Avolon Launch Customer for Rolls-Royce's

Vol. 26 No. 1 February 2019 orientaviation.com

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RDU • • LAS CLT • • LAX • PHX • SAN • TUS • DFW • ATL WATCH • MCO MIA OUT • WORLD New president, Ma Xulun, HRB • URC • to continue China Southern’s charge across the globe CGQ •

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• DFW Ronojoy Dutta All Nippon Airways strikes out• KWL Jet Airways chairman, takes top job for ASEAN passengers with Naresh Goyal, holding at LCC IndiGo PAL investment SZXback carrier’s rescue CAN •• ExpectationsAsia-Pacific of INDUSTRY INSIGHTmillennial REPORT passengers Now you can accept payments in virtually any form. Saying yes to alternative forms of payment means saying yes to new streams of revenue. Our payment solutions integrate easily with your current systems, helping you accept AFPs at a lower cost. And navigate the global payments market with ease. A more complete payment program starts with UATP. Learn more at UATP.com. CONTENTS Volume 26, Issue 1

COVER STORY 11 Singapore Airlines CEO outlines group’s progress 20 WATCH OUT WORLD to transformation New president, Ma Xulun, NEWS BACKGROUNDERS to continue China Southern’s 12 All Nippon Airways signals appetite for charge across the globe ORIENT AVIATION MEDIA GROUP Southeast Asia market with PAL purchase 17/F Hang Wai Commercial Building, 14 Politics keeps Air India afloat 231-233 Queen’s Road East, 15 Potential Jet Airways investors call time on Wanchai, Hong Kong founder’s influence Editorial (852) 2865 1013 16 Virgin Australia protests expanded scope of E-mail: [email protected] Qantas and Cathay Pacific code share application Website: www.orientaviation.com 25 Thoughts of “chairman” Bruns – Boeing’s veteran Mailing address: China hand GPO Box 11435 Hong Kong 26 Aviation services better business than airplane Publisher & Editor-in-Chief sales says Boeing China boss Christine McGee 27 Rough ride ahead for Asia-Pacific air cargo E-mail: [email protected] 28 Toll of the Sino/U.S. trade war

Chief Correspondent 29 Brazil gives Embraer-Boeing union crucial nod of Tom Ballantyne approval Tel: (612) 9638 6895 Fax: (612) 9684 2776 INDUSTRY ADDENDUM E-mail: [email protected] 30 Eagles Services Asia commences MRO for Pratt &

North Asia Correspondent Whitney’s GTF engine Geoffrey Tudor 30 Airbus breaks ground on Alabama A220 plant Tel: (813) 3373 8368 COMMENT 30 Lessor Avolon launch customer for Rolls-Royce’s E-mail: [email protected] 5 New China Southern leader faces challenging LifeKey 2019 31 Airbus sets up in Shenzhen in new cabin Photographers Rob Finlayson, Graham Uden, technology partnership Ryan Peters ADDENDUM 31 Japan Airlines and Lufthansa Technik deepen 6 China Eastern’s Ma Xulun succeeds Tan Wangeng component relationship Chief Designer as China Southern president 31 GMF AeroAsia and Satair sign exclusive parts Chan Ping Kwan 6 British Airways and China Southern deepen agreement Printing partnership with new Memorandum of 32 Travelport win GDS business of South Korean Printing Station(2008) Understanding LCC, Jin Air 6 Qatar Airways group CEO labels airline alliances ADMINISTRATION “old fashioned” 7 Ronojoy Dutta ends speculation by assuming General Manager control of Indian LCC, IndiGo Shirley Ho E-mail: [email protected] 7 Bangkok Airways scion moved into top job after disgraced father forced out 7 China brings forward complete ban on cockpit ADVERTISING smoking after safety and conduct breaches Asia-Pacific, Europe & Middle East Clive Richardson SINGAPORE AIRLINES CEO GOH 32 Vietnam Airlines accepts A321-200neo from Air Tel: (44) 7501 185257 CHOON PHONG HONORED AT 2018 Lease Corporation E-mail: [email protected] PERSON OF THE YEAR DINNER 32 CDB adds the lessor’s presidency to chief The Americas / Canada 8 A good party – Singapore Airlines CEO, Goh commercial officer Patrick Hannigan’s portfolio Barnes Media Associates Choon Phong honored as 2018 Orient Aviation 32 Retired GE Capital Aviation Services boss, Ray Barnes Person of the Year at award dinner in Hong Kong Norman Liu, joins GE Telesis Tel: (1 434) 770 4108 32 AAR appoints Sean Gillen as chief financial Fax: (1 434) 927 5101 officer E-mail: [email protected] [email protected] ORIENT AVIATION INSIGHT REPORT

Follow us on Twitter @orientaviation MEETING THE DEMANDS OF THE MILLENNIAL PASSENGER 33 WiFi in the sky a priority for the digital © All rights reserved generation of flyers Wilson Press HK Ltd., 34 Passengers reveal what they would like on Hong Kong, 2019 Qantas’ ultra-long haul flights

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New China Southern leader faces challenging year

China Southern Airlines, Asia’s largest carrier and the third the vice chairman of SkyTeam member China Eastern, as largest airline in the world, is heading to the top of the global president and deputy party secretary of the Guangzhou- industry’s table. Shanghai’s China Eastern and Air China in based carrier will be watched closely by the industry. Beijing won’t be far behind. Ma has an impressive resume. Before he moved to China The “Big Three” Mainland carriers may have shed Eastern Corporation in December 2008, he was on the staff their country cousin image in the airline world yet their at regulator, the Civil Aviation Administration of China, in the management structures, which include the airlines’ late 1990s. He then worked his way to the top of Air China as Communist Party committees participation in their decision- the Mainland industry underwent a radical restructuring in making, cast them as different in almost every way from their 2002-2003. western peers. He has challenges ahead of him. The airline group is They are stock exchange listed but state-owned. undertaking an ambitious joint venture expansion with Every aspect of their operations is controlled by Beijing, American Airlines. In December, Qatar Airways, led by from aircraft acquisitions approved by a centralized state mercurial group CEO, Akbar Al Baker, completed the purchasing organization to fuel policies, MRO and component purchase of five per cent of CSA. contracts. They receive government support that is not For the 12 months to December 31 last year, CSA forecast always fully extrapolated in their listing documents and annual its profit would decline by up to 56%, to 3.14 billion yuan reports. (US$46.788 million). The group attributed the predicted Ironically, while the big U.S. carriers complain bitterly results to foreign currency losses against the U.S. dollar. about alleged subsidies to Gulf airlines, they totally ignore the At China Eastern, Ma’s former domain, the news was fact that Chinese airlines are subsidized. Listed state-owned worse with the carrier predicting a profit fall of up to 63%, or Mainland airlines acknowledge they have received billions of 3.35 billion yuan, from higher fuel costs, a decline in the yuan U.S. dollars in government grants and loans in recent years. and the non-recurrence of 1.75 billion yuan investment bonus Executive appointments also are subject to centralized booked a year earlier. decision-making and can be opaque. The transfer of the China And then there is the Sino/US tariff war, which could have Southern Airlines president, 54-year-old Tan Wangeng, to the an indirect impact on the carrier’s fleet expansion if it is not role of executive vice president of COMAC went unreported soon resolved. Add to that the continuing speculation about for almost two months. Tan has led the carrier through the the carrier’s future alliance allegiance, if any. most expansionary period in its history and has declared it Ma and Wang Changshun, head of CSA’s party committee was time the voices of Chinese airlines be heard. have a challenging 2019 ahead of them in their march towards The appointment of 54-year-old Ma Xulun, until recently conquering their industry world. ■

TOM BALLANTYNE Chief Correspondent Orient Aviation Media Group

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FEBRUARY 2019 / ORIENT AVIATION / 5 ADDENDUM

Ma Xulun succeeds Tan Wangeng at China Southern Airlines

In a significant reshuffle at the Communist Party Committee, China Southern, Wang Changshun, leading member of the Star alliance top of two of China’s “Big Three” the majority owner of the carrier. would retain his influence in the and for the senior positions he has airlines, China Eastern’s Ma Wang will report to China Eastern third largest airline in the world with held at Air China, the Mainland Xulun is China Southern’s (CSA) chairman and party committee his leadership of CSA’s Communist regulatory body, the CAAC, and his new chairman and president. secretary, Liu Shaoyong. Party committee. involvement in airline associations. In Shanghai, the Civil Aviation At press time, Chinese media Ma is a well-known figure on Former CSA president, Tan Administration of China’s (CAAC) said the outgoing chairman of the global aviation scene both as a Wangeng, moved from CSA to deputy secretary, Wang Zhiqing, the vice presidency of Mainland has assumed the presidency as well aerospace OEM, the Commercial as the position of deputy secretary Aircraft Corporation of China at China Eastern. (COMAC) and the position of Ma also will hold the deputy secretary of its party position of deputy secretary of committee last November. (See the Guangzhou-based carrier’s Watch out world, page 20). ■

Dutta ends speculation by taking charge at IndiGo Smoking ban enforced in InterGlobe Aviation, the Technology, Harvard Business Since then, Dutta has parent company of Delhi School and management advised the Indian government Mainland cockpits headquartered, IndiGo, has consultancy Booz, Allen and on the merger of Air India and announced an ex-United Airlines Hamilton, he was running the Indian Airlines and was an advisor Who knew? Much to the president, Ronojoy Dutta, will airline when the 9/11 terrorist and then president of LLC, Air surprise of many in the industry run the low-cost carrier for the attacks struck the U.S. A United Sahara, from 2005-2008. After smoking in the cockpits of some next five years, with effect from Airlines aircraft hit the World Jet Airways bought Air Sahara in Mainland domestic carriers was January 24. Trade Centre and another April 2007, Dutta left the carrier permitted until last month. The announcement follows went down in Pennsylvania as within months and worked as a In November 2017, the Civil Dutta’s arrival at the carrier late passengers bravely fought the consultant for several aviation Aviation Administration of last year, where he was tasked terrorists. and infrastructure groups, China (CAAC) banned smoking with writing a business plan for The following year United including the AAR Group. for pilots and cabin crew, but the carrier to 2024 by IndiGo went into bankruptcy protection There are challenges allowed carriers two years to co-founder and fellow United and Dutta left the airline. The ahead at IndiGo. Formerly very fully implement a rule change Airlines executive, Rakesh Chicago-headquartered carrier profitable, the LCC has stuttered that included e-cigarettes. Gangwal. The assignment was going broke, despite in the last year as fuel prices rose, But recent incidents, which prompted the resignation of attempts to reduce costs that capacity exploded in the sector have included a pilot’s wife CEO-in-waiting, Greg Taylor. could not be agreed with the and competitors maintained a smoking in the cockpit, have Sixty-seven-year-old Dutta airline’s unions. In 2002, United painful fare price war. resulted in the CAAC ruling spent 17 years at United Airlines Airlines was US$1 billion in debt But the LCC still remains being brought forward by 10 where he was president from as traffic continued to drop after far ahead of rivals with a market months. 1999 to 2002. An alumni of the 9/11. The attacks were the final share of 43.2% at year end. From now, cabin crew prestigious Indian Institute of nail in United’s coffin. The remaining 56.8% of the who do not stop and or report passenger pie was divided among staff smoking inflight will be Jet Airways (13.9%), Air India suspended for six months. (12.4%), SpiceJet (12.3%), Go Air More severe penalties will be (8.8%) AirAsia India (5.3%) and imposed on crew for breaches Vistara (3.8%). of the ban if it is established At an earnings call after they have caused flight delays the announcement of his or inflight incidents. appointment as CEO, Dutta The International Civil said the LCC planned to grow Aviation Organisation (ICAO) by 30%, largely in overseas formally directed smoking be markets. The first route banned inflight more than two expansion will be increased decades ago, a ruling that has frequency between Kerala and resulted in global compliance by Doha and Kuwait, he said. ■ most airlines. ■

