Vol. 24 No. 5 June 2017 orientaviation.com
NEW NORMAL FOR CHINA AIRLINES
Chairman Nuan-Hsuan Ho has adapted the airline’s strategy to Taiwan’s changed political climate
China to open Japan’s low-cost THAI makes more civilian carrier, Peach Aviation, progress in airspace accepts bitcoin leadership search
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ORIENT AVIATION MEDIA GROUP Mailing address: GPO Box 11435 Hong Kong Office: 17/F Hang Wai Commercial Building, 231-233 Queen’s Road East, Wanchai, Hong Kong Tel: Editorial (852) 2865 1013 E-mail: [email protected] Website: www.orientaviation.com NEW NORMAL
Publisher & Editor-in-Chief Christine McGee AT TAIWAN’S E-mail: [email protected]
Chief Correspondent CHINA AIRLINES Tom Ballantyne Tel: (612) 9638 6895 China Airlines chairman, Nuan-Hsuan Ho, Fax: (612) 9684 2776 has profits in mind as his airline adjusts to E-mail: [email protected] a new political regime Greater China Correspondent Dominic Lalk Tel: (852) 2865 1013 E-mail: [email protected] COMMENT 18 China slow to succumb to Hawaii’s charms
North Asia Correspondent 7 Baffled by bans 28 THAI makes progress in leadership search Geoffrey Tudor 28 By the book at HNA Group Tel: (813) 3373 8368 E-mail: [email protected] ADDENDUM 29 Airlines must adapt and “sell more stuff” 8 Counter intuitive Bellew strikes again 30 No more lost luggage from 2018 India Correspondent R. Thomas 8 China to open more airspace for civilian flights 30 ICAO calls out ASEAN for infrastructure shortfalls Tel: (852) 2865 1013 8 Air India boss says his staff are the “finest there 31 Sydney finally receives second airport go ahead E-mail: [email protected] is” Photographers 9 Asia’s airline association adds voice to laptop ban INDUSTRY ADDENDUM Rob Finlayson, Graham Uden, Ryan Peters protests 32 Malaysia Airlines extends AFI KLM E&M 9 Japan’s low-cost carrier, Peach Aviation, accepts agreement Chief Designer Chan Ping Kwan bitcoin for fares
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Asia-Pacific, Europe & Middle East Clive Richardson 9 Airbus announces independent compliance panel 32 Asia’s MRO business to double by 2027 Tel: (44) 7501 185257 E-mail: [email protected] 32 Lufthansa Technik develops ground handling NEWS BACKGROUNDERS location software The Americas / Canada Barnes Media Associates 10 AirAsia to win region’s prize – AirAsia China 32 AerFin acquires Saudia’s 15 Embraer 170-LRs Ray Barnes 32 Mobil Jet Oil approved for PW4000 engines Tel: (1 434) 770 4108 Fax: (1 434) 927 5101 32 Alsim sells simulator to Indonesia E-mail: [email protected] 32 China’s CDB wins Mainland single aisle leases [email protected] INDUSTRY INSIGHT SPECIAL REPORT Follow us on Twitter @orientaviation Big Data changing the face of Asia-Pacific aviation also - keep up with the news of the week with Orient Aviation’s Week in 34 No place to hide from Big Data the Asia-Pacific 36 Getting to the heart of the engine
© All rights reserved 16 Star loosens rules to attract new members 37 Pressure of keeping up with customer Wilson Press HK Ltd., 17 Air New Zealand leaves competitors in its expectations Hong Kong, 2017 slipstream 38 MRO transformed by Big Data impact
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Baffled by bans
Even if the U.S. government does not extend its ban on Asia-Pacific and South America? passengers’ personal electronic devices (PEDs) beyond Just as alarming is the knowledge that several hundred the Middle East and North Africa, the present ruling raises lithium-powered PEDs are being stored in cargo holds, serious issues of safety and security for airlines. where they remain out of reach of crew and where they In May, both European and U.S. security officials could catch fire. confirmed bans on PEDs being carried into the cabin from No one argues with the fact that the U.S. has the more airports worldwide could be imposed; information sovereign right to take additional security measures when that is greatly concerning to the International Air Transport intelligence information suggests it is necessary. But Association and its 265 members. Washington’s reaction is a perfect example of regulation on Apart from the operational disruption it is unleashing the run. in effected countries, the prohibition is producing knock There was no informed consultation with the airline on effects. Foreign tourists to the U.S. are dropping off and industry. The bans were announced without a common sense premium travel is being hit by business travelers who want to appraisal of unintended consequences of the bans. Airlines work on board with their laptops. want all that to change. IATA said the impact on airlines also includes higher costs IATA wants governments to increase checks on the at carriers for extra handling for hold baggage, departure ground before passengers board their flights. They would like delays from increased screening procedures, airlines’ sniffer dogs at airports where PEDs are perceived as threats liability for theft or damage to checked PEDs and a potential and believe security staff should receive more specialized reduction in flight frequencies based on lower yields. training to screen PEDs. The airline association estimated the total impact of the And one more point. Once again, airlines are largely bans will be $1.1 billion annually. bearing the cost and logistical burdens of implementing Imagine the cost to the industry if the bans spread to the government policy. Is that fair? ■
