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Air Travel in Asia - December 2010

This report reviews recent developments in air travel in Asia and offers insight into future trends for the sector. The report begins with an overview of the current outlook for the economy and for the spending on travel and tourism in Asia. Following a discussion of air travel trends (including passenger volumes and capacity) by major Asian region and country, company level developments impacting air travel in the region are reviewed and analysed – notably, for example, the bankruptcy of the region’s biggest carrier, Japan Airlines (JAL), and the ongoing financial problems of other major carriers in the region such as Air India, Kingfisher and Philippine Airlines.

Other topics treated in depth include: the development of low-cost carriers (LCCs) in the region; the impact of major airline alliances on the region; distribution trends, including frequent-flyer programmes; security and safety; airport and route development, including fees and capacity constraints; and competition with rail.

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Table of contents

  1. Introduction

      • Key findings
      • Data Sources

          • Abbreviations
          • Overview

              • Ageing of the population
                • Demographic implications
                  • Figure 1: Percentage distribution of the population in selected age groups, by selected Asian country, 2009 and 2050
                • Outlook for GDP growth
                  • Domestic demand and inward capital flows
                    • Figure 2: Overview of World Economic Outlook projections (% change, unless otherwise noted), July 2010
                  • China overtakes Japan
                    • Leading car market and exporter
                      • Trade forecasted to bounce back
                        • Premium air travel correlated to trade
                          • Exchange-rate trends
                            • The Renminbi un-pegged
                              • Figure 3: Exchange rate forecast, US Dollar against Asian currencies, Sept 2010
                            • Yen to be stable
                              • Figure 4: Exchange rate forecast, Japanese Yen against Asian currencies, Sept 2010
                            • Euro to strengthen
                              • Figure 5: Exchange rate forecast, Euro against Asian currencies, Sept 2010
                            • Trend in the price of kerosene
                              • Figure 6: Trend in jet fuel prices, 1 October 2010
                            • Outlook for spending on travel and tourism
                              • Figure 7: Travel and tourism expenditure in Asia*, 2010-20
                            • North East Asia is heavyweight
                              • Figure 8: Travel and tourism expenditure in North East Asia*, 2010-20
                            • South Asia should grow fastest
                              • Figure 9: Travel and tourism expenditure in South Asia*, 2010-20
                            • Domestic and outbound to gain share in South East Asia
                              • Figure 10: Travel and tourism expenditure in South East Asia*, 2010-20
                            • Chinese dominance set to increase
                              • Japan on the slow growth track
                                • Figure 11: Travel and tourism expenditure in selected Asian countries, 2010-20
                            • Ranking of Asian Airlines

                                • Scheduled passengers carried
                                  • Figure 12: Number of international passengers carried, 2009
                                  • Figure 13: Number of domestic passengers carried, 2009
                                  • Figure 14: Number of domestic and international passengers carried, 2009
                                • Revenue passenger kilometres flown
                                  • Figure 15: Airlines ranked by international revenue passenger kilometres flown (RPK), 2009
                                  • Figure 16: Airlines ranked by domestic revenue passenger kilometres flown (RPK), 2009
                                  • Figure 17: Airlines ranked by domestic and international RPK*, 2009
                                • A new up cycle has begun
                                  • Figure 18: Trends in air traffic, Asia Pacific and worldwide, 2009 versus 2010
                                  • Figure 19: AAPA traffic highlights for September 2010
                                  • Figure 20: AAPA traffic highlights for nine months, to end September 2010
                              • Markets by Major Region/Country

                                  • Cambodia
                                    • Figure 21: Trend in passenger movements at Cambodia’s two principal airports, 2005-09
                                  • Société Concessionnaire des Aéroports (SCA)
                                    • International routes to Cambodia
                                      • Bangkok and Ho Chi Minh City – the leading destinations
                                        • Figure 22: International routes to/from Cambodia, 2006-07*
                                      • Two airlines account for 40% of capacity
                                        • Airlines serving Cambodia
                                          • Cambodian airlines are short-lived
                                            • Cambodia Angkor Air
                                              • Domestic air travel expensive
                                                • Airport expansion
                                                  • Third airport being developed at Sihanoukville
                                                    • A new airport?