6 / ORIENT AVIATION / FEBRUARY 2019 ADDENDUM

Bangkok Airways scion succeeds disgraced father in top job

Captain Puttipong Prasarttong- signatories of two non-related Osoth has added the positions directors and the issuance of of CEO and vice chairman a company seal by the airline of Bangkok Airways to his board for all decisions it takes. responsibilities as president of The billionaire surgeon, who the carrier following the recent built a private hospital business resignation of his father and into a regional medical services airline founder, Dr. Prasert Chainaknam, he was charged The SEC imposed fines group, later added the airports Prasartthong-Osoth (85) from with manipulating the share of 500 million baht (US$15.8 of Koh Samui (1989), Sukhothai the company. registers of both the airline million) on the trio at the time (1996) and Trat (2003) to the On January 21, Thailand’s group and the medical services of the resignations despite all family empire. The family retains Securities and Exchange company for personal gain from three parties insisting they are full control of the three facilities. Commission (SEC) forced November 2015 to January innocent of the charges. The Prasartthong-Osoth is listed Prasartthong-Osoth senior to 2016. Both women resigned SEC said the penalty shows the as a six per cent shareholder relinquish all involvement with from their positions at the airline offenders are liable to possess in Bangkok Airways and an Bangkok Airways and also his and the hospital group on the “untrustworthy characteristics” 18.4% investor in Bangkok position as chairman of Bangkok same day. Poramaporn was chief for a director or an executive of a Dusit, Thailand’s largest hospital Dusit Medical Services. operating officer of Bangkok listed company. and medical services network. Along with his daughter, Dusit. Other members of the At press time, Bangkok The family, through a separate Poramaporn, and executive family are board directors of the Airways announced new company, also holds majority secretary, Mrs Narumon companies. board procedures, including control of Siem Reap Airways. ■

China Southern signs MoU with British Airways

China Southern Airlines (CSA) of both airlines and providing largest in the world. It has a fleet bilateral agreements with and British Airways (BA) more convenience for the of 840 aircraft and a staff of partners where it makes sense signalled the deepening of their customers of two carriers.” 100,000 worldwide. for us. They may be partners we relationship with the signing of a The airlines began Separately, Qatar Airways have invested or independent Memorandum of Understanding co-operating in 2017 and code group CEO, Akbar Al Baker, partners,” he said. (MoU) late last month that share on 10 routes: China continues to keep the industry He said Qatar was “ready will broaden their code share Southern operated Shenyang/ guessing about his allegiance to terminate our membership” arrangements, including Harbin/Changchun-Shanghai, to oneworld following his at the turn of the year. “The expansion on domestic routes, Dalian/Changchun-Beijing and purchase of five per cent of director of oneworld has and will introduce reciprocal BA’s flights from Heathrow to alliance free CSA. spoken to me and I have raised frequent flyer benefits for Belfast, Edinburgh, Glasgow, At the launch of Doha- my concerns,” he said. passengers of both airlines. Manchester and Newcastle. Gothenburg last month he told “Now we have to see Director general of China The Guangzhou- media “these big alliances have how they are addressed Southern’s commercial headquartered carrier’s an old-fashioned mindset. They internally and whether they steering committee, Laijun Lo, resignation from the SkyTeam were good 20 years ago, but can be solved. We have to said: “By signing this MoU, we alliance became effective on they are not the way forward. give 12 months of notice if we hope to develop our long-term January 1 after 14 years of The challenge is about how to [intend to] withdraw. This is strategic partnership with BA membership. CSA is the largest get out of them”. an agreement we will comply by extending the network reach carrier in Asia and the third “I would rather make with.” ■

FEBRUARY 2019 / ORIENT AVIATION / 7 PERSON OF THE YEAR AWARDS DINNER

Goh Choon Phong honored as 2018 Orient Aviation Person of the Year

lobal aerospace leaders individually paid was 40 years almost to the day since SIA placed its first tribute to the leadership of Singapore order with Airbus, he told guests via video. Airlines CEO Goh Choon Phong by Boeing Commercial Airplanes president and CEO, video and in person at the 2018 Orient Kevin McAllister, said Choon Phong had developed Aviation Person of the Year dinner in a multi-hub strategy for his group, streamlined the GHong Kong last month. brands and strengthened partnerships around the International Air Transport Association director world “This type of leadership starts at the top. Choon general, Alexandre de Juniac, thanked Choon Phong Phong invests in and empowers his people.” for his outstanding contribution to IATA as chairman SVP sales and marketing The Boeing Company, of the association’s airline board last year, describing Ihssane Mournir, said Choon Phong “was a visionary him as a dedicated, balanced and professionally leader who had taken bold strategic steps to make one rigorous contributor to the association’s recent of the world’s airlines even better.” ■ governance reforms. Airbus Commercial Aircraft chief commercial Photos: Graham Uden 1 officer, Christian Scherer, complimented Choon Phong Sponsored by on his transformation strategy for the airline, especially his drive to establish new businesses for the airline. It

8 / ORIENT AVIATION / FEBRUARY 2018 PERSON OF THE YEAR AWARDS DINNER

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Highlights from Goh Choon Phong’s Orient Aviation Person of the Year address

“ or those of you who know Singapore Airlines well, you’ll know we generally shy away from personality-focused awards. The reality is that SIA is a big family, and no single individual can be responsible for its success. But I am veryF honoured to accept this award on behalf of the more than 26,000 employees of the SIA Group all around the world. It would also be remiss of me not to give credit to our visionary board, for enthusiastically encouraging and supporting the many changes that were factors behind our selection for this award. strengthening of the core business. SIA has been undergoing significant change for a This encompasses new revenue generation number of years. There has been so much structural initiatives, new operational efficiency enhancements, and change – especially in our part of the world. The organisational changes. All of this is underpinned by our key elements driving that structural change are the ongoing mission to delight our customers and provide proliferation of low-cost carriers and the rapid growth of them with the highest-quality service. Middle East airlines. More recently, Chinese airlines have We are more than half way through the three-year been carrying out aggressive international expansions as programme, and we have been very pleased with how well. it has been developing. An important element of it has The big three Middle Eastern airlines have expanded been to enhance our premium offerings. Last year was into all the major cities of Southeast Asia with large particularly busy in this area. Examples include the aircraft and, to many of those cities, with multiple daily launch of all-new cabin products on our A380s, the frequencies. Low-cost carriers now have the highest launch of regional cabin products on our 787-10s and market share of anywhere in the world – at more than A350-900s and our re-launch of the world’s longest flight, 50%. And all this change has occurred in a relatively between Singapore and New York. short time period of about two decades. There is much more to come. A major development So, when we were deciding what we needed to do over the next two years will be the enhancement of the to adapt to change, we took a good hard look at what in-flight products of our subsidiary SilkAir before its we were over the years. We were focused on three main eventual merger into SIA. There will be more growth of things: being a premium full-service airline, being Scoot and our associate carriers outside of Singapore, to focused primarily on the Singapore hub and being name a few initiatives. focused largely on revenue from ticket sales. It is very fitting that this event is taking place here We are still very focused on all these areas, but in Hong Kong. We have been serving Hong Kong for six now we have a significant and growing presence in the decades and it is one of the busiest ports in our network. low-cost market through our subsidiary Scoot, we have It is the home of great history in aviation, and the home investments in airlines overseas, such as India, Thailand of another great airline, Cathay Pacific. We may be and Australia and we have adjacent businesses, such as competitors, but we have very good friends at Cathay and pilot training. genuine respect for the team behind the airline. These have represented fundamental changes for the Allow me to make a special mention of thanks tonight SIA Group. I must admit when we started the change to Orient Aviation. The publication has done the industry programme, I was concerned about being able to get our such a great service over more than 25 years and I for one staff behind it. Not only was I very pleased that our staff look forward to reading it every month. The journalism is did get on board, but it was also apparent our employees top notch and its reputation is very well deserved. All that readily recognised the need for change. makes being named for this award even more humbling. The strategy is of course still developing and over the You also really know how to put on a party! Thank you past 20 months or so we have moved to the next phase of so much for hosting us in this lovely venue and bringing our transformation, giving even greater emphasis to the together so many good friends tonight.” ■

FEBRUARY 2009 / ORIENT AVIATION / 11 NEWS BACKGROUNDER

All Nippon All Nippon Airways orders 48 narrow bodies to fleet its Airways signals regional expansion Boeing won its first Japanese commitment for its B737 MAX 8 with the announcement ANA HOLDINGS INC. would order 30 of appetite for the type, including 10 options. The group also orded 18 A320neo, with deliveries all of the airplanes scheduled from 2021 to 2025. “The decision was based on the economic growth of Asia and emerging countries with demand in the Asian aviation market Southeast Asia and inbound demand on the rise,” the ANA parent company said. “ANA and Peach Aviation each selected its optimum aircraft to fit their strategy to grow.” with PAL “The A320neo that currently serves ANA international routes was chosen for its excellent fuel efficiency and cruising performance to support [LCC] Peach’s strategy. The specific markets to investment be served by the new order have not been finalised,” ANA said. “The B737 MAX 8, compared with current aircraft, creates All Nippon Airways (ANA) has confirmed a more comfortable atmosphere. It is also fuel efficient and is expected to improve efficiency by approximately 15%. Given the its 9.5% investment in privately-owned plane’s benefits to the domestic market, it will succeed the B737 Philippine Airlines (PAL) signalling its NG series.” readiness to engage in hand-to-hand combat with rival, Japan Airlines (JAL), in the battle for market share in Southeast Asia. ANA reports turning point results

for December quarter All Nippon Airways (ANA) has reported a 30% net profit n January 29, in Conscious that JAL is decline, to 106.8 billion yen (US$97 million), for the nine months a bold defensive expanding its network between to December 31 last year. ANA HOLDINGS CFO and senior vice move, All Nippon North Asia and neighbouring president, Ichiro Fukuzawa, said: “Increased revenues, mainly in Airways made nations to the south, ANA air transportation, resulted in operating revenues of 1.568.4 billion yen, while operating income was 156.6 billion yen. Ordinary it clear it had HOLDINGS INC, the parent of income was 154.1 billion yen due to an increase in operating Ono intention of surrendering ANA, will invest US$95 million expenses.” market share to Japan Airlines for 9.5% of Lucio Tan-controlled Steadily increasing and robust demand resulted in an increase in the demographically dynamic Philippine Airlines (PAL). Billionaire in operating income by 500 million yen to 51.4 billion yen, Southeast Asian region. Tan took back full ownership of compared with the reported months of a year earlier, he said. “It is a great turning point and a good sign for further profitability,” he said. International passenger revenue increased 11%, or 49.2 billion yen, year on year, he added.