TOM BALLANTYNE Chief Correspondent Orient Aviation Media Group
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JUNE 2017 / ORIENT AVIATION / 7 ADDENDUM
Counter intuitive Bellew strikes again
Malaysia Airlines Berhad (MAB) group an ancillary add-on. They will have a 36-inch managing director and CEO, Peter Bellew, seat pitch and will be sold as XL in size. is bucking the industry trend by including a “We believe premium economy will four-seat first class in the airline’s new A350s. damage our business class revenue in a very He also has decided, again against current negative way,” Bellew said, and added “the industry practice, that MAB will not have carrier will be creating a world class business premium economy on the new Airbus jets. product in the next 12 months and that Bellew told Orient Aviation in May that needs a very sharp focus’’. the first class cabin would be smaller than the MAB is evaluating a 25-30 wide body eight suites on each of its six A380s, but that order. It is assessing the A330neo, the the airline had more demand than four seats A350 and the B787-9. “We do not have an right now. “It is actually not enough,” he said. attractive enough offer yet. We are waiting Instead, MAB will install 25 extra leg for a good offer from the manufacturers,” room seats in economy that can be bought as Bellew said. By Dominic Lalk ■
China to open more airspace for civilian flights
A deputy director of China’s Air Traffic crowded skies and would announce a always has priority over civilian passenger Control Commission, Cai Jun, told a Beijing new “airspace management system” this planes. forum the Mainland government had month. More than 80% of China’s skies are The new Civil Aviation Administration recognized the problem of the country’s controlled by the military and its aircraft of China (CAAC) plan would “integrate management of civil and military aviation”. It will widen the air traffic from key traffic hubs, including the Pearl River and Yangtze River Deltas and the Beijing-Shanghai-Guangzhou corridor. Approximately 22%-25% of flights were delayed in China last year, with weather and air traffic congestion causing most of the disruptions. “We understand that reforming the management of the airspace is an essential need,” Cai told the forum’s delegates. ■
Air India boss defends his staff as “the finest there is”
Air India chairman and managing director, As a result, the airline’s $7.5 billion debt is “cannot be denied or wished away”, but Ashwani Lohani, does not accept criticism “insurmountable” and is “at the root of all the accused many arm chair critics of “a gross lack lightly. Besieged by complaints about the problems that manifest as symptoms to all and of understanding of the issue” and of unfairly carrier’s dire financial performance, he has sundry”, he said. blaming the company and its employees for all taken to Facebook to defend the company Air India is surviving on a $4.7 billion of Air India’s woes. and its employees. government 10-year bailout package and is He acknowledged that “gross In a hard hitting post, Lohani laid the blame struggling to improve its financial position. For mismanagement” at senior management for his airline’s losses at the door of India’s the current fiscal year, the government has levels of Air India had played a part in its rapid previous United Progressive Alliance (UPA) allocated $280.1 million to the carrier. To date, downward slide and questioned “the prudence government, a coalition of centre-left political it has received $3.75 billion in government of a government which appoints senior parties. support. management functionaries” to such positions. “Air India went down due to the ill-fated In its previous financial year, Air India He stoutly defended his entire workforce, decision to merge government-owned Air India posted an operating profit of $16.4 million, including pilots and engineers, and said it needs and domestic Indian Airlines in 2007. It was mainly as a result of lower fuel prices and to be appreciated that Air India always had and not destined to be and was coupled with many improved passenger demand. still has “the finest employees be it pilots, cabin other wrong decisions by the regime,” he wrote. Lohani said the grim financial scenario crew, engineers or the rest”. ■