                                                      • China
                                                        • Passenger traffic at Chinese airports
                                                          • Figure 23: Top 25 Chinese airports ranked, by passenger movements, 2009
                                                        • 12 domestic routes with over 20 daily departures
                                                          • Figure 24: Top 12 Chinese domestic routes, 1 February 2010
                                                        • Beijing sees rapid growth in new services from Chinese carriers
                                                            • Figure 25: New flights inaugurated at Beijing Airport between 10 May and end 4 October 2010
                                                          • Recently established international routes
                                                            • Air China opens new routes
                                                              • Rail a potential threat
                                                                • Airport development
                                                                  • New airports between 2006-20
                                                                    • Shenzhen’s Bao’an International Airport
                                                                      • Seven new or upgraded airports for Xinjiang
                                                                        • Urumqi to become a hub for Central Asian destinations
                                                                          • Hainan Boao Airport
                                                                            • Aircraft
                                                                              • Figure 26: Outlook for growth in China’s civilian air fleet, by type of aircraft, 2008
                                                                            • 243 new aircraft in 2010
                                                                              • Strong growth at regional airports
                                                                                • Shenzhen Airlines
                                                                                  • Tangshan Sannuhe Airport inaugurated
                                                                                    • Big three have over 800 aircraft
                                                                                      • Air China buys 20 Boeing 737-800s
                                                                                        • Leasing to finance future growth
                                                                                          • Merger dominates the Shanghai market
                                                                                            • China-Australia open-skies accord
                                                                                              • Enforcing flight regularity
                                                                                                • Hong Kong
                                                                                                  • Figure 27: Passenger movements through Hong Kong International Airport, 1998-2009*
                                                                                                • Flight movements down 7.5% in 2009
                                                                                                  • Figure 28: Flight movements at Hong Kong International Airport, 1998-2009*
                                                                                                • Hong Kong International Airport
                                                                                                  • 90 airlines
                                                                                                    • Civil Aviation Department
                                                                                                      • Runways and parking aprons
                                                                                                        • Ground transport facilities
                                                                                                          • Establishing links with mainland destinations
                                                                                                            • Air service agreements
                                                                                                              • Baggage and ramp handling
                                                                                                                • Aircraft maintenance services
                                                                                                                  • Air-traffic control services
                                                                                                                    • Satellite-based communications and navigation
                                                                                                                      • Airlines
                                                                                                                        • Cathay Pacific Airways
                                                                                                                          • Other Hong Kong-based carriers
                                                                                                                            • Recreational flying
                                                                                                                              • Government Flying Service
                                                                                                                                • Aircraft orders by Hong Kong-based carriers
                                                                                                                                    • Figure 29: Hong Kong passenger airline fleet, by airline and manufacturer, October 2010
                                                                                                                                  • India
                                                                                                                                    • An acceleration of growth mid-decade
                                                                                                                                      • Supply outstripped demand
                                                                                                                                        • Air traffic recovering smartly
                                                                                                                                          • Figure 30: Indian passenger airlines volume, 2004-09
                                                                                                                                        • 230 million passenger movements by 2020?