PAL from investor, San Miguel, At a press conference in September 2014. ANA where the deal was announced, HOLDINGS INC. will acquire its Uematsu said landing slots were equity in PAL from Trustmark mostly full at Tokyo’s Haneda Holdings, which is owned by and Narita international airports the Lucio Tan family, the largest which made the deal necessary. shareholder in PAL. It boosts passengers without The deal expands PAL’s increasing flights. code share relationship with ANA said that “in line with ANA, established in 2014, and its Mid-Term Corporate Strategy places the ANA vice president from 2018 to 2022, it was for Global Strategy, Tadahiro expanding its international group Uematsu, on PAL’s board. network, considered its main Investment regulations cap growth pillar, and strengthening foreign ownership of Philippines its partnerships with foreign companies at 40%. airlines to provide more

12 / ORIENT AVIATION / FEBRUARY 2019 NEWS BACKGROUNDER

convenience for its passengers”. Indonesia, also a code share “This purchase underscores partner with ANA, announced it ANA HOLDINGS’s belief in the would apply to the appropriate dynamism of the Asian region, authorities to form a joint venture the great potential of the with JAL. Philippines’ multi-awarded flag In the meantime, ANA carrier and our confidence the continues to consolidate its four- Philippine air traffic market will year lead over JAL in international continue be an economic leader passenger traffic and tied up in ASEAN,” it said. an 8.8% investment in Vietnam Tokyo-based aviation analyst, Airlines in 2016. Vietnam is Kotaro Toriumi, told the Nikkei the fourth largest future airline news agency he believed JAL market in the Asia-Pacific after had become a threat to ANA. China, India and Indonesia. The flag carrier had emerged “Not only code-sharing but from its 2010-2017 period of more company tie-ups, including All Nippon Airways adds Perth tax payer supported bankruptcy investments and joint ventures, and Chennai to network in much leaner shape and had are necessary to prevent JAL from since delivered higher profits taking more of ANA’s partners,” Japan’s biggest airline, All Nippon Airways (ANA), continues in some periods of the last two Toriumi said. to set the pace in North Asia with the January announcement of its network expansion strategy for the next 12 months. years than ANA. ANA maintains Recently, in a notable global It will launch direct services from Tokyo Narita to Perth from JAL was treated favourably by airline survey, PAL was voted the September; the first Japanese airline to operate the route. In another the government to the detriment world’s most improved airline for first, Narita to Chennai in southern India will be added to the ANA of its expansion and investment the latest year. It is proceeding network late this year. The new services follow commencement initiatives. through an expansion of its fleet of Tokyo-Haneda to Vienna this month. Since completion of its to 100 aircraft and flies to 80 The carrier, which has won five-star SkyTrax ratings for six bankruptcy penance, JAL has destinations across the globe. consecutive years, said the new routes were based on rising established a code share with ANA flies 14 times a week to the global demand and were to be incorporated into the ANA group’s Hawaiian Airlines, which has Philippines and PAL operates 84 Mid-Term fiscal year 2018-2020 corporate strategy. The airline is developed into an application for services a week to nine Japanese enhancing its “Tokyo Metropolitan Dual Hub Model” that makes full use of both Haneda and Narita airports. a joint venture, and Aeromexico destinations. The two carriers ANA forecasts the flow of people and goods in the Asia-Pacific has abandoned ANA for JAL as a also operate 16 code shares to will expand as key economic agreements such as the Regional code share partner. Japanese domestic cities and 11 in Comprehensive Economic Partnership (ECEP) deepen. “By opening In October last year, Garuda the Philippines. ■ a route, ANA will contribute to expanding commercial exchanges between Japan and Australia as well as between Japan and India,” All Nippon Airways rival, Japan Airlines (JAL), announced an ANA statement said. last month it would commence direct Narita-Bengaluru flights in “The new routes also will strengthen the air travel network the summer of next year. At present there are no nonstop flights in the Asia-Oceania region and enhance the presence of ANA in operating between Japan and the “Silicon Valley” of India. The this vital market.” The decision to add Perth to the network was airline said the route would provide North American passengers made following increased demand from key industries in Western with a new option for travelling to southern India. Australia including mining and agriculture, the airline said. Next month, JAL will launch a direct Narita-Seattle service ANA believed Tokyo-Perth would capture growing demand and increase frequency from Narita to Moscow’s Domodedovo for travel between the two cities, particularly as the seasons are International Airport from four a week to daily. reversed in Japan and Perth, which should support a stable market for two-way leisure travel throughout the year, it said. “This coincides with projected increases in demand over the medium to longer term for routes between Asia and North America. ANA will employ Japan’s first A380 aircraft on its Hawaii route this year,” the carrier said. “Additionally, it plans to improve profitability by introducing the B787-10, the latest variant of the B787, onto its Southeast Asian routes, with the goal of winning business from connecting traffic via Japan.” On the cargo front, ANA said “building on the changes to its passenger side, ANA’s potential to meet demand for cargo transport will increase with the introduction of a new Boeing 777F large-scale air freighter”.

FEBRUARYRY 2019 / ORIENT AVIATION / 13 NEWS BACKGROUNDER

“massive debt”. This legacy issue must be segregated from the Politics keeps current challenges at the airline, he told an aviation conference. “If you feel that future Air India afloat revenues can actually service fter India’s In November, a ministerial the debt, that is not possible for government failed panel headed by Finance the simple reason that the debt to sell 76% of Minister, Arun Jaitley, approved is so massive,” he said. “We are debt-laden Air the transfer of $4.3 billion of the proactively working [on the debt India group last airline group’s debt to a special If sold, the proceeds from issue] with the Finance Ministry AMay, the national government purpose vehicle (SPV), the Air the sale of the ground handling to make it happen. has decided to launch a strategic India Asset Holding Company. and engineering subsidiaries “We have prepared a plan. disinvestment strategy for the Earlier in the year, the will go to the SPV to bring We are trying to professionalise airline company that is aimed at finance minister injected US$150 down the carrier’s debt and the entire management of Air raising US$1 billion. million into Air India to support a make the carrier more attractive India right from the CEO so that Last year buyers were “turnaround plan”. Last month, to potential investors. Air there is a proper management put off from making bids for politicians approved an second India has been losing money structure that can take the the airline group because of equity infusion of $352.5 million since it absorbed domestic airline to new heights.” At press its huge continuing losses, a to keep the group in business. carrier, Indian Airlnies, into its time, Air India reported a four multi-billion debt and a sale Air India’s ground handling operations almost 12 years ago. per cent increase in passengers package that compulsorily subsidiary, Air India Air Transport India’s civil aviation minister, carried for the quarter ended included the purchase of all Air Services, is up for sale and plans Suresh Prabhu, said last month December 31, last year with India subsidiaries as well as the are proceeding for the sale of Air that future revenue from the revenue up 23% from improved mainline carrier. India Engineering Services. airline could not service its aircraft utilization. ■

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14 / ORIENT AVIATION / FEBRUARY 2019 NEWS BACKGROUNDER

Potential Jet Airways investors call time on founder’s influence The survival of debt-ridden Jet Airways is in question with negotiations to save it concentrated on persuading founder, Naresh Goyal, to relinquish his controlling role at the Mumbai-based carrier. Chief correspondent, Tom Ballantyne, reports.

egotiations to keep market regulator, the civil aviation Jet Airways afloat ministry, the airline’s board and were drawing closer all of its lenders, SBI said. Under to settlement at Indian law, ownership and control press time with the of Jet must remain in domestic Nairline’s founder and chairman, hands. Naresh Goyal, reported to be If there is a change of prepared to step down from management at Jet after a the carrier’s board if minority takeover, the new buyer has shareholder, the Etihad Airways to make an open offer to Group, agreed to raise its price for the general public to buy an an enlarged holding in the carrier. additional 25% of the carrier. The Abu Dhabi aviation Transactions must be cleared group holds 24% of the Indian by the Securities and Exchange international carrier and has Board of India (SEBI). offered to increase its equity to The open offer price has 49%, a cash injection the carrier at Rs 276 on the Bombay Stock in Vistara and Malaysia’s AirAsia to be the highest of the prices desperately needs. But Goyal Exchange. Indian media reported India fell through apparently over determined by four parameters: was holding out for a better deal Goyal “is holding on till the right demands Goyal step down from • the negotiated price between and an additional 25% holding. valuation is negotiated”. the carrier. the buyer and the selling Retaining 25% of Jet gives Naresh Although it controls more SBI, as the carrier’s largest promoter some beneficial voting rights. than a sixth of India’s booming creditor, said in January Jet • a volume weighted average Etihad, which also has been aviation market, Jet has become lenders were considering a price of the 52 weeks before lossmaking for the last two years, the country’s latest corporate restructuring plan under the RBI the public announcement of the has informed the State Bank basket case as a result of high (Reserve Bank of India) framework takeover of India (SBI) it would purchase fuel taxes, a weak rupee and cut for the resolution of stressed • the highest price the buyer Jet shares at Rs 150 (US$2.11) throat competition from rivals, assets that would ensure long- paid in the 26 weeks before the each. SBI is the lead lender to the particularly low-cost carriers. term viability of the company. announcement of the takeover airline. It is carrying $1.13 billion in In a letter to the SBI • or the volume weighted Other conditions for Etihad’s net debt and has not reported chairman, Goyal said he was average price of 60 trading days additional investment included a a profit for nine of the last 11 willing to invest $98.48 million before the announcement of the reduction in Goyal’s 51% equity years. It is months behind in in the airline and also pledge all takeover. in Jet to 22% and the removal of payment of wages and benefits his shares in the carrier on the India’s prime minister, any family influence at the airline. to its employees and it has been condition that he retains 25% of Narendra Modi, faces national According to reports, Goyal was reported that some lessors have the company he founded. elections in April and May. He willing to sell his shares at Rs200, commenced the process of Etihad’s Tony Douglas, has came to power in 2013 with but was not prepared to let his re-possessing aircraft because told the SBI it would pump $35 promises of millions of new jobs holding in the carrier go below Jet has failed to meet its monthly million into the carrier if Goyal and business friendly policies. 25%. leasing commitments. stepped down. Modi’s rivals say figures reveal In the past year, Jet’s share An invitation to TATA The structure of a rescue the $2.6 trillion economy has been price has been as low as Rs 163. Industries, already a joint venture would require approval from losing jobs on the prime minister’s At the end of January, it stood investor with Singapore Airlines India’s Central Bank, the country’s watch. ■