8 / ORIENT AVIATION / JUNE 2017 ADDENDUM
Asia’s airline association adds voice to laptop ban protests
The ripple effects of the recent laptop bans stay connected to the internet and social prior consultation with the airline industry, and their proposed expansion produce no media onboard. “Airlines are responding the bans have resulted in confusion at tangible public security benefits, the region’s to these demands by investing heavily in affected airports as airlines scramble to airline association said last month. inflight connectivity in newer passenger comply with the directives while dealing with “They would only serve to further the aircraft,” he said. unhappy passengers who can no longer take aims of the terrorists, who measure their “Already, passengers are subject to their PEDs into the cabin,” he said. success by how much society over-reacts to onerous and inconsistent security screening “In addition, safety issues related to their provocations,” said the director general measures before boarding a flight and endure large numbers of lithium battery powered of the Association of Asia-Pacific Airlines, wide variations in screening procedures at PEDs being stowed in aircraft cargo holds is Andrew Herdman. different airports. Many of them are calling contrary to recognized best safety practices “Rather than focus on generalized for the streamlining of passenger processing and remain unresolved.” screening of innocent passengers, past at airports.” “Despite recent events, public experience with evolving threats and terrorist Bans on large PEDs implemented by the confidence in the safety and security of air plots repeatedly highlights the critical U.S. and UK on inbound flights from specific travel remains high. It would be a tragedy importance of effective intelligence gathering foreign airports “raise many unanswered if this confidence was undermined by and analysis.” questions” and have had led to significant ill-judged reactionary measures being Herdman said airline passengers travel changes in airline operations and disruption misguidedly imposed by those entrusted with with multiple personal electronic devices to the travelling public, the AAPA said. maintaining public safety.” See Unintended (PED) and expect to work, watch films and “Implemented at short notice without Consequences page 12. ■
Japan’s Peach aviation accepts bitcoin fares
Successful Japanese low-cost carrier, The Japanese government has Peach Aviation, will be the first airline in established a licensing system for the the country to accept payment for fares in currency exchanges and fund transfer bitcoin. Kansai-based Peach has embraced companies that accept bitcoin. The market bitcoin to exploit Japan’s fascination with driven decision takes Peach into a group the crypto currency. Acceptance of the of 5,000 businesses that are seeking the virtual money for fare payments is aimed custom of high spending Chinese tourists. at Peach’s younger Chinese passengers, The big spenders pay with bitcoin via reported the Financial Times from Japan. intermediary settlement systems, the Peach’s chief executive, Shinichi Inoue, newspaper said. Peach, which has focused said: “We want to encourage visitors from its growth on North Asia, is 66% owned by overseas and also the revitalization of ANA HOLDINGS, the parent company of All Japan’s regions.” Nippon Airways. ■
Airbus announces independent compliance panel
Airbus announced last month it would purchases in Thailand and Indonesia. French establish a three-member independent and British authorities are examining the panel to review the company’s compliance alleged use of middle men to win business with contemporary anti-bribery laws. Panel for Airbus . Airbus Group CEO, Tom Enders, members are litigation lawyer, Lord Gold, said the aircraft manufacturing group has former French minister for European Affairs been co-operating fully with UK and French and a member of France’s highest court on investigators and that improving Airbus’ administration and tax, Noelle Lenoir, and compliance system was obviously “our former German finance minister, Theodor number one priority now”. Waigel. “To embed irreproachable behaviours in Airbus is being investigated for alleged all our business undertakings sustainably, we corrupt behavior when securing orders for must take a hard look at both our systems and aircraft, including deals made for airplane our cultures,” he said. ■
JUNE 2017 / ORIENT AVIATION / 9 NEWS BACKGROUNDER
AirAsia wins the region’s prize - AirAsia China
Malaysia’s AirAsia Group has built a stable of budget subsidiaries across the Asia-Pacific. Now it is set to put the icing on the no-frills cake with a joint venture carrier in China, an achievement that will take the group’s business to a new level.
