), and the former AirAsia Zest in Philippines (Formerly Asian Spirit then Zest Airways then AirAsia Zest, before finally being merged with the separate AirAsia Philippines). AirAsia also tried to purchase Batavia Air to expand Indonesia AirAsia, but that fell through (and Batavia went out of business). Those airlines are more similar to "franchaising", using the AirAsia/Jetstar name.
Ultimately, cross-investments and codesharings are the path forward for now - much easier than having to deal with all the ownership laws and also, eventually have to answer the question "who gets what".
bolbibug wrote:Some of those int he list are state-owned (or part state-owned). I don't think I've ever heard of a state-owned airliner merging with other state-owned airline.
LupineChemist wrote:bolbibug wrote:Some of those int he list are state-owned (or part state-owned). I don't think I've ever heard of a state-owned airliner merging with other state-owned airline.
SAS?
Irrelevant to the discussion, but sort of the exception that proves the rule.
cedarjet wrote:LupineChemist wrote:bolbibug wrote:Some of those int he list are state-owned (or part state-owned). I don't think I've ever heard of a state-owned airliner merging with other state-owned airline.
SAS?
Irrelevant to the discussion, but sort of the exception that proves the rule.
SAS isn’t the product of a merger.