FEBRUARY 2019 / ORIENT AVIATION / 15 NEWS BACKGROUNDER

“significant concerns” about the proposed variation of the Virgin Australia protests Determination that will result in an unnecessary expansion of both Qantas and Cathay Pacific’s scope of Qantas and market power to the detriment of the travelling public, it said. “Qantas and Cathay Pacific Cathay Pacific code share dominate the Hong Kong route with a combined frequency share of 88% and a combined seat capacity share of 90%,” said By chief correspondent, Tom Ballantyne Virgin. “In the 12 months ending October 2018, both airlines recorded passenger load factors exceeding 80% and together carried 92% of all passengers travelling between Australia and Hong Kong. “Virgin Australia and Hong Kong Airlines carried the balance of passengers on the route, recording passenger load factors of 66% and 61% respectively during the period. Hong Kong Airlines withdrew from the Hong Kong route in October 2018, leaving Virgin Australia as the only other competitor in the market.” Virgin said the Qantas application did not provide sufficient information to irgin Australia is not its code to Cathay Pacific and In January, Qantas requested allow interested stakeholders, happy. Its efforts Cathay Dragon destinations from approval from Australia’s Air including Virgin Australia and to break into the Hong Kong to 10 cities in India, Services Commission (ASC) to the Australian Competition lucrative China Myanmar, Sri Lanka and Vietnam vary its agreement with Cathay. and Consumer Commission, to market are being and on Cathay long-haul flights It “proposed that Cathay Pacific properly assess and comment Vstymied by a developing love from its home hub to Perth and will offer code share services on the potential impact of the affair between former frenemies, Cairns. on flights operated by Qantas expansion of its code share Qantas Airways and Cathay In turn, Cathay has placed its on the Hong Kong route from arrangement with Cathay. Pacific Airways. code on 13 routes of the Qantas’ 31 March 2019”. Exactly what “Notwithstanding the The second Australian domestic network. That in itself it is asking for is not known, paucity of information in international carrier launched was a surprise to some. Both with the submission only saying the Qantas application, any Melbourne-Hong Kong in 2017 carriers are oneworld alliance that “a copy of the confidential strengthening of cooperation and restored its Sydney-Hong members but their relationship code share agreement between with Cathay Pacific is likely to Kong route last year after forging has had its strains. Qantas and Cathay Pacific will increase the market power the a code share agreement with Cathay did not appreciate be provided separately to the two carriers individually and Mainland-owned Hong Kong the partnership Qantas forged Commission”. collectively hold on the Hong Airlines. At the time, Hong Kong with Emirates Airline while the Virgin has reacted Kong route. This would inevitably Airlines operated to Queensland’s Australian carrier was far from vehemently to the request. It diminish competitive forces in the Gold Coast. It cancelled the route impressed when Cathay mounted is right to be concerned about market and may lead to higher last October. a campaign that contributed to its scope. In its own submission airfares and reduced choices for From the same month ending Qantas plans to establish to the ASC, it said it is the only customers, with corresponding Qantas and Cathay have a low-cost carrier subsidiary, other operator of flights between implications for Australian activated a new code share Jetstar Hong Kong. All, it now Australia and Hong Kong. tourism and trade,” Virgin partnership. Qantas has added appears, has been forgiven. Virgin Australia holds Australia said. ■

16 / ORIENT AVIATION / FEBRUARY 2019 ALPHA BRAVO COLLINS DELTA ECHO FOXTROT GOLF HOTEL INDIA JULIET 47687 RC ABCollins_Commercial_3pgSprd_OrientAviation.indd 1 2/4/19 2:02 PM

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Client: Rockwell Collins - Commercial Ad Title: ALPHA BRAVO COLLINS Publication: Orient Aviation - December/January & February Trim: 404 x 273 mm • Bleed: 414 x 283 mm • Live: 384 x 253 mm COVER STORY NO TIME TO WASTE IN CLIMB TO THE TOP The ambitions of the Asia-Pacific’s largest carrier, China Southern Airlines, appear limitless as the state-owned enterprise marks out its expansion with shrewd global partnerships, top of the line fleet and product investments and high frequency networks fed by a domestic passenger market of double digit growth. Chief correspondent, Tom Ballantyne, reports.

n September last year, the then president of China Southern Airlines (CSA), Tan Wangeng, told delegates at the World Routes Conference in Guangzhou that the carrier, Asia’s largestI airline and the third biggest carrier in the world, planned to have 1,000 jetliners “real ones, big ones, not small regional jets, turboprops or ancient aircraft built in the old Soviet Union or more recently in the third world” in its fleet in less than two years. By 2035, he said, that number would rise to 2,000 airliners at least, representing fleet growth of 287% in 16 years. If that seems overly ambitious, consider this: in 1998, the Guangzhou-headquartered CSA fleet had just crept past the 100 mark. In November last year the airline made a brief announcement that its fleet had topped 800 and that it had nearly 270 new jets on order. Today, more than 2,000 CSA daily flights travel to 224 destinations in more than 40 countries. With American Airlines (AA) a CSA shareholder – it invested US$199.6 million for 2.68% of the carrier in 2016 – the two airline giants are progressing through a deepened code-share relationship that provides large scale entry into each other’s home market. As well, in the final days of 2018, Qatar Airways negotiated the purchase

20 / ORIENT AVIATION / FEBRUARY 2019 COVER STORY

of five per cent of CSA, a move month, they showed domestic passenger that opens up extensive network numbers for the month rose 5.8%, to 9.7 opportunities for both airlines. million. International passengers were up Development of these partnerships 14.7%, to 1.6 million. In the 12 months to has followed CSA’s widely predicted December 31 last year, passengers carried and recent departure from the by CSA rose 10.8% year-on-year to 139.9 SkyTeam alliance given its close million. This included a lift in domestic ties with AA, a oneworld member. passengers to 119.5 million and a 16.4% Whether it will join the oneworld increase in international traffic, to 17.9 alliance, in which both American and million. Air cargo volumes also were up Qatar are members, remains to be seen. 3.3%, to 1.7 million tonnes. CSA has spearheaded the When he spoke at Routes, Tan remarkable growth of China’s airline said: “China’s aviation market is sector by rapidly extending its reach – growing rapidly, driven by outbound from dominance in the domestic market tourism. The growth rate of outbound to global recognition as the Mainland’s tourism is 20% in the past year and leading international airline. could reach 200 million tourists by 2020. Half of China’s Most of that growth has been engineered by 54-year-old tourists are tending to take China-based airlines and this Tan, although he eschews the limelight and insists the success provides us with plenty of opportunities for development.” of the carrier is due to his employees and their dedication to As a result of the rapid expansion, more widebody developing superior operations and a top class cabin product. aircraft will be needed in the near future. At press time, 12% Nevertheless, under his stewardship net profit grew more of the CSA fleet was wide bodies. CSA intends to increase than 10-fold, from US$80 million in 2010 to $985 million these numbers to 15% by 2020. last year. The fleet includes 271 Airbus single aisle family jets – A CSA executive director since June 2016, president A319-100s, A320-200s, A320 neo, A321-200s and A321neo. of the carrier since January 2009 and vice chairman since It has ordered 25 A320-200s, 85 A320neo, six A321-200s January 2013, Tan’s tenure at the airline group is at an end. and 36 A321neo. In January Beijing announced that China Eastern president It operates 50 A330s, which are scheduled to be returned Ma Xulun, had succeeded Tan at CSA. to lessors from this year. On order are 20 A350-900s with “Sometimes it takes them a little while to fill these slots deliveries to commence this year. It also is the only carrier to because they rotate people around the industry quite a lot operate the A380, of which it has five. and maybe there are some other pieces to the puzzle,” said Its Boeing narrow body fleet consists of 26 B737-700s, one observer. 165 B737-800s and 24 B737 MAX8s. An order is in place In the meantime, Tan has moved onto the country’s for 56 more of the latter with the purchase of 30 of those largest aircraft manufacturer, the Commercial Aircraft awaiting Chinese government and shareholder approval. Corporation of China (COMAC). The OEM is delivering its The long-haul Boeing fleet is 10 B777-300ERs (eight ARJ21 regional airliner to customers after years-long delays more to come), 10 B787-8s, eight B787-9s (12 more to come) and has commenced test flights of its 190-seater C919 single and 10 B787-10s. Its regional aircraft fleet is 20 Embraer 190s aisle aircraft. In partnership with Russia, it also is designing a and it has placed an order for 20 of COMAC’s C919s. Its wide body airplane, the CR929. cargo fleet is made up of two B747-400F and 12 B777F full COMAC held a party committee meeting in November freighters. to appoint Tan as deputy party boss, a position that would CSA will expand its route map to Latin America and place him in an extremely high-level executive job at the Africa in the next three years with Brazil and Argentina manufacturer. the most likely launch destinations. In Africa, the airline’s Chinese media has reported Tan was transferred expansion will be in line with China’s “One Belt One Road” to COMAC because the senior management of the policy to deepen relations with its allies. In addition, it will manufacturer was seen to be tech heavy and lacking the increase frequencies to New York, London and Paris. skills necessary to manage such a large and geographically Beijing’s second airport at Daxing, set to open late diverse group. It is understood Tan is expected to correct this imbalance. Tan has left an indelible mark on CSA by positioning the You’re at Air China today, airline for the next stage of its growth. CSA’s net profit in the China Eastern tomorrow and two years final quarter of its current year, did plunge, mainly as a result later you go to China Southern. of higher fuel costs (Chinese airlines hedge minimally) and foreign exchange issues but it is far from reporting losses. That’s not uncommon here,” The latest monthly traffic statistics, for December, Orient Aviation was told last month reveal CSA continues to outperform its rivals. Released last