                                                                                                                                          • Domestic traffic growing faster than international
                                                                                                                                            • Figure 31: Air traffic summary for fiscal years ended in March, 2008-10
                                                                                                                                          • Freight recovering also
                                                                                                                                            • Accelerating growth in Q1 fiscal 2010
                                                                                                                                              • Figure 32: Air traffic summary for the period April-July 2009 and 2010
                                                                                                                                            • Liberalisation
                                                                                                                                              • India’s cost competiveness
                                                                                                                                                • Inappropriate taxation of air travel
                                                                                                                                                  • Lack of co-ordination on security issues
                                                                                                                                                    • Airport development
                                                                                                                                                      • Mumbai to get a second airport
                                                                                                                                                        • Delhi’s new Terminal 3
                                                                                                                                                          • Airport classification
                                                                                                                                                            • Passenger movements by type of airport
                                                                                                                                                              • Figure 33: Passenger traffic, by type of airport, fiscal year 2009
                                                                                                                                                            • Passenger traffic up 19% in Q1 fiscal 2010
                                                                                                                                                              • Figure 34: Passenger traffic, by type of airport, April-July 2010 versus April-July 2009
                                                                                                                                                            • International passenger traffic growth by airport
                                                                                                                                                              • Figure 35: Major airports showing the fastest y-o-y growth in international passenger traffic, April-June 2010
                                                                                                                                                            • Domestic passenger traffic growth by airport
                                                                                                                                                              • Figure 36: Major airports showing the fastest y-o-y growth in domestic passenger traffic, April-June 2010
                                                                                                                                                            • Aircraft movements by type of airport
                                                                                                                                                              • Figure 37: Total aircraft movements April-March 2009-10 versus April-March 2008-09
                                                                                                                                                            • International aircraft movements
                                                                                                                                                              • Figure 38: Major increases in international aircraft movements, fiscal years 2008-09
                                                                                                                                                            • Domestic aircraft movements
                                                                                                                                                              • Figure 39: Major increases in domestic aircraft movements, fiscal years 2008-09
                                                                                                                                                            • Airports Authority of India
                                                                                                                                                              • Airlines
                                                                                                                                                                  • Figure 40: Market share of scheduled domestic airlines, 2009-10
                                                                                                                                                                • Hard times in recent years
                                                                                                                                                                  • Budget model taking over
                                                                                                                                                                    • Air India Express
                                                                                                                                                                      • Transition to LCC model necessary for survival
                                                                                                                                                                        • Air India being restructured
                                                                                                                                                                          • US$1.1-billion injection from JP Morgan
                                                                                                                                                                            • Air India government subsidy initially approved but then rejected
                                                                                                                                                                              • Performance review for end November
                                                                                                                                                                                • Massive restructuring required
                                                                                                                                                                                  • Lack of medium-haul aircraft?
                                                                                                                                                                                    • Progress held back due to politics
                                                                                                                                                                                      • An IPO perhaps?
                                                                                                                                                                                        • Jet Airways
                                                                                                                                                                                          • Expansion plans
                                                                                                                                                                                            • 65% of domestic capacity in LCC format
                                                                                                                                                                                              • Jet’s fleet
                                                                                                                                                                                                • Foreign investor rules limit financing
                                                                                                                                                                                                  • Airline in dire straits
                                                                                                                                                                                                    • Capital increase is necessary
                                                                                                                                                                                                      • Kingfisher launches 22 additional flights for the 2010-11 winter schedule
                                                                                                                                                                                                        • IndiGo
                                                                                                                                                                                                          • More challenging environment in 2011
                                                                                                                                                                                                            • IPO in the offing?