Tom Ballantyne reports
any airlines plans for its central and western across the region regions,” said Fernandes. have been avidly Henan government’s seeking a share deputy governor, Shu Qing, said: of China’s fast “Zhengzhou was once the capital Mgrowing air passenger market, of ancient China; with AirAsia but it was revealed in May that supporting the city’s aeropolis Malaysia’s AirAsia Group has – an industrial, commercial and pretty much beaten everyone logistics zone five times the size to the punch with the surprise of Manhattan with the airport announcement that there will at its heart – we have absolute soon be an AirAsia China. confidence we will succeed in AirAsia Group CEO, transforming Zhengzhou into the Tony Fernandes, has signed a India and the Middle East to the been revealed. new hub for global transport and Memorandum of Understanding west, and ASEAN at the centre. The AirAsia Group has ordered logistics.” (MoU) with China Everbright “It represents an unbelievable 294 A20neo and 100 A321neo. China Everbright Group vice Financial Holdings and the foundation to drive growth for our Some of these aircraft could be chairman and president, Gao provincial government of Henan partners and catapult change in earmarked for AirAsia China. In Yunlong, said China “is ready for to establish budget carrier, AirAsia the region.” 2005, AirAsia became the first the world’s leading LCC. We feel China, in the province’s capital of Why Zhengzhou? Built on foreign LCC to fly into China. It AirAsia can deliver on that promise Zhengzhou. the southern bank of the Yellow has carried more than 40 million by providing real value to Chinese The new partners will invest River, it is one of the Eight Great passengers on its flights to and travellers thanks to its unique in the development of a low-cost Ancient Capitals of China. More from the Mainland. The budget combination of low fares and terminal at Xinzheng International importantly, for a budget airline, it carrier and a subsidiary, AirAsia X, world-class service.” Airport, an MRO facility and a has a population of 9.3 million in a fly to 15 destinations in China. AirAsia co-founder and training academy for airline crew. province of 95 million people. Fernandes, Everbright’s executive chairman, Datuk “This Chinese venture In a report by The Economist executive director and president, Kamarudin Meranun, said the represents the final piece of the Intelligence Unit on China, Wang Weifeng, and Henan MoU was the latest in a long line AirAsia puzzle,” said Fernandes. Zhengzhou was named as one Airport Group’s vice chairman and of strategic collaborations with “In just 16 years, we have of the 13 emerging megacities president, Li Weidong, signed the Chinese companies, from Tencent, successfully built a presence in on the Mainland. Zhengzhou’s MoU in Zhengzhou in the presence Alipay and Union Pay to ICBC for Malaysia, Thailand, Indonesia, the airport handles just over 20 of Malaysia’s prime minister, Najib aircraft financing and CALC for Philippines, India and Japan, with million passengers annually and Razak. aircraft leasing. China closing the loop on all major has forecast a sharp increase in “We chose Zhengzhou as “We are working closely with territories in the region. passengers in coming years. our base because of its strategic Huawei to create a digital airline “AirAsia can now live up to No details of the carrier’s location and importance as a and a smart airport to transform its name as the only airline that launch date, fleet and aircraft logistics hub. As China’s gateway the way we fly. We also have connects travellers across the Asia- type have been announced by the to Europe, Zhengzhou sits at the started exploring the COMAC Pacific – from China, Japan and joint venture partners nor has the centre of a vast rail, highway and air C919. China has been good to South Korea in the north, Australia breakdown of the shareholding of transport network that forms the us. We want to give back in a big and New Zealand to the south, each partner in the planned LCC lynchpin of China’s development way,” he said. ■
10 / ORIENT AVIATION / JUNE 2017
MAIN STORY
UNINTENDED CONSEQUENCES Airlines have mounted a campaign for “smarter” application of bans on onboard personal electronic devices.