FEBRUARY 2019 / ORIENT AVIATION / 21 COVER STORY

The airline tends to cooperate with the budget carrier even though the business models and the management are totally different. The mainstream airlines need (to be) in partnership with them and China Southern Airlines is looking into the possibility of establishing a joint venture. The airline is facing a stiff competition with international China-U.S. code shares airlines and low-cost carriers are expand beyond major cities fighting for a market share budget airline market. Last October, China’s largest privately- owned LCC, Spring Airlines, bought 1.63% of CSA. this year, will be the largest airport in the world. CSA will CSA has not let up in its efforts to improve the carrier’s establish a second hub for the group at the gigantic new operational efficiency and service levels. At the China facility. International Import Expo in Shanghai last November CSA international flights are fed traffic from several its executives signed 40 new contracts with international domestic airlines in which it holds majority equity. They are suppliers in the global aviation manufacturing industry, Xiamen Airlines (55%), Chongqing Airlines (60%), Hebei including Pratt & Whitney, General Electric, Rolls-Royce, Airlines (99.23%), Jiangxi Air (60%), Zhuhai Airlines (60%), Rockwell Collins, Thales and Honeywell. Shantou Airlines (60%), China Southern Henan Airlines They covered aircraft engines, aviation supplies, special (52.65%), Guizhou Airlines (60%), China Postal Airlines vehicles, cabin equipment, in-flight entertainment systems (49%), Sichuan Airlines (39%) and a 4.92% holding in and other major imports. The airline said the deals were Haikou Meilan International Airport. part of its accelerated transformation into a world-class It also has plans to set up a carrier sometime this year competitive transport enterprise. in the Xiongan New Area, an economic zone south of The agreements will significantly improve the operational Beijing. Expected to start flying from the Beijing Daxing capacity of the airline’s fleet and provide an enhanced travel International Airport (BDIA) once it opens, the wholly- experience for the airline’s business and leisure passengers, owned subsidiary will operate under the name Xiongan CSA said. Airlines. It will have domestic, regional and international Its resignation from Skyteam underscored CSA’s networks. determination to free itself from alliance restraints and forge It is not known if Xiongan will be a low-cost carrier co-operative deals with anyone that can bring benefits to (LCC), although CSA has shown interest in moving into the the table. When it announced it was leaving the alliance a

In December Qatar Airways purchased 5% of China Southern Airlines, almost double the holding of the Mainland carrier’s other partner, American Airlines

22 / ORIENT AVIATION / FEBRUARY 2019 THE A330neo.

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statement from the carrier said it would allow the airline American to 21 cities in the U.S. to “explore possibilities to establish new partnerships with In December, it launched non-stop Los Angeles- advanced airlines around the world, promote bilateral and Shenyang in China’s northeast. It is the country’s fourth multilateral co-operation and provide quality services to largest city and was China’s first capital, from 1625 to1644. passengers around the world”. The reciprocal frequent flyer agreement means American It has a wide range of partners, from Australia’s Qantas AAdvantage members can earn and redeem miles from Airways to Finnair, but the expanded deal with AA has China Southern’s network of 3,000 plus daily flights to become a cornerstone of its network expansion. Trans-Pacific 224 destinations in 40 countries worldwide. In turn, China traffic between China and the U.S. is a major battlefield Southern Sky Pearl Club members have the ability to earn and CSA is taking advantage of its increased ties with its and redeem miles throughout AA’s network of 6,700 daily U.S. partner to compete with rivals, Shanghai-based China flights to nearly 350 destinations in more than 50 countries. Eastern and Beijing-based Air China. The two carriers offer reciprocal lounge access to their CSA told Bloomberg Television last November that after passengers. the opening of Beijing Daxing it will fly almost 50 million “We are very pleased with the progress we have made passengers in and out of China every year. That compares so far in our newly formed relationship with the largest with 30 million travelers who flew the airline in 2016 from its airline in Asia,” said AA president, Robert Isom. With the home hub in Guangzhou. It will operate 250 aircraft out of opening of Beijing Daxing International Airport in 2019 and Daxing and introduce more U.S. flights, along with AA, into the ability to cooperate fully with China Southern, we are its network. incredibly excited about American’s future in the Chinese In the last few months CSA and American have market.” expanded their codeshare cooperation followed by the Whatever happens, there is no stopping the rise of China introduction of reciprocal frequent flyer benefits and lounge Southern. Before he departed north to COMAC, Tan said access. From January, in addition to 14 Chinese cities served the airline is promoting itself simply by being in the market beyond Beijing, American placed its AA code on flights from and pointed to the large number of international routes it has Beijing and introduced codeshare services beyond Shanghai launched in recent years. to 14 more domestic cities, bringing its total codeshare As international capacity grew, the airline’s international services on CSA beyond Shanghai to 20. brand grew. It uses Twitter and Facebook and other social Adding to the six U.S. cities served by CSA on American, media and sponsors major sporting and cultural events. In his the Chinese carrier will place its CZ code on flights beyond view it time for the voice of Chinese airlines to be heard on Los Angeles, San Francisco and New York. With this the world stage. There is little doubt it already is happening.■ expansion, CSA will have its CZ code on flights operated by

The market between China and the U.S. is the biggest one. We now have flights to cities like New York and Los Angeles, but they are just not enough. We hope the frequency reaches a point where people can fly to Beijing for a conference and back to New York in a single day New airport will increase China Southern Airlines passengers to 50 million annually

24 / ORIENT AVIATION / FEBRUARY 2019 NEWS BACKGROUNDER

Thoughts of “chairman Bruns” Boeing’s veteran China hand Speculation endures about the impact of the Sino-U.S. trade dispute on the China business of Boeing’s commercial aircraft arm. Last month, Orient Aviation’s chief correspondent, Tom Ballantyne, was brought up to date by Boeing’s boss on the Mainland.

sked if there have systems companies and we all been signs that U.S. work together to support China President Donald on safety, capacity and efficiency Trump’s tariff initiatives,” he said. dispute with China “It has the U.S. government Ais damaging Boeing’s Mainland involved in the form of the FAA business, Beijing-based Boeing (Federal Aviation Administration), China president, John Bruns, which participates in various said: “I’ll give you a data point. seminars and events that we We delivered last year, for the do in China around safety. full year, 219 airplanes to China. It also reflects the fact that That’s a record for us and it was while politicians haggle, at an done in the middle of all these operational level both sides are trade tensions. Obviously the getting on with the business of deliveries are our lifeblood. So, aviation. from that standpoint the answer Bruns said: “We delivered would be no.” our 2000th airplane [to China] Nevertheless, the trade last November. China has tensions are concerning, he said. benefitted from the rapid growth “We were encouraged by the of its aviation system and they good round of talks a couple of have airlines that are truly world weeks ago. They seemed to have class players. They are profitable gotten both sides back to the Office in Long Beach before in common than we have and successful. They have an table, so we hope those talks will moving to Beijing in 1994 as differences. There are so many excellent safety record. yield some results,” he said last deputy to the company’s China compelling reasons to find a “China also is a growing month. president. solution and I am optimistic we part of our supply chain. We “Obviously, we are a big After the merger of Boeing will,” he said. contribute about $1 billion a year proponent of free trade. We and McDonnell Douglas in 1997, While Washington and to China’s economy through know there are issues here he joined the Boeing Commercial Beijing try to resolve the trade procurement of parts and that need to be resolved and Airplanes sales organization and dispute at a political level, assemblies, joint ventures and difficulties to be worked through, led numerous successful aircraft something else is happening other investments we have made. but we think it is in the best sales campaigns with Chinese Bruns pointed out. “We do a lot “In training, I think the interests of both countries they airlines and leasing companies. of things by ourselves, but we number is 75,000 aviation are resolved.” He returned to Beijing in 2007 also are a key member of the professionals we have trained. If anyone has a feel for the and was promoted to president U.S.-China Aviation Cooperation I am talking about pilots, Chinese psyche, it is Bruns. A of Boeing China in 2016. program, which is a public/private mechanics and engineers. It’s fluent Mandarin linguist, he “I’ve been working in China partnership. We have members a two-way benefit that can be has had more than 25 years for almost my entire career. I from about 42 U.S. companies applied to the rest of the trade of experience in the Chinese grew up here and have been involved in aviation including relationship.” aviation market. Originally with an observer of the U.S.-China Boeing, GE, Textron and Pratt & Boeing’s message on China McDonnell Douglas, he was relationship for a long time. I Whitney, The members supply is business as usual and that assigned to its China Program am optimistic we have more equipment to airports and includes the manufacturer’s

