If industry forecasts are to be believed, air traffic in the Asia-Pacific region is set to triple over the next 20 years. Eager to cash in on this expected boom in aviation travel are several Asian start-up carriers. How many will be able to overcome the political, financial, regulatory and infrastructural barriers in their paths, however, remains to be seen.
The development of a regional-airline industry in Asia is far from uniform and varies greatly from country to country. With the exception of Taiwan, there has still to be a US-style free-for-all explosion in regional air transportation. Where second-tier carriers have and are emerging, such as in Malaysia, it has been a gradual process. In countries such as Thailand, however, regionals have hardly got off the ground.
"The biggest stumbling block often proves to be governments. All airlines in this part of the world need regulatory support to help them survive and grow. Without that they don't get the traffic rights, and without that they don't get the airlines," says Dragonair chief executive officer Stanley Hui.
Dragonair struggle
During Dragonair's formative years the airline struggled to survive as an independent carrier under the Hong Kong Government's "one airline, one route" policy. A growing number of Asian authorities are now taking a more laissez -faire approach by easing bureaucratic procedures and encouraging new contenders.
In the Philippines, Presidential Executive Order 219 has allowed three new airlines to emerge since 1995. The largest, GrandAir, now operates a fleet of four Airbus Industrie A300B4s and two Boeing 737-200s domestically and on routes to Hong Kong, Taipei and, in the near future, Singapore. Cebu Pacific Air and Air Philippines are also hoping to venture overseas by the end of the year.
Malaysian start-up AirAsia has been similarly blessed with high-level political support. Despite an aborted take-off early on, the airline finally became airborne in November 1996 with a leased 737-300 on routes to east Malaysia, Taiwan and Thailand. It has now added Jakarta, in Indonesia, along with a second 737, and is drawing up plans to spread its wings further (Flight International, 23-29 April, P11).
"That's the way to go," says Trinity Group aviation consultant Steve Miller, "but you've got to have a government with the guts to do it. You then have an airline that is confident enough to operate domestically and then regionally."
In both Malaysia and the Philippines, the emergence of new regional airlines was preceded by state divestment in national carriers - Malaysia Airlines and Philippine Airlines, respectively. Without a church-and-state-type divide, the development of regional aviation often remains in a state of paralysis, say analysts, pointing to Thailand as a perfect example.
"Thailand is a mess," says Miller. "The flag carrier is the Government and aviation a military and political pension scheme. Nothing has gone through and everything takes second place to political whim." He adds that, for a second airline to prosper, "-a number of steps need to be taken, starting with the complete privatisation of Thai Airways International".
Attempts at launching a new national carrier have so far foundered on the large amount of capitalisation demanded by the Government as an entry fee and Thai's demands to either have a role in the new airline or else relegate it to non-competing uneconomical routes. In the meantime, domestic carrier Bangkok Airways continues to struggle on, and recently launched a new route from Koh Samui to Singapore.
Any new regional carrier which does emerge is likely to be hamstrung by Thailand's congested aviation infrastructure. In contrast to the large-scale airport projects under way in Hong Kong, Kuala Lumpur and Seoul, which promise to open up opportunities for newcomers, Bangkok's plans to turn the swamplands of Nong Ngu Hao into a new airport have become politically bogged down.
Japan's budding start-ups face a similar shortage of runway capacity, despite a growing Government willingness to liberalise the country's over-regulated aviation industry. The allocation of six new daily slots at Tokyo's rebuilt Haneda Airport is unlikely to provide Skymark Airlines and Hokkaido International Airlines with the kick-start they had been hoping for.
China impetus
Where regional airlines have flourished recently, it has been largely on the coat-tails of much larger international operators. The turnaround for Dragonair came in 1990 when former foe Cathay Pacific Airways took control. The airline was sold again in 1996 and its new majority owner, China National Aviation, could prove to be an even more powerful ally post-1997.
SilkAir has grown at a more sedate pace under the wings of parent Singapore Airlines (SIA), but it is on the verge of making a pro and embarking on a major re-equipment programme.
The airline is complementing SIA's network by cultivating connections into South-East Asia and the potentially rich Indonesia archipelago. Indonesian private regional operator, Sempati Air Transport, has taken note of the winning formula and wants an international partner to compete effectively against state-run Garuda Indonesia and Merpati Nusantara Airlines.
Source: Flight International
