Five years after 9/11, A-Pac aviation altered in unexpected ways

Sydney, Sep 14: The Centre for Asia Pacific Aviation (CAPA) said today the air transport sector continues to grow - particularly in Asia -- five years after the attacks of September 11, an assault that had the seeming potential to undermine air travel.

''A simple reality is at play,'' said its executive chairman Peter Harbison. ''People still want and need to travel by air, a reality that will reach many more people in this region's emerging markets in the years to come as economies grow and incomes rise.'' Global demand including Asia was hit prior to September 11 as the US economy dipped after the dot-com bust. In this region, demand had already started to recover (to year-on-year levels) by early 2002 and had it not been for SARS, would have recovered to its strong growth bias by 2003.

The growth trend was finally re-established in 2004, although recent growth rates for the region's full service carriers are slowing while Chinese, Indian and low cost carriers (LCC) power on.

''LCCs have been the unexpected surprises for the Asia Pacific region, capturing growth and taking advantage of the opportunities afforded by increasing liberalisation,'' said Mr Harbison.

The latest data from OAG confirm the rise of the LCC phenomenon in Asia. LCC capacity (seats) is set to rise 63 per cent year-on-year this month and LCCs will account for 10 per cent of total services in the region, up from six per cent in the same period last year and just one per cent in September 2001.

Most importantly though, they offer the opportunity for the full service carriers to profitably participate in the growth occurring at the bottom end of the market.

All Nippon Airways plan to establish up to two LCC subsidiaries next year to grow and defend its international and domestic markets.

ANA could join the ranks of full service carriers in this region with their own leisure-focussed low cost units.

These already include Thai Airways, Air India, Qantas, Air New Zealand and Singapore Airlines. ''And these LCC subsidiaries are also riding on the wave of progressive liberalisation,'' the CAPA said.

Malaysia and Singapore last week confirmed they are working towards the long-overdue liberalisation of their bilateral air services agreement which dates back to the early 1980s, citing mutual benefits of such a development.

Kuala Lumpur-Singapore, a cash-cow for Malaysia Airlines and Singapore Airlines, is in the sights of Tiger Airways, AirAsia and Jetstar Asia (two of which are subsidiaries of full service carriers) -- and all promise to offer significantly lower fares which would stimulate new levels of growth. The opening up of this route would again demonstrate the role of LCCs as agents of change in this region.

''But all of this recent expansion occurred during a period of globally strong economic conditions. The last major global downturn was triggered by a downturn in the US economy. A slowdown led by the United States remains the greatest threat to growth going forward,'' said Mr Harbison.

UNI