FEBRUARY 2019 / ORIENT AVIATION / 25 NEWS BACKGROUNDER

latest Chinese joint venture, five years. Cadet training for YTO the single aisle completion and Airlines and Kunming Airlines is delivery centre at Zhoushan, underway. 144 kilometres southeast of Through the Pilot Shanghai. It is Boeing’s first such Development Program, Boeing facility outside the U.S. The first works with flight schools aircraft from the new plant, a worldwide to provide airlines B737 MAX, was delivered to Air with pilot candidates as well as China in December. managing student performance Aircraft destined for and correction and developing Zhoushan are assembled in commercial pilot training courses Seattle and flown to China for and materials. completion. A joint venture split market. We are a little bit ultra-long haul routes to South It includes ab initio pilot with the Commercial Aircraft ahead in terms of market share America and Africa. training - from zero flight hour Corporation of China (COMAC), of the installed fleet. We’ve “The 300ER has done very experience to advanced flight Zhoushan will eventually deliver been delivering more in recent well in the long-haul fleets of the training—and is designed to 100 aircraft a year to Chinese years than they have, but I never “Big Three” and I think they will develop cadets into B737 type- airline customers, who now buy underestimate our competition. continue to focus on the 777 at rated first officers. one in every five Boeing narrow They are going to be tough the high end of the fleet size. We “That’s going to be a big body jets. competitors here because they have more than 80 787s delivered emphasis for us going forward,” “It’s going to be a very see the same opportunities as to China and lots of interesting Bruns said. “It’s not only pilots, gradual ramp up of capability we do.” point-to-point routes have been its mechanics and engineers there,” explained Bruns. “There’s These opportunities are opened up, which is what it was and other specialists. We have still some finishing work to be massive for both Airbus and designed for,” said Bruns. a wholly-owned training centre done on the site and we are still Boeing. “It is our biggest market Training is one of the biggest in Shanghai with probably half hiring and training staff at both going forward,” said Bruns. “It’s challenges for Chinese airlines a dozen simulators. We do a the completion centre and the a $1.2 trillion market for aircraft. because Mainland airlines lot of our entitlement training delivery centre. From an airplane standpoint continue to record double digit there which comes along with “We also are working with and a services standpoint it’s an growth. “Recently, we have aircraft purchase deals, so it’s the local airport on the ground incredible market. But nothing is been working on the Pilot transitioning pilots into a new handling of the airplanes and easy. We have tough competition Development Program to help model like the B787.” operating at the airport. We here.” carriers, especially the smaller There are Boeing pilots don’t want to rush. We want to He is confident Boeing’s carriers in China, with the based in China who trouble make sure it is a smooth ramp up. latest aircraft, the B777X, recruitment and training of new shoot at carriers. “These pilots It’s going to take us a couple of will be a big hit with Chinese pilots at their airlines,” he said. travel around and meet flight years to get there [to our delivery customers. With deliveries due Last year the program operations people and chief targets].” from September, he believed it was expanded to include the pilots at the airlines to work Boeing is well aware rival would the future backbone of screening, selection and training on day-to-day issues. If there Airbus has been ahead of it their long-haul fleets, particularly of 100 pilots at OK Airlines, a are questions about a certain in investing in China and also on trans-Pacific flights and some program that will continue for procedure or an airline’s flight that Toulouse is continuing to operations, these pilots interface invest on the Mainland. The with Boeing to ensure we are European plane maker operates a Services business more profitable being responsive when questions well-established A320 assembly than aircraft sales come up,” Bruns said. line at Tianjin, two hours from The main focus, as always, is Beijing, and an A330 completion Boeing president China, John Bruns said: “Don’t forget we on safety. “We are always willing and delivery centre adjacent to have created a new Boeing business unit, Boeing Global Services. to do whatever it takes to help The services market here [China] is as big if not bigger than the the A320 complex. China maintain its excellent safety aircraft market. “They see the same record. If you think about it, it “It’s a much more fragmented industry, but we are aiming to goldmine that you mentioned. become a bigger and bigger player in that space. That’s everything is pretty remarkable what they They have certainly increased from spares to training to MRO and conversions and a lot of new have achieved. They have year their investments here as we digital aviation products. after year of double-digit growth have. The good news is we have “China is a massive opportunity [in the services sector]. It may and still have this absolutely out delivered Airbus in China for be underperforming a little bit recently because the fleet is so new. outstanding safety record. It’s six of the last seven years,” Bruns They don’t require more spare parts and maintenance and so on, a real credit to all the people in said. but as time goes on that will change. the industry here that they have “But it is still a pretty evenly achieved that,” Bruns said. ■

26 / ORIENT AVIATION / FEBRUARY 2019 AIR CARGO

data showed capacity rose by 4.3% year-on-year, outstripping Rough ride ahead for demand. When the global economy was in synchronized recovery during 2017, supply Asia-Pacific air cargo and demand conditions came into balance after seven years of overcapacity. In some months, Recent oil price declines have put lift into forward airline demand exceeded supply but earnings, but an uncertain global economic outlook and the then the growth trend began to U.S.-Sino trade standoff threatens to depress air cargo, a sector reverse. The November data clouded critical to the economic health of Asia-Pacific airlines. the outlook for December when demand usually peaks in the lead up to Christmas. In recent By chief correspondent, Tom Ballantyne past years, there was ultra-tight supply and outsized demand for charter airlift to supplement scheduled air cargo services for the festive season. This year that did not happen. The Association of Asia Pacific Airlines (AAPA) said its cargo statistics indicated air freight in the region rose by 0.1% in November and freight capacity increased by 5.9%. AAPA director general, Andrew Herdman, said the capacity expansion had resulted in a 3.8 hen U.S and months. After a 2.1% rise in export order books in all major percentage point decline in the Chinese air freight traffic in October, exporting nations, with the average international freight load negotiators the region experienced its first exception of the U.S., shorter factor, to 65.2%. met last month decline in air cargo profits for supplier delivery times in Asia “Moderating export activity in their latest more than two-and-a-half years and Europe and weakened from reduced business orders Weffort to resolve their damaging in November. consumer confidence compared contributed to the slowdown trade war, there were signs Asia-Pacific airlines, with with the very high levels of early in air cargo growth for the some of the heat had gone out a 36% share of the global 2018 all point to a downward month, although the trend was of the talks and a resolution to freight market, posted a 2.3% trend in air freight traffic. mitigated by higher volumes of the commerce conflict could be year-on-year demand drop, the “Normally, the fourth e-commerce shipments going negotiated. first decline since May 2016, said quarter is a peak season for into the end-year festive season,” China’s Ministry of the International Air Transport air cargo,” said IATA director he said. Commerce said both countries Association (IATA). general and CEO, Alexandre “Asia-Pacific airlines had “extensive, in-depth and Asian exporters have been de Juniac. “So, flat growth recorded a cumulative 4.3% detailed communication” on reporting weaker demand in November was a big increase in air cargo demand trade and structural issues and for their products, a trend disappointment. While our during the first eleven months had agreed to maintain contact. telegraphed in below normal outlook is for 3.7% demand of the year, a reasonably solid The talks, it said, had “laid seasonal outbound demand at growth in 2019, downside risks growth rate following the a foundation for addressing key Asian air gateways in China, are mounting. Trade tensions exceptionally strong 9.6% annual each other’s concerns”. Ever Singapore and South Korea. are cause for great concern. We increase in 2017.” the protagonist, U.S. President While international need governments to focus on Looking ahead, Herdman Trump declared Beijing was e-commerce continues to grow, enabling growth through trade, said: “Continued moderate feeling the pain from U.S. tariffs overall air freight demand not barricading their borders growth in the global economy and forecast “we’re going to be faced significant hurdles to stay through punitive tariffs.” and lower oil prices should able to do a deal with China”. in profit, IATA said. Signs of The fall-off in November was support expansion in air travel In the meantime, air freight weakness in global economic the ninth consecutive month of demand and air cargo markets earnings have flattened in recent activity, a contraction in overcapacity for the sector. IATA this year, but the recent

FEBRUARY 2019 / ORIENT AVIATION / 27 AIR CARGO

deterioration in trade sentiment significant drops in air freight Airport, the region’s biggest lower than in December last year. and uncertainties about the traffic at many Asia-Pacific cargo hub, said its freight traffic The downturn was not universal. potential impact on consumer cargo gateways and also at was down 5.5%, a result it Beijing-based Air China Cargo confidence levels present some airlines in the last two months. attributed to global economic reported December traffic was downside risks.” Cathay Pacific Airways reported uncertainty. Traffic to and from up 2.8% over the Christmas Cargo Facts Consulting, December cargo traffic declined Europe and South Asia suffered month last year. formerly the Air Cargo 5.9% over the previous 12 the biggest drops in volume. The threat of a freight Management Group, said the months, to 1.04 billion RTKs, but Shanghai Pudong downturn has not discouraged disappointing November results its full year cargo traffic growth International Airport Cargo some carriers from bringing in were a preview for an overall rose by 4.2%. Terminal, the largest cargo more capacity to their cargo diminished peak season for air Singapore Airlines freight handler at Shanghai’s Pudong fleets. Atlas Air Worldwide freight, as volumes and traffic traffic declined 5% and its cargo Airport, reported its December Holdings, which operates declined across all regions. load factor was down 3.5 points cargo handling had declined by all-cargo aircraft for airlines, said “But considering the current to 63.3%. Taiwan’s EVA Air 5.8% over December 2017. It Japan’s Nippon Cargo Airlines negotiations between the U.S. reported a 6.2% year-on-year largely blamed falling inbound has added three Nippon Cargo- and China and the government decline for December, which international cargo volumes of owned B747-400 freighters to its shutdown in the U.S. that is was the carrier’s lowest traffic 13.5% for December drop. In the operations, bringing to five the beginning to affect aviation month since February 2018. second half of 2018 cargo traffic B747-400Fs Atlas flies on behalf across the country, we would not Guangzhou-based China had declined every month to of the carrier. The aircraft will be surprised to see year-on-year Southern Airlines reported a 3% December 31. be operated on the trans-Pacific comparisons continue to suffer in fall off in December cargo traffic At South Korea’s Incheon route and are scheduled to the near-term,” it said. compared with a year ago. Airport, a North Asia air cargo sequentially enter service in April, The consultancy reported Hong Kong International hub, freight traffic was 5.2% July and September. ■

suggest China’s economy has cooled faster than expected, Toll of the trade war despite Beijing’s introduction of several expansionary measures here is little doubt heat in their tariff talks. ING said a fall in electronic in recent months that have that the China-U.S. For airlines, it is slowing shipments could be related to included expanded infrastructure trade impasse is the demand in the electronics sector foreign companies avoiding spending and tax cuts. major reason for that is most worrying. incorporation of China-made Some analysts believed uncertainty in the ANZ Bank chief economist, electronic components in their China will have to speed up and Tair cargo sector as China is the Raymond Leung, wrote last products and also predicted intensify its policy easing and major driver of air cargo growth month that “a trade recession is exports and imports of electronic stimulus measures after factory and not only in the Asia-Pacific. likely, in our view” and predicted parts and goods would likely activity shrank in December. Last month, it was revealed a period of export contraction shrink this year. Sales of products “Today’s data reflect an end to exports in December from China similar to 2015- 2016. from iPhones to cars are falling export front-loading and the suffered their biggest fall in two “The global electronics cycle off. Apple has warned of start of payback effects, while years, by 4.4%, and imports also remains the key driver of Chinese declining demand for its iconic the global slowdown could also contracted, figures that pointed exports. A potential downturn phones and has announced weigh on China’s exports,” to a growing weakness in the in the sector poses the real risk sweeping job cuts because of Nomura economists wrote in a world’s second largest economy. to China’s external outlook even reduced demand. note. Demand in most of China’s if China and the U.S. reach a Analysts said the dismal It said there was a surge major markets is weakening. resolution in their trade dispute.” December trade readings of shipments to the U.S. over Imports dropped 7.6%, their much of last year as companies biggest decline since July 2016. rushed to beat further tariffs. Analysts had expected export “The export growth print also growth to slow to 3% and suggested the recent strength imports to increase by 5%. of the yuan might be short-lived; Data also showed China posted Beijing will perhaps be more its biggest trade surplus with eager to strike a trade deal with the U.S. on record last year, the U.S. and that policymakers which has prompted fears U.S. will need to take more aggressive President Trump could use the measures to stabilize GDP negative data to increase the growth,” Nomura said. ■