Tom Ballantyne reports
lans by the U.S. government to extend its March would consider the scale and scope” of the ban. ban on onboard Personal Electronic Devices As the news circulated in the industry, the International (PEDs) beyond the Middle East and North Air Transport Association (IATA) announced that its Africa have propelled the controversial ruling to director general and CEO, Alexandre de Juniac, had written the top of the global airline agenda. Carriers fear to the U.S. Homeland Security chief, John F. Kelly, and the Pthat cargo holds stacked with hundreds of lithium-powered European Commission’s commissioner for Transport, PEDs will threaten safe flight and add layers of cost to Violeta Bulc, to inform them of the “serious concern” its 265 airlines already being challenged by over-capacity and member airlines had about the PED ban. reduced yields, the International Air Transport Association “If, despite this negative impact, governments agree said in official correspondence with U.S. and European additional security measures are necessary, we urge the security and immigration officials. adoption of several short-term measures as alternatives to the Last month, when it was revealed the U.S. government broad extension of the current ban,” de Junaic said. was considering an extension to its onboard PED ban beyond “These alternative measures would avoid the the countries announced in March, airline safety experts said concentration of lithium battery-powered devices in the they were concerned about the danger of inflight fires in an cargo holds of passenger aircraft, which is deemed to create area of an aircraft that cannot accessed by crew. an additional safety threat.” In mid-May, the U.S. Department of Homeland Security De Juniac said the current U.S. PED ban affects 350 spokesman, David Lapan, told reporters in Washington DC flights per week from the Middle East and North Africa. If that countries being assessed were “not solely Europe” and extended to all of Europe, it would additionally impact 390 that an expansion of the bans “was likely”. He said “talks flights a day or more than 2,500 flights a week. This figure
12 / ORIENT AVIATION / JUNE 2017 MAIN STORY
could peak at 3,250 flights weekly in Europe during the peak bigger than a regular cell phone. Washington feared terrorists northern summer holiday season. could hide a bomb in a laptop made from materials that IATA estimated the impact of an extended PED ban cannot be detected by airport security screening. amounted to $1.1 billion annually. It warned the U.S. and After insistent urging from IATA, the International Civil Europe that businesses would cancel trips rather than risk Aviation Organization (ICAO) opened debate with member laptops that contained confidential company information states on the standardization of rules for PEDs onboard. being removed from their owners before boarding. “This Executive director of the European Aviation Safety would have implications for future investment and business Agency (EASA), Patrick Ky, said EASA is responsible for transactions,” the association said. aviation safety in 32 countries and that lithium batteries, An extended PED ban meant more airlines would have considered as dangerous goods, pose a risk of accidental fire. to pay for extra handling of hold baggage and also for Such outbreaks of fire would be even more difficult to departure delays prompted by increased baggage screening contain if they happened in an aircraft’s cargo hold, he said. measures. The delays would have a follow on impact on EASA wants airlines to avoid packing all passenger PEDs subsequent flights from the same gates. in a single container. “Should we go further? I don’t think so The ban also increased airlines’ liability for theft or for the time being. But if we have a fire risk that we think is damage of checked PEDs and had the potential to reduce high, then of course we would take the necessary action,” he flight frequencies as yields fell because of fewer corporate said. customers. ICAO agreed to discussions on the PED ban after the There are indications PED bans in the passenger cabin United Arab Emirates, Egypt and other countries affected by could extend to the Asia-Pacific. Last month, Australia’s it complained their airlines have been unfairly penalized. An prime minister, Malcolm Turnbull, said he was considering ICAO working paper suggested laptops are a greater security following the example of the U.S. and Britain by banning risk in the passenger cabin than in the hold, because hidden PEDs onboard. explosives could be detonated manually. Turnbull said his government was “looking very closely” “The threat to aircraft from concealed Improvised at bans on flights from some Middle Eastern countries. Explosive Devices (IED) has been the greatest security risk to Australia would “work very closely with our partners around commercial aircraft for some years,” it said. the world” in constantly reviewing aviation security, he said. ICAO asked its experts to weigh this threat against the The U.S. PED prohibition affects airline passengers safety risk of storing a larger number of unattended travelling from Amman, Jordan, Kuwait City, Cairo, flammable batteries in a commercial aircraft’s baggage Istanbul, Jeddah, Riyadh, Casablanca, Morocco, Doha, compartment. ICAO’s aviation security panel is expected to Dubai and Abu Dhabi. deliver its recommendations this month, the The British ban covers air journeys from Turkey, organization said. Lebanon, Jordan, Egypt, Tunisia and Saudi Arabia. The U.S. announced the PEDs ban in March and said it would cover electronic devices if they are
