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Asia Aviation Summit: Event Notes

Posted: Mon Oct 13, 2014 5:37 pm
by LAXintl
This week CAPA is holding its Asia Aviaion Summit in Singapore.

Diverse set of airlines and executives are participating. Below some random notes from comments made during presentations on the first day which primarily focused on LCCs.

Jetstar Asia
o Without benefit of Malaysia or Indonesia low cost base must innovate and be efficient in other ways
o Remains flexible with capacity to meet demand. As SIN market softened moved capacity away.

Jeju Air
o Like to see LCC partnerships, particularly opportunity with China
o LCC market share domestically in Korea has now reached 50%
o With fleet reaching 20-frames, next stage of growth is longhaul

Vanilla Air
o In 2015 fleet size becomes 8 A320s. Looking at A320CEO replacement. Could have decision next few months
o Love to enter China, but markets like PEK and PVG closed to due lack of authority
o ANA pilots get company provided transportation to airport and a special meal, Vanilla pilots take train and buy own bento box.

Tigerair Taiwan
o Really encouraging start.
o Taiwan consumer very keen to travel by air. Ideal demographics
o TPE-SIN route so full, CEO got bumped.

o By March 2016 will have 11 787s. Doubling airline in 1-year
o Very excited about 787 economics. Allow new markets, lower fares
o Remain Asia-Pacific growth focused. Mostly 4 - 8 hour distant routes
o 60% of tickets sold direct. Markets like Japan and China still heavily travel agent reliant for international trips.

o Released guidelines and seeks to promote development of LCCs in China
o China worlds most promising aviation market. Hit ~540mil enplanements in next 2 years.
o LCCs like Spring with high development and high profit margin push full service carriers to move faster.

Air Asia
o Has essentially evolved to becoming a major network carrier connecting hundreds of markets up and down Asia.
o Some say longhaul low cost is a trial balloon, but found very effective for Air Asia.
o Social media keeps you honest
o Social media is also free market research. With analytics have identified and launched successful routes

o LCCs both increase the pie, and take share away from full service carriers.

o Indian aviation in deep turnaround mode. Not out of the woods
o Becoming #2 domestic airline in India
o LCC formula works well in a nation like India.

Peach Air
o Fastest Japanese start up. 16 routes after 25 months
o Dedicated LCC terminal at KIX already at capacity. Airport will build 3rd terminal for budget carriers
o Have fastest check in process in the world -- 5 second kiosk

o In talks with both Airbus and Boeing for widebodies

Spring Airlines
o Regularly experience 90% LF
o Multi-national LCCs model good fit for Asia. After Japan subsidiary, seeks to enter Korea.
o Social media engagement very high in China. Effective marketing tool, but also need to stay ahead of events.


RE: Asia Aviation Summit: Event Notes

Posted: Mon Oct 13, 2014 7:05 pm
by mercure1
Thank you for notes.

LCC companies seem happy an upbeat. I wonder if legacy airlines feel same way.  

RE: Asia Aviation Summit: Event Notes

Posted: Mon Oct 13, 2014 8:48 pm
by LAXintl
Yes, dont suspect the major legacy carriers are as enthused about the rapid growth of new competitors.

RE: Asia Aviation Summit: Event Notes

Posted: Mon Oct 13, 2014 9:03 pm
by allrite
Interesting summary, thanks. No Jetstar Japan involved?

RE: Asia Aviation Summit: Event Notes

Posted: Tue Oct 14, 2014 1:11 am
by lutfi
Surprised so upbeat, given the issues at Tiger/ Jetstar. No HK Express?

Thanks for this!

RE: Asia Aviation Summit: Event Notes

Posted: Tue Oct 14, 2014 1:36 am
by MaverickM11
Quoting lutfi (Reply 4):
Surprised so upbeat, given the issues at Tiger/ Jetstar.

Meh...what else are they going to do? Given that many of them are losing their shirt, never mind the legacy carriers as well:

RE: Asia Aviation Summit: Event Notes

Posted: Tue Oct 14, 2014 5:05 pm
by LAXintl
Some day-2 notes:

o Plan another major order - reviewing regional models, more narrowbodies, and even widebodies
o Indian carriers are financial basket case. Last 8 yrs lost USD $11bil. Project $1.3-1.4il loses this year
o Govt. seeking to restore FAA Cat-1 status around end of fiscal year (Mar 2015)
o Indian domestic market now 4x larger than 10 years ago.

Air Asia X
o Some complain about over capacity - but its great for consumers. Demand will catch up to capacity
o ASEAN open-skies was overdue
o Since August product rebranding premium economy/business class sales up 20%
o Hybridisation trend is a fallacy. Airlines must make fundamental choice - either LCC or full service. Blurring lines raises cost base but no guarantee on revenues side. Too many carriers become tempted and lose sight of their fundamentals.
o Fly-Thru connectivity growing across network. Using mixed model of two sector pricing, sometimes O&D pricing.
o Becoming a network player was never part of grand plan but its evolving that way as clients look to you for diverse routings.
o First half of 2014, 51% of AAX clients connected - 34% booked fly-thru, 17% self made connections.

o Finalizing government approvals for scheduled service routes. Currently only doing charters and corporate limo flight
o First focus on growing domestically using CRJ200 jets. Intl routes to destinations near Mynamar at future date.

Lion Air
o Expect rapid growth in Indonesia during 2015
o Looking to utilize group owned leasing subsidiary to lease out up to 40 older 737 frames as newer A32x and 737 frames arrive. 9Air China is first outside customer for 3 aircraft. Many of leases could be within Lion Air group however for 2015

o As full service carrier targeting 8-9% base cost improvement. Need to become more efficient on per employee basis also.
o Even with LCC pressures, GA growing domestically. Up 12% first half of 2014. Citilink subsidiary 27% growth in 2014
o See strong market growth within ASEAN basin
o Seeks deeper partnerships with Skyteam and ANA. Allows expanded network without large capital cost or risk.

HK Express
o Carried over 1mil pax since transition to LCC Oct 2013.
o HK market desperately needed an LCC. Don't believe what the big airlines would want you to think otherwise
o Under 5% of seats into HKG operated by LCCs
o Was break-even as of summer. Expect with arrival of few more aircraft will have scale for consistent profit

Cebu Pacific
o Massive opportunity in domestic market. Long list of p2p markets ready to be served directly
o Carriers longhaul ambitions are modest, but seek to serve that value segment
o Only two strategies work in business - 1) be lowest cost producer, or 2) be highly differentiated
o First metal neutral JV in Southeast Asia will be pooling flying with Tigerair on MNL-SIN

West Air
o Cost have been reduced by 20% as company transitioned from full service to LCC. Looked at all procedures, contracts, and suppliers.
o Average of fleet is less than 2 years age. Modern technology allows airline to reduce cost
o 2015 might venture into first intl route

o Partnerships with UA and LH produce not only passengers and revenue, but important knowledge sharing also
o If had a choice would base everything at HND, though accepts that split Intl network at NRT reality. Work with partner airlines to maximize flights/options across both airports.
o Existence of LCC is growing Japan market pie as more tempted to fly and do so more frequently. ANA also benefits from this both directly, and though its LCC ventures.

Fly Mega
o Still room in the world for smaller carries.
o Looking at smaller non-hub airports and 5th freedom route opportunities
o Considering link with QR to open up Europe markets.


RE: Asia Aviation Summit: Event Notes

Posted: Wed Oct 15, 2014 1:58 am
by mercure1
Sounds like LCCs taking over the world (or atleast Asia).