28 / ORIENT AVIATION / FEBRUARY 2019 NEWS

Brazil gives Boeing-Embraer union crucial approval

oeing could complete the joint venture is ratified by all with the Boeing brand. its US$4.2 billion deal stakeholders, analysts forecast. Strategically, adding to acquire 80% of Embraer’s private shareholders Embraer’s jets to the Boeing Embraer commercial must cast their vote on the deal portfolio will counter the aircraft operations by by mid this month. integration of Bombardier’s Byear end following the Brazilian Winning Brazilian C-Series medium-range airliners, government’s approval of the government approval for a now known as the A220 family, proposed joint venture last restructured Embraer has been into the Airbus commercial month and the agreement of the the biggest hurdle to Boeing’s aircraft product line. Embraer board to the partnership proposed 80% acquisition of On the defence front, Boeing soon afterwards. the South American aircraft and Embraer have agreed to Boeing and Embraer issued manufacturer. If approved by set up a separate joint venture a joint statement on January shareholders, the joint venture to develop new markets for 11 that noted a “strategic partners must then apply for Embraer’s KC-390 multi-mission partnership that will position both regulatory approval in several medium airlift helicopter. was approved under the terms companies to accelerate growth countries and sequentially Embraer will retain majority in the proposed. in global aerospace markets”. address closing conditions for the new structure (51%) with Boeing But a later statement issued The new Brazilian government, transaction. In their statement, holding the remaining equity of by his office said his government elected on January 1, said the the two manufacturers 49%. had analyzed the proposal and venture would preserve current anticipated the deal would be The January announcement found that it “preserves (Brazil’s) employment at Embraer in completed in December this year. ended weeks of uncertainty sovereignty and the national Brazil but acknowledged the The Boeing/Embraer about the merger as the Brazilian interests”. While Boeing would sale had provoked controversy partnership will produce aircraft government appeared hesitant gain control of Embraer, the two domestically. for the commercial aircraft about signing off on the manufacturers would “maintain In December, left leaning “mid-market” of 70 to 150 politically sensitive deal. Shortly the current jobs in Brazil”, he politicians and union leaders passengers that includes the after assuming the presidency said, which would appease mounted two separate efforts Embraer E-Series and the latest last month, Jair Bolsonaro, a far unions and politicians who feared to block the sale but lost their E-Jet E2 twin-engine narrow right leader and former army job losses at Embraer factories cases in the courts. Opposition body. Boeing has not revealed if captain, said Boeing could end up from consolidation of the two to the sale will continue until it will re-christen the Embraer jets owning all of Embraer if the deal companies. ■

FEBRUARYRY 2019 / ORIENT AVIATION / 29 INDUSTRY ADDENDUM

Eagle Services Asia commences P&W GTF MRO

Pratt & Whitney’s Singapore engine centre, Eagle Services Asia (ESA), part of the group’s global MRO network for servicing the engine manufacturer’s GTF engines, has commenced its first overhaul of the PW1100G-JM turbo fan engine. Eagle Services Asia is a joint venture between Airbus breaks ground on engine clients faster, more efficient access to SIA Engineering and United Technology lessor services and maximize their return on subsidiary, Pratt & Whitney. U.S. A220 plant their engine investments. ESA invested almost US$85 million to At press time, LessorCare had upgrade the Singapore facility to perform Airbus leaders and 700 guests attended attracted 14 customers which the OEM said GTF MRO that included modernizing the groundbreaking ceremony of its A220 represented almost half of its leased wide tooling equipment and machinery, adding assembly line in Mobile, Alabama on January body engine fleet. advanced digital capabilities and training 16. The facility, which will supply North LifeKey is replacing the Operating Lessor staff to operate the updated complex, Pratt American customers, is the European aircraft Engine Restoration Agreement (OPERA) & Whitney senior director aftermarket manufacturer’s second commercial aircraft and complements LessorCare because it services –Asia-Pacific, Brendon McWilliam. production facility in the U.S. It will be built improves visibility, accessibility, portability adjacent to Airbus’s A320 family production and liquidity of lessor engine assets. line and completed next year. Avolon OEM Team Head, Paul Geaney, Production of the 100-150 seat A220- said: “As the launch customer for LessorCare, 100s and A220-300s will commence in the we are very pleased to conclude our LifeKey third quarter of this year with first delivery agreement with Rolls-Royce. LifeKey provides scheduled in 2020. A minimum of 500 orders significant security enhancements to Avolon have been placed for the aircraft that will be and demonstrates that among OEMs. powered by Pratt & Whitney’s PW1500G “Rolls-Royce is at the forefront of geared turbofan engines. ■ developing products that address the needs of the leasing industry. This agreement is more evidence of Avolon’s deep and growing LEASING relationship with Rolls-Royce.” Rolls-Royce senior vice president customer business civil aerospace, Simon Avolon launch customer for Goodson, said he looked forward to working Current PW4000 and Engine Alliance Rolls-Royce’s LifeKey closely with Avolon “to maximize shared GP7200 engine customers also will benefit opportunities” and also to demonstrate to the from the centre’s modernization, the OEM Global aircraft lessor, Avolon, is the first industry that Rolls-Royce’s development in said. Engine Alliance is a joint venture customer of Rolls-Royce’s LifeKey, the this sector provides value for customers. ■ between Pratt & Whitney and General recently established asset management Electric whose engines have competed with facility available exclusively to customers of Rolls-Royce for A380 propulsion contracts, one-year-old LessorCare. BRIEFLY … most notably with Emirates Airline. LessorCare’s strategy is to offer Trent ESA is introducing a ground based flow • Samoa Airways, the flag carrier of system in its hangars that enables visual line Samoa, will lease a B737MAX 9, powered of sight on the GTF engine overhaul line. by CFM LEAP-1B27 engines, from U.S. Engine modules will move from one station to headquartered Air Lease Corporation. It another through the stages of MRO checks; a will operate between Apia, the capital of the system developed by auto manufacturers. Pacific island nation and Australia and New ESA managing director, Ying-Kiong Zealand following delivery in the final quarter Yip, said: “In addition to broadening our of the year. capabilities on next generation aircraft • Aircraft leasing platform, Aergo, engines, this expansion enables us to invest has hired Antony Snelleman as co-chief in our engineers and technicians by training commercial officer and global head of risk. them to handle advanced materials and An economics graduate from Queensland automation.” ■ University, Snellemen will be based in Hong

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Kong where he also will be responsible for the lessor’s Asia-Pacific business development. ■

INNOVATION

Airbus in Shenzhen enters cabin technology of delivering TCS services to the airline’s International Airport in Jakarta. partnership B787 fleet.■ The terms of the LoI, which were announced late last year, build on a February The Airbus China Innovation Centre 2017 agreement between the partners to (ACIA), the OEM’s first innovation complex GMF AeroAsia sign parts manage the supply of materials for third party to be established in Asia, has signed a agreement with Satair Airbus maintenance checks. Memorandum of Understanding (MoU) with GMF AeroAsia director of business and global manufacturer of flexible displays, Garuda Maintenance Facility (GMF) and base operations, Tazar Marta Kurniawan, sensors and foldable phones, Royole Satair, a subsidiary of Airbus, have agreed said the “availability of materials is one of Technology. a Letter of Intent (LoT) that confirms the the crucial aspects of maintenance with the The two companies will develop a European company as the sole supplier of partnership. We expect to further increase digitalized and personalized cabin to improve material support for Airbus’s third party our support to third party customers by the safety, environment and energy usage maintenance work at the Indonesian MRO’s minimizing extended turnaround times of airliner interiors. The MoU allows the four hangar facility at the Soekarno Hatta because of lack of materials supply.” ■ partners to extend their relationship to manufacturing commercial applications of the technology. SITAONAIR & Rolls-Royce Based in southern China’s Shenzhen, the unite to overcome airline Mainland’s Silicon Valley, the goal of the ACIC is to bring together the city’s technological resistance to sharing data talent pool with Airbus’s expertise to produce break through aerospace technologies to Engine OEM, Rolls-Royce is the launch fuel the global OEM’s growth. ACIC’s official customer for SITAONAIR’s e-aircraft opening is planned for the early months of DataHub. The cloud-based hub allows this year. ■ airlines to share selected aircraft data from diverse fleets, aircraft models and formats SITAONAIR portfolio head e-Aircraft, with their chosen OEMs without charge. Pierre-Yves Benain, said: “our aircraft data MRO As data analytics takes centre stage hub services helps navigate the complex in delivering cheaper and more accurate ocean of connected data and identifies MRO solutions to airlines, the issue of trust actionable insights for both airlines and Japan Airlines and has emerged in the fast developing sector. OEMS. Lufthansa Technik deepen “Several hurdles have hampered “We keep the control and ownership progress, “ said SITAONAIR, when it of the data in the airline’s hands while component relationship announced the Rolls-Royce partnership providing OEMs with greater insights that last month. will enhance their products. Japan Airlines (JAL) and MRO, Lufthansa An issue it said was airlines’ reluctance “No other solution puts airlines in Technik, have expanded their partnership to to permit OEMs access to sensitive control of their data sharing with third include a ten-year Total Component Support data. Another barrier, to date, was “the parties in this way.” (TCS) services for the Japanese carrier’s complexity of achieving timely and tailored Rolls-Royce head of product A350s. The airline has ordered 31 of the type and secure data transfer and distribution” management, servitisation and user and also holds 25 options for the aircraft. to all actors in the chain. experience, Nick Ward, said: “This is a The new contract covers most of JAL’s The e-Aircraft DataHub collects an powerful solution, enabling us to work with A350 components as well as maintenance, airline’s raw authorized data and then valued airline customers to extract greater programs for reliability monitoring and classifies, decodes, stores and dispatches value from aircraft data, in a trusted way, to enhancement and logistical services. the appropriate data sets to a carrier’s improve aircraft availability and minimize JAL has been a committed customer of specified OEM. operational costs.” ■ the global MRO that has included eight years