                                                                                                                                                                                                              • Indonesia
                                                                                                                                                                                                                • Passenger traffic quintupled
                                                                                                                                                                                                                  • Rapid growth has put strain on infrastructure
                                                                                                                                                                                                                    • Safety has been a major concern
                                                                                                                                                                                                                      • 47 Indonesian carriers banned from EU
                                                                                                                                                                                                                        • A major upgrading in infrastructure is planned
                                                                                                                                                                                                                          • Domestic traffic dwarfs international
                                                                                                                                                                                                                            • Figure 41: Domestic air traffic in Indonesia, 2003-08
                                                                                                                                                                                                                            • Figure 42: International air traffic in Indonesia, 2003-08
                                                                                                                                                                                                                          • Domestic capacity has shrunk …
                                                                                                                                                                                                                            • … but international has increased steadily
                                                                                                                                                                                                                              • Airlines
                                                                                                                                                                                                                                • Figure 43: Domestic Indonesian air transport capacity, March 2010
                                                                                                                                                                                                                              • Lion Air plans to grow fast
                                                                                                                                                                                                                                • Figure 44: Lion Air’s existing and planned fleet, March 2010
                                                                                                                                                                                                                                • Figure 45: Lion Air’s delivery schedule, 2010
                                                                                                                                                                                                                                • Figure 46: Fleet plans of select South East Asian airlines, February 2010
                                                                                                                                                                                                                              • Lion Air Australia aborted
                                                                                                                                                                                                                                • Wings Air – a Lion Air subsidiary
                                                                                                                                                                                                                                  • Garuda Indonesia
                                                                                                                                                                                                                                      • Figure 47: Garuda’s 2014 ‘Quantum Leap’ Programme highlights, 2010
                                                                                                                                                                                                                                    • Australia has become its number one destination
                                                                                                                                                                                                                                      • Figure 48: Garuda Indonesia’s international seat capacity, March 2010
                                                                                                                                                                                                                                    • To Europe once again
                                                                                                                                                                                                                                      • Denpasar–Kuala Lumpur
                                                                                                                                                                                                                                        • Debt restructure approved ahead of IPO
                                                                                                                                                                                                                                          • Securing long-term fuel commitment
                                                                                                                                                                                                                                            • Application to join SkyTeam
                                                                                                                                                                                                                                              • Airports
                                                                                                                                                                                                                                                • Figure 49: Share of top 12 airports in Indonesia’s total scheduled air transport capacity, March 2009
                                                                                                                                                                                                                                              • 16 airports have international flights
                                                                                                                                                                                                                                                • Malaysia and Singapore account for 30% of international seat capacity
                                                                                                                                                                                                                                                  • Foreign airlines predominate on international routes
                                                                                                                                                                                                                                                    • Figure 50: Leading airlines on international routes to and from Indonesia, March 2009
                                                                                                                                                                                                                                                  • Japan
                                                                                                                                                                                                                                                    • JAL has shrunk
                                                                                                                                                                                                                                                      • Figure 51: Trend in JAL’s international passenger traffic and capacity, fiscal years 2007-09
                                                                                                                                                                                                                                                      • Figure 52: International passenger traffic and capacity by route, January 2010 compared to January 2009
                                                                                                                                                                                                                                                      • Figure 53: Trend in JAL’s domestic passenger traffic and capacity, 2007-09
                                                                                                                                                                                                                                                    • Forced to seek government support
                                                                                                                                                                                                                                                      • JAL has filed for bankruptcy
                                                                                                                                                                                                                                                        • Radical downsizing plan
                                                                                                                                                                                                                                                          • Details of JAL’s US$10-billion restructuring
                                                                                                                                                                                                                                                            • Figure 54: Key details of JAL reorganisation plan, September 2010
                                                                                                                                                                                                                                                          • 344 flights eliminated
                                                                                                                                                                                                                                                            • Figure 55: Recent and future route changes in JAL’s domestic route network, October 2010
                                                                                                                                                                                                                                                            • Figure 56: Recent and future route changes in JAL’s international route network, October 2010
                                                                                                                                                                                                                                                          • Infrastructure issues
                                                                                                                                                                                                                                                            • Liberalisation would favour LCCs
                                                                                                                                                                                                                                                              • A lack of structure in managing airspace
                                                                                                                                                                                                                                                                • LCCs yet to make their mark
                                                                                                                                                                                                                                                                  • Search for LCC airports
                                                                                                                                                                                                                                                                    • Figure 57: Landing fees for Airbus 320 and 330 at Ibaraki, Narita and Haneda airports, 2010
                                                                                                                                                                                                                                                                  • JAL and ANA considering creation of LCCs
                                                                                                                                                                                                                                                                    • Qantas likely to be involved
