With all the attention that US airlines are getting because of the majors' struggle for survival and low cost airlines gaining prominence, it is interesting to take a look elsewhere and examine what is happening in the fast growing Asia Pacific region. Asia Pacific already accounts for over a quarter of the world's airline traffic and is set to become a dominant region in the foreseeable future.
Asia Pacific airlines account for around 24% of RPKs and will grow to a dominant 32% within twenty years*... or at least on a par with North America**.
Today the region has a 32% share of the widebody aircraft fleet and a 15% share of the narrowbody fleet in service, with future direction indicated by the on-order share for the region. Asia Pacific has 38% of widebodies and 13% of narrowbodies currently on order.
The enormous potential of the Chinese market continues to be progressively realised through expansion of airlines and facilities. In addition to tremendous economic growth, the region boasts more expansive airport development than any other region, as evidenced by the 5 August 2004 opening of the new Guangzhou airport.
This replaces the old Baiyun airport, which handled 15 million passengers in 2003, with an increased capacity of 25m passenger per year (the same level of traffic handled by Sydney or Toronto in 2003). The new airport is aimed at a capacity of 80m passengers each year by 2010 (the level handled by the world's busiest airport, Atlanta in 2003).
Whilst financial performance of airlines in the region has historically been mixed, there has been a strong recovery following the SARS crisis of 2003, and there is a trend towards profitability. The region boasts some of the most profitable major airlines in the world, for example Cathay, Singapore and Qantas with profit margins of around 10%.
One the many notable airline performances in the region is highlighted by Qantas' recently announced record profit of $665.9m for the year ending 30 June 2004, a remarkable achievement given strong low-fare domestic competition from Virgin Blue and the SARS affect on traffic early in the financial year. Qantas rapidly established a multi-brand strategy, with Australian Airlines providing low fare long haul services and Jetstar Airways providing low fare short to medium haul services. Contributing to results were cost and efficiency savings of $353.4m and growth in ancillary services such as co-branded credit and charge cards.
Recent orders at the time of writing include the Cathay Pacific acquisition of eight pre-owned 747-400s (four for cargo use) and Thai Airways International's decision to purchase six A380s and two more A340s and six 777s, the ANA (All Nippon Airlines) order for 50 787s, and Air New Zealand's order for 2 787s.
The level of economic growth, airline financial performance and fleet growth make the region particularly demanding of focused attention and understanding for businesses planning to serve the global air transport market.
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*Rolls-Royce 2003 Outlook. **Airbus GMF 2003. Boeing does not give domicile regional traffic shares.
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