According to a Jetstream market outlook, between 1995 and 2004 Asia, the Pacific and China, will grab a 19.5 per cent share of worldwide regional aircraft delivery volumes, exceeding those in Europe. The projected 655 new aircraft in the 19-70 seat range represents a 62 per cent increase in the area's regional fleet.
Avro predicts Asia-Pacific carriers will take delivery of 1,299 aircraft in the 40-150 seat bracket through to 2013, with China accounting for another 427 aircraft. Passenger traffic is expected to climb from 395.5 billion revenue passenger km last year to 1,327.6 billion RPKs in 2013.
The unique and diverse nature of the world's most populous region throws up barriers to smooth growth and sustained profitability.
The Asia-Pacific regional airline market encompasses large domestic markets with low yields, such as Malaysia and Indonesia; the mature regional operations of Australasia; the sparsely scattered islands of the South Pacific; the volatile new deregulated skies of India and Pakistan; and China, with fast growth but an uncertain political future.
In the more advanced markets such as Thailand, the Philippines, Malaysia and Indonesia, regional services have traditionally been run as a subsidised arm of the national flag, but this is changing.
National airlines are in the process of addressing traditionally high cost levels running counter to the low yields they get from domestic services. Philippine Airlines, Japan's All Nippon Airways and Garuda Indonesia are examples of airlines which, while retaining involvement in regional operations, are now doing so through lower cost subsidiaries or through transferring domestic routes to independent or quasi-independent carriers, such as Air Nippon, Merpati Nusantara or the proposed Filipino regional airlines.
The high cost of expansion is encouraging the emergence of regional groupings. Already the Asean nations - Thailand, Malaysia, the Philippines and Indonesia - are moving ahead with plans for a joint-venture regional operation. Deregulation in Australia and New Zealand has sparked growth in their already strong regional market, although most operators are linked, either through equity or marketing deals, with Qantas, Ansett or Air New Zealand.
Congestion at primary airports has seen new strategies, particularly in Australia where carriers such as Impulse, operating the Jetstream 41, and Hazelton, with its Saab 340s, are opening new routes bypassing capital cities and directly linking big regional centres for the first time.
In the Pacific islands, where regional operations are critical to communication and transport, small carriers are still attempting to find the right aircraft to operate long over-water, inter-island sectors economically; they need a 70-seat turboprop with the range and economics of a B747!
Profitability remains a big problem for individual nations, and regional cooperation initiatives are beginning to develop. Governments of the North Pacific's tiny Marshall Islands, Nauru, Tuvalu and Kiribati have already signed a letter of intent to share aircraft in a bid to stem mounting losses. Air Marshall Islands is taking delivery of two Saab 2000s this year, and should play a key role in the new combined operation.
Further south, in the central Pacific, carriers from Fiji, The Solomons, Vanuatu, Tonga and Western Samoa are heading in a similar direction.
In India and Pakistan, phenomenal growth and deregulation are allowing small air taxi companies to enlarge their fleets and compete for the first time with the government-owned carriers. While the emphasis is on longer haul trunk routes, these start-ups must serve thinner regional routes as well. India's state-owned regional airline, Vayudoot, is plagued by financial problems and is being integrated into Indian Airlines.
In the rapidly growing but still immature Chinese market, trunk routes are taking priority and there are few specialised regional operators; instead, a handful of Fokker 100s, BAe146s and turboprops are integrated into the operations of longer haul carriers such as China Eastern, China Southern and China Northwest.
Throughout Asia, regional operators are moving towards larger aircraft. Indonesia, Japan, Taiwan and South Korea hope to take a slice of the airframe market.
Source: Airline Business