JUNE 2017 / ORIENT AVIATION / 13 MAIN STORY
The safety and security of civil air transport are top priorities for IATA and its members. IATA fully acknowledges that security remains the primary responsibility of States, and we understand that the U.S., the UK and other States have compelling reasons to mandate the implementation of counter-measures in response to credible threat intelligence. In doing so, however, we urge all regulators to weigh the impacts of such measures on the passenger, the economy
ICAO cannot and the airlines and therefore impose binding rules, although its consider implementing actions to influence on safety and security standards meant its findings support our shared are largely followed by its 191 member states. According to the working paper, ICAO is looking to “to identify a possible objective in this regard global approach to mitigate the security risk associated with Alexandre de Juniac large portable electronic devices”. International Air Transport Association Speaking in Seoul at IATA’s Safety and Flight director general and CEO Operations Conference in April, de Juniac called for increased dialogue between regulators and the industry to ensure that industry experience and know-how are “We have a common interest in safe and secure flights. incorporated into new regulations and standards on PEDs. Yet last month the U.S. and the UK announced that large electronic devices would be banned from passenger cabins on some flights from the Middle East and North Africa,” he Think before banning said. “There was no consultation with airlines and the measure IATA is seeking more considered implementation of challenged public confidence with inconsistencies, while the bans on in-cabin personal electronic devices (PEDs). The safety concerns about concentrations of lithium batteries in recommendations are: the aircraft hold have not been adequately considered or • Utilizing Explosive Trace Detection (ETD) at primary and secondary checkpoints. It is a widely available and addressed. simple tool that can be used on a continuous and random “The lessons from this are many: governments need to basis on passengers and bags at the boarding gate, without share information. They need to consult with industry and undue negative consequences to service and facilitation they need to support ICAO as it develops a global aviation levels. security plan. • Conducting trace analysis on the PED by visually “The safety and security of civil air transport are top inspecting the device for signs of tampering and determin- priorities for IATA and its members. IATA fully ing the provenance of the device by questioning the pas- acknowledges that security remains the primary senger as to the purposes for carrying a device. This may responsibility of States and we understand that the U.S., the include turning on the device. UK and other States have compelling reasons to mandate the • Deploying behavioral detection officers on both land and airside and use trained canines as a deterrent. implementation of counter-measures in response to credible • Recognizing trusted traveler programs and the threat intelligence. identification of high risk/low risk passengers. “In doing so, however, we urge all regulators to weigh the • Increasing training of screeners to detect this PED- impacts of such measures on the passenger, the economy and based threat. airlines and consider implementing our recommanded actions to support our shared objective in this regard.” ■
14 / ORIENT AVIATION / JUNE 2017 ELIMINATE CREDIT CARD FEES NEW REVENUE STREAMS
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Star loosens rules to attract new members
By Dominic Lalk in Shanghai
oomsayers have make ideal candidates, but Goh and border authorities which don’t. When it comes to full long predicated said they could only become complicated matters. “The airport membership, that is a long road, the golden years members if they added value to authorities need to understand somewhere further.” of global airline the Star network. that this is part of the seamless Star’s immediate focus is alliances were “When Shanghai Airlines left experience we need to offer to transforming the 20-year-old Dover, but Star begs to differ. It Star Alliance, we and Air China our customers. There is no point alliance into an organization that believes its leaner Connecting thought that Air China would putting an alliance in one terminal uses digital technology to deliver Partner Model (CPM) and digital add connectivity from Shanghai. if the process does not work,” on the seamless service promise. transformation in the industry But Pudong, and Hongqiao in Goh said. “We want to be much will ensure its continuing success. particular, are starved of slots. Goh said “there were no more focused on our customer Star board chairman and We have not achieved what airlines in Russia that make sense proposition. They expect a CEO of Copa Airlines, Pedro we had hoped in Shanghai so for us. We are not going to recruit seamless and trouble free Heilbron, told Orient Aviation at Juneyao became an interesting an airline just for the sake of it”. journey,” he