                                                                                                                                                                                                                                                                      • Jetstar can serve as a model
                                                                                                                                                                                                                                                                        • Airport development
                                                                                                                                                                                                                                                                          • Haneda to open a fourth runway
                                                                                                                                                                                                                                                                            • Figure 58: Recent route changes at Haneda Tokyo, October 2010
                                                                                                                                                                                                                                                                          • Osaka Bay
                                                                                                                                                                                                                                                                            • Japan-US in open-skies deal
                                                                                                                                                                                                                                                                              • Japanese wish to extend open skies throughout Asia
                                                                                                                                                                                                                                                                                • Korea
                                                                                                                                                                                                                                                                                  • Incheon took over from Gimpo eight years ago
                                                                                                                                                                                                                                                                                    • Regional airports have suffered
                                                                                                                                                                                                                                                                                      • Passenger movements down by half
                                                                                                                                                                                                                                                                                        • Figure 59: Annual passenger movements at Korean airports, 2000-09
                                                                                                                                                                                                                                                                                      • Jeju Airport continues to grow
                                                                                                                                                                                                                                                                                        • Six leading domestic carriers
                                                                                                                                                                                                                                                                                          • Figure 60: Airline shares on domestic routes, March 2010
                                                                                                                                                                                                                                                                                        • International traffic
                                                                                                                                                                                                                                                                                          • Delta ‘returns’ to Seoul with Detroit flights
                                                                                                                                                                                                                                                                                            • Asiana grows routes to China and Japan
                                                                                                                                                                                                                                                                                              • Figure 61: Trend in Asiana’s annual passengers carried, 1999-2009
                                                                                                                                                                                                                                                                                            • 95% of ASKs on foreign routes
                                                                                                                                                                                                                                                                                              • Figure 62: Asiana’s weekly capacity, by top ten foreign destination, 2010
                                                                                                                                                                                                                                                                                            • Korean Air twice as big in key US market
                                                                                                                                                                                                                                                                                              • Figure 63: Summary of non-stop weekly flights between Seoul Incheon and US cities, September 2010
                                                                                                                                                                                                                                                                                            • Korea Airports Corporation
                                                                                                                                                                                                                                                                                              • Malaysia
                                                                                                                                                                                                                                                                                                • Figure 64: Malaysian passenger airline volume, 2004-09
                                                                                                                                                                                                                                                                                              • KLIA passenger traffic up 7.8% in 2009
                                                                                                                                                                                                                                                                                                • Kuala Lumpur International Airport
                                                                                                                                                                                                                                                                                                  • ‘Airport in the forest’
                                                                                                                                                                                                                                                                                                    • A dedicated low-cost terminal
                                                                                                                                                                                                                                                                                                      • Airline market
                                                                                                                                                                                                                                                                                                        • Figure 65: Malaysian passenger airlines market shares, 2008
                                                                                                                                                                                                                                                                                                      • AirAsia – a dynamic growth story
                                                                                                                                                                                                                                                                                                        • Figure 66: AirAsia’s air fleet, by country, June 2010
                                                                                                                                                                                                                                                                                                        • Figure 67: Consolidated operating statistics for AirAsia, 2006-09
                                                                                                                                                                                                                                                                                                      • AirAsia X – a successful long-haul budget carrier
                                                                                                                                                                                                                                                                                                        • Lower prices and much lower costs
                                                                                                                                                                                                                                                                                                          • Fleet to triple by 2025
                                                                                                                                                                                                                                                                                                            • AirAsia to stick to the region
                                                                                                                                                                                                                                                                                                              • AirAsia taking up slack in downturn
                                                                                                                                                                                                                                                                                                                • AirAsia’s affiliation to hotel business
                                                                                                                                                                                                                                                                                                                  • Expansion partner in Thailand
                                                                                                                                                                                                                                                                                                                    • Maldives
                                                                                                                                                                                                                                                                                                                      • Hanimaadhoo Airport
                                                                                                                                                                                                                                                                                                                        • Pakistan
                                                                                                                                                                                                                                                                                                                          • Safety an issue
                                                                                                                                                                                                                                                                                                                            • Airline market shares
