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Aviation History
1988
1988 - 0270.PDF
ASIAN AEROSPACE '88 REPORT Capacity shortage angers airlines Increased liberalisation, combined with improvements to airways and airport facili ties, would dramatically improve airline industry growth in the Asia-Pacific region, according to leading airline chiefs. Currently forecast to grow at 11 per cent per annum for the next ten years, over twice the worldwide average, passenger seat-miles in the region are in such short supply that passengers are being turned away. This is prompting anger among airline executives, who see the excess demand as a loss of legitimate business. Cathay Pacific Airways reached an average load factor of almost 78 per cent last year, in an industry where over 65 per cent means that passengers are turned away at peak periods. Singapore Inter national Airlines suffered the same frustration, recording an identical load factor on its Singapore-Hong Kong route. At a recent conference in Singapore, organised by the Financial Times and address ing aspects of civil aviation in the Pacific Rim, SIA chief Cheong Choong Kong called on Asian airline executives to co-operate in working a trig ger mechanism to combat the problem. Under this system, airlines experiencing exces sive load factors would auto matically add capacity, circumventing inevitable government disagreements. "Asia-Pacific countries are missing out on potential tourist dollars because of restrictions on frequency and capacity," Kong says. "The pace of liberalisation is not fast enough, and a system where market forces alone determine price, capacity, service standards, and frequency is a long way off." Under the proposal, airlines exceeding a 65 per cent load factor for 12 months would automatically be entitled to add one extra weekly frequency on the affected route. Kong says that talks with airlines in the region continue but, while agreement has been reached in principle, actual agreement is elusive. At the root of the problem lies protectionism and restrictive practices that prevail on international routes, despite some domestic liberalisation in Japan, China, Australia, New Zealand, and the USA. Any liberalisation on international routes in the region is "tentative". Kong is angered by restrictions to entering the US market, an emotion shared by Michael Miles, the Cathay chief, who says that the US stance is hypocritical, and by Japan Air Lines boss Mitsunari Kawano. Regulations which con strain capacity are not the only problem, and Miles lists many more. The most signifi cant is his allegation that military aircraft in the region "frequently" display a "potentially dangerous disregard" for air traffic control. Other complaints raised by the outspoken Miles include difficulties with hiring cockpit crew, as a result of the worldwide pilot shortage, and a problem in hiring Japanese- speaking cabin staff for flights to Japan, owing to the strength of the Yen, which makes the salaries offered seem derisory. Additionally, "unco-opera tive" governments provide inadequate airport facilities, which in turn leads to friction between passengers and airline staff and a high staff turnover. Dog-leg airways are also criticised. "The responsibility for tackling these constraints on airline growth rests squarely with the governments of the region. Airline management is acutely concerned with the inertia of bureaucracy," Miles says. "My prediction is that Asian airlines will surmount these problems, but at a cost in terms of salaries, working hours, and loss in productivity that is far greater than is currently anticipated," Miles declares with a defensive call for airlines to mobilise and press for government action. A consortium formed last year by SIA, Thai Airways, and Cathay continues in its efforts to lure more airlines into a computer reservation system (CRS) now under development. Kong reveals that renewed talks are under way with JAL, and he fore casts that many airlines will eventually join. The CRS, named Abacus, is designed to defend Asia- Pacific carriers from domi nation by "mega-CRSs" in the USA or Europe. "The US carriers are aggressively seek ing international expansion, and Asia-Pacific and Europe are the prime targets. Highly protected, subsidised national carriers may find survival India unveils five-seat helicopter Naras Aviation of India unveiled its Model 305 helicopter, a licence-built Brantly design claimed to be the only five-seater piston helicopter available. Naras is also building the two- seat Brantly B.2B. in a new, more competitive environment extremely diffi cult," says Kong. The popularity of home computers in Japan could be the foundation of a compre hensive CRS there, with home terminals used to reserve flights, hotels, and rented cars. The same computer could instruct bank payment, Kawano says. In spite of the dissatis faction, there was some opti mism for change. Impending privatisation or reduced government shareholdings in SIA, Pakistan International, Air New Zealand, Qantas, and Australian Airlines are seen by airline officials as a poten tial prelude to deregulation and freedom co expand. In spite of the difficulties, airline business has grown rapidly in the Asia-Pacific region. Nine international scheduled carriers, consti tuting the core of the Orient Airlines Association, flew close to one quarter of the world's revenue tonne- kilometres in 1986, surpassing carriers in the USA. Twenty years ago they flew just 7 per cent. Malaysia, Thailand, and Singapore (with a gross national product the size of Italy's) have all achieved dramatic economic growth, and a widespread emergence of a middle class is fuelling growth in demand. China and South Korea are seen as potentially lucrative markets. Cargo will be almost as buoy ant a market as passengers. Japan's Ministry of Trans port last year announced plans to encourage a doubling of outgoing Japanese passengers, to reach 10 million during 1991. Part of the plan is to establish over seas tourist resorts for Japan's fast growing senior citizen population, seen by JAL's Kawano as a key future market. They have to go abroad to find the open spaces that Japan lacks. One resort, for young people, was recently opened in Indonesia. Already transpacific travel is growing three times faster than transatlantic travel. It will exceed it by the turn of the century, Kawano concludes. FLIGHT INTERNATIONAL, 6 February 1988
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