said. Star carrier front the alliance’s 20th anniversary proposition,” Goh said. Air Star regards its coverage as line employees now have access to ceremonies in Frankfurt last China sponsored Juneyao’s CPM improving in Australia. “It’s almost inter-Star feeder and connecting month that gaps remain in the membership. the backyard of Singapore Airlines flight information. Until recently, alliance’s network, most notably A former IATA lawyer, Goh and Air New Zealand. Air China these transactions at times in Australia and Russia, but said things looked “a little more is launching a lot of flights into required calling the other airline attracting new members was not flexible” at the new airport in Australia too,” Goh said. involved in rebooking a journey. a priority. “There are not many Beijing. “As soon as the CAAC The Star chief dismissed The alliance has introduced airlines interested in joining that (Civil Aviation Administration persistent rumours that Etihad a baggage hub system that Star is interested in having join, of China) announced who was Airways would join the alliance, tracks bags across alliance although membership is not moving to the new airport, we despite Etihad’s warming relations member airlines. It also plans closed,” Heilbron said. and Air China established a with Star founding member, improvements in retroactive Star’s recent membership working group with BCIA (Beijing Lufthansa. “A lot of these mileage claims and check-in focus has been the CPM, which Capital International Airport). It is developments are on the aviation processes. allows regional, low-cost or hybrid planned that China Eastern and side – MRO, catering and other Star carriers fly more than airlines to be cost efficiently linked China Southern Airlines will move services,” Goh said. 690 million passengers a year. to the Star Alliance network to Daxing but the Star carriers will “On the airline side, it is still Asia-Pacific members are Air without being full members. remain at BCIA. limited. Lufthansa and other China, Air India, Air New Zealand, Juneyao Airlines became the first Goh said ‘Star Gold Track’ Star member carriers will work All Nippon Airways, Asiana CPM member to be inducted into priority services were part of with Etihad on an exceptional Airlines, EVA Airways, Shenzhen Star, at its home base in Shanghai the discussion with BCIA, but basis because Etihad goes to Airlines, Singapore Airlines and on May 23. the talks involved customs places that some of our members Thai Airways International. ■ “The CPM was designed to recapture market share lost to low-cost and hybrid carriers. It also has allowed us to grow more strategically in certain locations,” Star CEO, Jeffrey Goh, told Orient Aviation in Shanghai. “No more than a handful” of other airlines were likely to become Star CPs in the next two years, Goh said. Air India Express, SilkAir and THAI Smile would
16 / ORIENT AVIATION / JUNE 2017 NEWS BACKGROUNDER
Air New Zealand leaves competitors in slip stream
By Dominic Lalk in Frankfurt
ainland Chinese is a lot of rationalisation in the outperforming forecasts. shifted in the last six to nine carriers may market,” Luxon observed. “Buenos Aires has exceeded months to asking how do we be rapidly “People get confronted with our expectations. We have just keep perfecting the customer increasing their economics. You have to start announced a frequency increase experience and how do we make capacity into being smart at some point,” the from three to five weekly it a much more seamless and MAustralia and New Zealand, but ex-Unilever top executive said. B787-9s. The key factor is that joined up experience. There’s lot Air New Zealand (Air NZ) CEO, “The carriers coming from 40% of the traffic is Australians of irritation and pain points that Christopher Luxon, and his Air secondary or tertiary cities in coming through Auckland and need to be solved for customers New Zealanders are thriving on China are not too much of a onto Buenos. The same goes for along the way, so we are saying the competition. worry for us. When I look at the Houston,” Luxon said. lets renew our energy and do “It’s been an absolutely performances of those airlines Air NZ just won a new round exactly that.” fabulous year for us. Ten new that have been in Australia and of customer service and preferred Areas for improvement, competitors showed up in our New Zealand for a year or two, employer awards. “Sixty per Luxon said, were joint space in the last 12 months, their load factors are abysmal. cent of New Zealanders said opportunities in bag tracking, a including some of the biggest “They are really struggling they wanted to work for us. We more seamless check-in process airlines in the world, but we’ve economically to make those had 45,000 people apply for and retroactive mileage claims. competed incredibly strongly and routes work. We’re going after 3,000 jobs in the last year, but “The way we are going incredibly well,” the Air NZ boss a very different sector of the we’ve only had 6%-7% in staff to achieve this is by digital told Orient Aviation on the side market. We are not interested turnover so we know we have enablement and greater lines of the Star Alliance 20th in a lot of customers that other good morale,” he said. digitalization. It is the big focus Anniversary gala in Frankfurt last airlines take because we know Are the golden years of as we