                                                                                                                                                                                                                                                                                                                              • Airports
                                                                                                                                                                                                                                                                                                                                • Philippines
                                                                                                                                                                                                                                                                                                                                  • Figure 68: Philippine air traffic, 2006-08
                                                                                                                                                                                                                                                                                                                                  • Figure 69: Air seat capacity shares in the Philippine commercial aviation market, August 2010
                                                                                                                                                                                                                                                                                                                                • Cebu Pacific
                                                                                                                                                                                                                                                                                                                                  • Figure 70: Cebu Pacific financial highlights for 12 months ended 31 December 2009
                                                                                                                                                                                                                                                                                                                                • Largest offering ever in the Philippines
                                                                                                                                                                                                                                                                                                                                  • Also largest global LCC IPO ever
                                                                                                                                                                                                                                                                                                                                    • Passengers to double by 2014
                                                                                                                                                                                                                                                                                                                                      • An expanding fleet
                                                                                                                                                                                                                                                                                                                                        • Figure 71: Cebu Pacific aircraft deliveries, 2010-14
                                                                                                                                                                                                                                                                                                                                      • An expanding route network
                                                                                                                                                                                                                                                                                                                                        • Figure 72: Cebu Pacific route changes, January-November, 2010
                                                                                                                                                                                                                                                                                                                                      • More international flights for 2011
                                                                                                                                                                                                                                                                                                                                        • Domestic flights also increasing
                                                                                                                                                                                                                                                                                                                                          • Lower income passengers targeted
                                                                                                                                                                                                                                                                                                                                            • CEB offers PHP499 seats on select bus and ferry routes
                                                                                                                                                                                                                                                                                                                                              • Philippine Airlines
                                                                                                                                                                                                                                                                                                                                                • Decade in receivership
                                                                                                                                                                                                                                                                                                                                                  • Return to profitability?
                                                                                                                                                                                                                                                                                                                                                    • Figure 73: Philippine Airlines’ financial highlights for three months ended 30 June 2010
                                                                                                                                                                                                                                                                                                                                                  • Some signs of recovery in market
                                                                                                                                                                                                                                                                                                                                                    • Disappointing results in 2009
                                                                                                                                                                                                                                                                                                                                                      • PAL needs more capital
                                                                                                                                                                                                                                                                                                                                                        • Making the shares more liquid …
                                                                                                                                                                                                                                                                                                                                                          • Cost-control measures
                                                                                                                                                                                                                                                                                                                                                            • Cost-cutting plans lead to labour issues
                                                                                                                                                                                                                                                                                                                                                              • Management’s defence
                                                                                                                                                                                                                                                                                                                                                                • Pilots depart and flight attendants seek a raise
                                                                                                                                                                                                                                                                                                                                                                  • Warning of a collapse
                                                                                                                                                                                                                                                                                                                                                                    • Reduced cabin crews
                                                                                                                                                                                                                                                                                                                                                                      • Lower retirement age a significant issue
                                                                                                                                                                                                                                                                                                                                                                        • Strike threat
                                                                                                                                                                                                                                                                                                                                                                          • PAL could be renationalised
                                                                                                                                                                                                                                                                                                                                                                            • International expansion thwarted by safety issues
                                                                                                                                                                                                                                                                                                                                                                              • On the EU blacklist
                                                                                                                                                                                                                                                                                                                                                                                • PAL and CEB react
                                                                                                                                                                                                                                                                                                                                                                                  • Aircraft orders depend on rating upgrade
                                                                                                                                                                                                                                                                                                                                                                                    • Figure 74: Philippine Airlines’ aircraft deliveries, 2010-13
                                                                                                                                                                                                                                                                                                                                                                                  • Government may temporarily open skies
                                                                                                                                                                                                                                                                                                                                                                                    • Will there be enough capacity?