FEBRUARY 2019 / ORIENT AVIATION / 31 INDUSTRY ADDENDUM

Travelport and Jin Air imbuing the team with an execution driver culture of competency,” Chang said. establish technology “Pat will lead our teams with the broader partnership role of focusing on corporate and strategic issues, which are critical to our efforts to Travelport and South Korean low-cost advance our business and help us innovate carrier, Jin Air, have signed a multi-year and strengthen relationships with key comprehensive agreement for merchandising, business partners.” ■ branding and technology collaboration. the third quarter of the year to 2021. Jin Air, South Korea’s second largest LCC, ALC executive vice president and has a 26 aircraft fleet that serves a network of managing director Asia, Jie Chen, said last Norman Liu takes GE Telesis 30 domestic and international destinations. week that more A321-200neo deliveries to board seat Travelport will provide Jin Air with fares and Vietnam would take place in coming weeks. content accessible to Travelport connected The airline also has leased two A330-200s Retired chairman, president and CEO of travel agencies via the Travelport Rich from ALC, bringing the number of aircraft the GE Capital Aviation Services, Norman Liu, Content and Branding Merchandise Solution. Los Angeles-headquartered lessor will have has joined the board of GA Telesis as an leased to the carrier to 22. ■ independent director. Liu retired from the global commercial aircraft leasing and financing firm in PEOPLE December 2016 after 30 years with GE and is now a senior advisor to several companies in CDB Aviation promotes the aviation and infrastructure sectors. ■ Hannigan to president “Travelport’s innovative solutions will Harry Forsythe moves to not only expand our reach tomore agencies CDB Aviation, a wholly owned subsidiary Kahala Aviation and global travelers, but also help us to fulful of China Development Bank Financial their personalized needs. In collaboration Leasing Co. Ltd, has added to the position of Kahala Aviation Corporation Limited has with Travelport, we look forward to bringing president to the responsibilities of its chief announced Harry Forsythe has joined the safe, enjoyable and unique travel experiences commercial officer, Patrick Hannigan, with lessor as its senior marketing representative. to more travelers around the globe,” a Jin Air immediate effect. Forsythe was deputy CEO and chief statement said. Before he took up his chief commercial commercial officer at Asia Aviation Capital, Travelport vice president Asia-Pacific officer role at CDB Aviation, Hannigan was a based in Singapore for the last two years, air partners, Chris Ramm, said: “We are founding shareholder and head of EMEA for and executive vice president marketing committed to understanding airlines’ Avolon. He joined the Mainland owned lessor at Macquarie AirFinance from 2010 to technology and commercial needs. Our in January 2017 at the same time CEO Peter November 2015. teams work hard to help airlines efficiently Chang came on board. For the previous 17 years he held reach and attract travel buyers in every “Pat and I have been working closely senior marketing roles for AWAS in the channel.” ■ together since he joined our top caliber team Asia-Pacific.■ in 2017 to focus on growth, expanding the aircraft portfolio and customer base and AIRLINES AAR names new chief financial officer

Air Lease Corporation Global aerospace solutions company, AAR delivers As321neo to Corp. has appointed Sean Gillen to succeed Michael Milligan as vice president and Vietnam Airlines chief financial officer of the U.S. group. He will report to AAR president and CEO, John Vietnam Airlines has accepted an on lease Holmes. A321-200neo from global lessor, Air Lease Previously, Gillen was vice president and Corporation (ALC). treasurer of construction group, Chicago- The arrival of the jet in Hanoi is the first headquartered USG, which reports net of 12 of the aircraft type the flag carrier has annual sales of US$3.2 billion. Before that, he leased from ALC’s order book with Airbus. spent seven years as an investment banker The airline also is scheduled to take in the Global Industrials Group of Goldman delivery of eight on lease ALC B787-10s from Sachs. ■

32 / ORIENT AVIATION / FEBRUARY 2019 INDUSTRY INSIGHT SPECIAL REPORT MEETING THE EXPECTATIONS OF THE ASIA-PACIFIC MILLENNIAL PASSENGER

from the brands with which they interact. What a passenger “Studies reveal that 69% of customers are more loyal to companies that personalise their must have — now experiences, which is especially true for millennials who are known to value experiences over What do airline passengers expect when they embark on their material goods. airline journeys? Simple. They dream of hassle-free travel from “As consumer trends continue to evolve, airlines can their departure airport to the flight and onto their destination. adopt strategies to deliver next Along the way they demand their experiences at 35,000 feet generation customer experiences mirror their lives on the ground. by taking charge of the potential passengers from the commencement of their journeys to boarding and the flight itself.” By chief correspondent, Tom Ballantyne The Asia-Pacific is forecast to handle four billion passengers, passengers (45%) have travelled more than half of the world’s on flights offering the service, passenger traffic, by 2036. the Inmarsat survey found. “Smart use of technology can Inmarsat said the survey help manage the challenges led it to conclude that inflight of rising passenger numbers, WiFi is a key driver in developing limited infrastructure and airline customer satisfaction and increased complexity, said digital loyalty. More than two-thirds analytics and solutions provider, of all passengers (67%) are SITA. more likely to rebook with an “Biometrics is becoming airline if quality inflight Wi-Fi is more commonplace at airports available. The breakdown is 83% worldwide. SITA is working for business travellers and 81% with around 40 governments to for passengers travelling with providing border management e take WiFi Inflight Connectivity Survey said children. solutions. We also have biometric availability for Wi-Fi is “fundamental” to daily “In the digital age, self-service solutions operating granted on life and more than half (55%) of consumers feel more worldwide, including Australia, the ground. In respondents said the service was empowered,” said Sabre Airline USA, Mexico and the Middle the air, some crucial to their travel experience. Solutions vice president and East,” SITA said. Wairlines offer it. Many do not - Premium passengers, general manager Asia-Pacific, Seamless travel required and they are penny pinching to parents and younger passengers Dasha Kuksenko. “With the turning traditional methods their detriment. Survey upon are among those most likely advent of mobile devices, on their heads. Airlines must survey reveals WiFi on board is to use inflight Wi-Fi service. consumers can accomplish “unlearn” the methods that critical to attracting and retaining “Whether it’s used for sending tasks with just a few taps and made the industry a success customers. that important work email, are increasingly expecting more in the past, said IATA’s FDS Global mobile entertaining the children Transformation Director, Eric communications provider, or connecting with fellow Leopold. Inmarsat Aviation, recently passengers, staying online is Speaking at IATA’s recent reported demand for WiFi service a crucial part of the inflight Global Media Day, he said not on flights was so critical to a experience for today’s airline all airlines will move at the same passenger’s flying experience passengers,” said Inmarsat pace in the digital revolution, that they were prepared Aviation president, Philip Balaam. but they understand it cannot to sacrifice alcoholic drinks Demand for inflight WiFi be avoided. Seamless shopping and meals in exchange for outstrips supply. Passengers can experiences corroborated this guaranteed WiFi service to their send emails, search the Internet trend as customers expect seat. and more on some flights, but real-time information and zero More than three quarters of access is “spotty” from airline to click payments as the standard those polled (78%) in a global airline. Less than half of global for digital purchases, he said.

FEBRUARY 2019 / ORIENT AVIATION / 33 INDUSTRY INSIGHT SPECIAL REPORT MEETING THE EXPECTATIONS OF THE ASIA-PACIFIC MILLENNIAL PASSENGER

IT said: “Self-service continues IATA’s Head of Passenger Priorities for passengers to reduce passenger processing Security, Guido Peetermans, said times at airports. Passenger the global airline association’s Despite the abundance of surveys that promote Wi-Fi on board processing at off-airport locations strategy is to open borders and it rates as number four in passenger priorities. More important is is another element in the tech- improve passenger processing the airline’s reputation (1), free checked baggage (2) and extra savvy airport’s toolkit. By 2021, efficiency. It is encouraging leg room (3). Other key “wants” of air travellers, some of them admittedly unrealistic, are: 46% plan to have off-airport countries to use data from • No queues at check-in services,” its interactive API (Advanced • Efficient and rapid immigration processes on departure and Almost 90% of airports Passenger Information) systems arrival have check-in kiosks and they to replace traditional visas with • Seamless passage through security and standardization of are forecast to be integral to e-Visas. security requirements across the world the operations of all airlines by It also wants to promote • Real time baggage tracking 2022. Self-service for baggage automated border control (ABC) • Mobile connectivity with real time information from their processing is becoming more systems that read ePassports airline about delays, gate changes and other factors that affect common with 78% of airlines and advocates IATA’s Fast Travel their journeys. intending to put in place practices of more self-service, unassisted bag drop systems in automation and advanced the short to medium term. screening, self-check-in, bag In the next three years, 77% drop, immigration and self- of airports are planning major boarding. programs or R&D in biometric ID For passengers, lots of management, with overall airport entertainment on board is a IT spend expected to reach far must, particularly for long-haul beyond the $10 billion of the last journeys. Carriers in the region 12 months. and Gulf airlines have well- SITA boss, Barbara Dalibard, earned reputations for providing said: “As the research shows, top class IFE to their passengers, integration causes challenges and especially as their systems are the variety of legislative demands continually upgraded. can be daunting for airlines and An example was an Emirates airports. To deliver a seamless Airline announcement in January passenger experience, we must that it will upgrade the Emirates all collaborate – airlines, airports, mobile App to allow passengers governments and industry to create their own playlists suppliers – and use technology ahead of their flights and sync to automate and even eliminate it to their seats after boarding. Enhanced processes such far ahead of the rest of the world. tedious processes. We achieve Flyers can choose the music, as automation, new distribution China’s WeChat holds 86.7% the best results when we work movies or TV shows they want to and payment capabilities and of domestic market share for together.” enjoy during a flight. ■ business model changes are messaging apps and it was only “transformation horizons” that launched in 2011. KakaoTalk should be under consideration in South Korea dominates the Qantas passengers submit for carriers, he said. IATA is local market where 99.2%, or working on a range of initiatives, 99 million users, are KaKaoTalk bucket lists for ultra-long flights including ONE Order (ticketing subscribers. In China, 60% of With Qantas “Sunrise” ultra-long haul flights from Sydney to processes) and ONE ID (check-in online bookings are made by London and New York on the drawing board for launch in 2022, processes), to redefine the smartphone. In North America it the Australian carrier asked its customers for their bucket lists passenger experience. Both are is 28% and Europe 33%. of services they would like available on the 22-hour journeys. They included: vital components in the quest Another messaging app is * Sense of separation: virtual reality relaxation zones, audio to offer a seamless journey for LINE, with nearly 200 million mindfulness experiences and broader inflight entertainment customers. active users per month in * Spaces to do stretching and gentle exercising Airlines must look at other Japan, Taiwan and Thailand. It * Dedicated exercise zones that included exercise bikes and industries to be abreast of trends. is expanding in Hong Kong and rowers Messaging Apps, for example, Singapore. Such high traffic sites * Refresh stations that offered cold drinks and snacks are having a huge impact on the offer huge opportunities for * An inflight café that served both alcoholic and non-alcoholic hotel business. In terms of mobile airlines to reach new customers. drinks, snacks and “treat” foods. booking rates for hotels, Asia is SITA’s 2018 Air Transport

34 / ORIENT AVIATION / FEBRUARY 2019 No.1 Asia-Pacific commercial aviation magazine

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