                                                                                                                                                                                                                                                                                                                                                                                      • A wake-up call
                                                                                                                                                                                                                                                                                                                                                                                        • President supports open skies
                                                                                                                                                                                                                                                                                                                                                                                          • Airline capacity at Manila Ninoy Aquino
                                                                                                                                                                                                                                                                                                                                                                                            • Figure 75: Major market shares of airlines at Manila Ninoy Aquino International Airport, 2010
                                                                                                                                                                                                                                                                                                                                                                                            • Figure 76: Foreign carriers operating from Manila Ninoy Aquino International Airport, 2010
                                                                                                                                                                                                                                                                                                                                                                                          • Singapore
                                                                                                                                                                                                                                                                                                                                                                                            • Figure 77: Singaporean passenger airline volume, 2004-09
                                                                                                                                                                                                                                                                                                                                                                                          • 42 million passengers by 2013
                                                                                                                                                                                                                                                                                                                                                                                            • Growth in regional traffic in 2009
                                                                                                                                                                                                                                                                                                                                                                                              • Figure 78: Top 10 city links, by passenger traffic, 2008-09
                                                                                                                                                                                                                                                                                                                                                                                            • 14 new destinations added
                                                                                                                                                                                                                                                                                                                                                                                              • A boom in LCC traffic
                                                                                                                                                                                                                                                                                                                                                                                                • Changi Airport
                                                                                                                                                                                                                                                                                                                                                                                                  • 102 gates
                                                                                                                                                                                                                                                                                                                                                                                                    • Figure 79: Changi Airport capacity, by terminal, 2010
                                                                                                                                                                                                                                                                                                                                                                                                  • 330 stores and F&B outlets
                                                                                                                                                                                                                                                                                                                                                                                                    • JetQuay CIP Terminal for an ‘elite’ experience
                                                                                                                                                                                                                                                                                                                                                                                                      • Airlines
                                                                                                                                                                                                                                                                                                                                                                                                        • Figure 80: Passenger airlines’ market shares at Changi Airport, 2008
                                                                                                                                                                                                                                                                                                                                                                                                      • Singapore Airlines
                                                                                                                                                                                                                                                                                                                                                                                                        • In-flight firsts
                                                                                                                                                                                                                                                                                                                                                                                                          • Suites
                                                                                                                                                                                                                                                                                                                                                                                                            • Can be an office
                                                                                                                                                                                                                                                                                                                                                                                                              • Fine dining
                                                                                                                                                                                                                                                                                                                                                                                                                • Ferragamo amenity kits
                                                                                                                                                                                                                                                                                                                                                                                                                  • Figure 81: Singapore Airlines’ suite features, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                • A member of the Star Alliance
                                                                                                                                                                                                                                                                                                                                                                                                                  • September 2010 operating results
                                                                                                                                                                                                                                                                                                                                                                                                                    • Figure 82: Singapore Airlines’ operating statistics, September 2009 vs September 2010
                                                                                                                                                                                                                                                                                                                                                                                                                  • A turnaround in financial results
                                                                                                                                                                                                                                                                                                                                                                                                                    • Fleet and route development
                                                                                                                                                                                                                                                                                                                                                                                                                      • Outlook
                                                                                                                                                                                                                                                                                                                                                                                                                        • SilkAir
                                                                                                                                                                                                                                                                                                                                                                                                                          • Tiger Airways
                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 83: Shareholders in Tiger Airways as at 25 August 2010
                                                                                                                                                                                                                                                                                                                                                                                                                            • Sri Lanka
                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 84: Trend in air transport in Sri Lanka, 2006-09
                                                                                                                                                                                                                                                                                                                                                                                                                            • SriLankan Airlines
                                                                                                                                                                                                                                                                                                                                                                                                                              • Destinations (including code-shares)
                                                                                                                                                                                                                                                                                                                                                                                                                                • Fleet
                                                                                                                                                                                                                                                                                                                                                                                                                                  • Human resources
                                                                                                                                                                                                                                                                                                                                                                                                                                    • In-flight amenities
                                                                                                                                                                                                                                                                                                                                                                                                                                      • Subsidiaries
                                                                                                                                                                                                                                                                                                                                                                                                                                        • SriLankan Holidays
                                                                                                                                                                                                                                                                                                                                                                                                                                          • SriLankan’s International Aviation Academy
                                                                                                                                                                                                                                                                                                                                                                                                                                            • Airports
                                                                                                                                                                                                                                                                                                                                                                                                                                              • 13 domestic airports to be renovated
                                                                                                                                                                                                                                                                                                                                                                                                                                                • Regional aircraft to be purchased
                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Taiwan
                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Figure 85: Air traffic at Taiwanese airports, 2000-09
                                                                                                                                                                                                                                                                                                                                                                                                                                                  • China Airlines
                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Figure 86: Trend in China Airlines’ passenger traffic, 2002-09
                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Figure 87: China Airline’s top 10 foreign destinations, 21 June 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Thailand
                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Traffic up more than 80% over decade
                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Air traffic getting back to normal
                                                                                                                                                                                                                                                                                                                                                                                                                                                        • International traffic up 12.6%
                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Passenger traffic up 13% so far in 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Thai AirAsia gaining on Thai Airways in domestic market
                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 88: Airline market shares in Thailand, 1 February 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                            • 56 countries served
                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 89: Thailand’s top 12 foreign destination air travel markets, 1 February 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                            • airberlin present via LTU
                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Vietnam
                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 90: Air transport traffic in Vietnam, 1995-2009
                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Vietnam Airlines
                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Airports
                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Phu Bai Airport to be upgraded
                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Singaporean investment
                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Airline Service Quality in Asia

                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • South East Asia strong leader in sector
                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Figure 91: Overall airline rankings in Skytrax’s annual quality surveys, 2001-10
                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Service assessment always subjective
                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Customers report on airlines for Skytrax
                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Ranking methodology
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Singapore Airlines – ‘good service but poor value for money’
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 92: Details of Singapore Airlines’ five-star survey results, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Thai Airways – ‘good value for money’
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 93: Details of Thai Airways’ four-star survey results, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Malaysia Airlines – ‘good 4.5-star airline’
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 94: Details of Malaysia Airlines’ five-star survey results, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Cathay Pacific – ‘too expensive’
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 95: Details of Cathay Pacific’s five-star survey results, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • The ‘new’ Garuda
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 96: Details of Garuda Indonesia’s four-star survey results, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Bangkok Airways – ‘uniquely structured airline’
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 97: Details of Bangkok Airways’ four-star survey results, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • South-East Asian carriers fly quality flag
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • An Asian private jet service
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Three membership levels
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Complimentary benefits
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Asia Jet owner programme
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Asia Jet’s partner, Metrojet
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Block charter programmes
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Maintenance and pilot training
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Asia Jet growing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Unregulated competition
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Good time to buy fractional shares?
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Introducing smaller aircraft to Asian market
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Expat market is not long-term bet
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Asia Jet’s collaboration with JapanQuest Journeys
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • New runway opens on 31 October
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Airline Alliances in Asia

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Major Asian carriers attractive candidates
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Alliances have over 70% market share
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 98: Market share of the three alliances, 2008
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Airline alliances relatively new
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 99: Airlines by alliance, November 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Oneworld
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • JAL courted by the alliances
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Delta and American offered millions
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Kingfisher lining up for oneworld
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Advantages for both parties
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • SkyTeam
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Vietnam Airlines has joined SkyTeam
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • China Eastern to join SkyTeam
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Jet Airways considering SkyTeam
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Star Alliance
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • US approves joint ventures
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Shanghai Airlines exits the alliance
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Air India’s application still waiting in wings
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Figure 100: Major Asian airline frequent-flyer schemes (members >1 million), 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Figure 101: Regional industry accident rates for Western-built jets – IATA and non-IATA hull losses/million sectors, 2006-10
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • New security measures at South Korean airports
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Fingerprint recognition also in use
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • What Next?

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Figure 102: IATA Asia Pacific EBIT margin and net profit outlook, 2007-11
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Premium travel recovering
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Lack of pilots
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Pressure from Middle Eastern carriers
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Airlines setting up training schools
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Salary competition
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Low-cost carrier expansion and impact
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • New policy option for governments
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • China to open airspace to civilian aircraft
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • The PLA still controls the airspace
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • A potentially lucrative market for manufacturers
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • 898 private aircraft versus 222,000 in the US

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Air Travel in Asia - December 2010

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              US $2,002.85 (Excl.Tax)