go forward. It will be month. they’re low-yield and low value.” global airline alliances over? an exciting period as we try to “We’ve taken some yield Air NZ continues to defy the “Star Alliance has been a pretty make the member airlines work pressure, as everyone across the industry’s declining performance. great story for us. It’s been a together in a more seamless way industry has, but having said that “Upfront is doing really well. great way to get our global for our customers,” he said. ■ we’re rather unique. Our unit We have four more B787-9s connectivity and network costs are down 3.5%, excluding coming in this year. They will be together. Obviously, in more fuel. We have worked really hard in a configuration that will be a recent years, we’ve done more running this as a business, not lot more Business Premier, a lot bilateral deals and other joint just an airline.” more premium economy and less ventures, but that does not Air NZ will announce its fiscal economy,” he said. mean we are not fully committed year results in August and Luxon Luxon said both Houston to Star,” he said. said the carrier is “on track for a and Buenos Aires are “The focus [at Star] has very good result indeed”. The capacity assault has We’ve taken some yield pressure, “certainly been decreasing in the last few months. American as everyone across the industry has, [Airlines] has announced it is out but having said that we’re rather unique. of the market for two months. Our unit costs are down 3.5%, People are being rational with capacity management”, he said. excluding fuel. We have worked really “We also have some Chinese hard running this as a business, carriers removing capacity for the not just an airline winter months. They did not do it in 2016, but this year they are Christopher Luxon cancelling some flights. There Air New Zealand CEO
JUNE 2017 / ORIENT AVIATION / 17 NEWS BACKGROUNDER
China slow to succumb to Hawaii’s charms
Mainland China’s air passengers are a priority target for most of the world’s airlines. But three years after it launched its flights to Beijing, Hawaiian Airlines is doing it hard in its bid to win over the country’s leisure travelers.
Tom Ballantyne reports
awaii may be one Hawaiian operates 23 A330-200s of the world’s with another of the aircraft type to best known island arrive at the airline this year. destinations; a place The Airbus airliners are of palm trees, endless gradually replacing its B767s, Hbeaches and Polynesian music, which are down to eight from 14. but for the growing millions of The new A330s are being fitted Chinese hitting the international with lie-flat beds in Business Class, airways it is not top of their travel a first for Hawaiian. Also on order hit list, Hawaiian Airlines has are six A330neo from 2019. discovered. “The next step for us fleet Despite three years of flying wise is incorporating our 16 on between Honolulu and Beijing, order A321neo into the fleet,” the carrier said China is still in the said Ingram. early stages of passenger brand The first delivery has been recognition on the Mainland. delayed from July to October, Hawaiian serves Beijing-Honolulu a result of issues with the three times week. Air China flies production line of Pratt & Whitney to Honolulu from Beijing and engines. “Candidly it is a little China Eastern from Shanghai. fluid right now. But we have great So, why the slow pick up? confidence about the long-term Speaking to Orient Aviation during committed so it cannot increase it in 2015. Hawaiian tourism success of this plane,” said a visit to Australia last month, China services until at least 2018. authorities forecast that number Ingram. The arrival of the A321s Hawaiian Airlines chief commercial As well, the Zone 1 cities under will be 360,000 by 2020. will free up A330s now flying officer, Peter Ingram, said: “Hawaii the current bilateral air treaty For now, the carrier’s biggest U.S. West Coast routes to service and Hawaiian Airlines are very between the U. S. and China: Asian market is Japan. “Japan destinations in Australia and Asia. well known in Australia and in China - Beijing, Shanghai and is the number one source of Hawaiian’s first quarter Japan, where there is an incredible Guangzhou are fully allocated. international visitors for Hawaii,” profit to March 31, slipped 28% affinity for Hawaiian travel. But it “We would love to improve said Ingram. “We have introduced year-on-year, to $37 million, is still relatively new in China.” our slot times in Beijing. We two Tokyo services in addition to amid higher fuel and staff costs. Additionally, the rapid are not operating at the most the daily Haneda flight that began Operating revenue for the period growth in China’s outbound convenient times for our guests. in 2010. Recently, we added a grew 11.4%, to $614 million, traffic has been more focused on It’s a 2am departure and a 5am Narita service. We also have a and costs increased by 20.4% to short-haul destinations. Long-haul arrival,” he said. second Haneda flight that is split $546.9 million. destinations have struggled to However slow the pick-up for four times a week to Honolulu Hawaiian has a new livery, achieve the same growth. The Hawaiian in China, the carrier is and three times a week to Kona. first revealed on one of its B717s majority of China’s international confident its investment will pay We serve Osaka daily and Sapporo last month. “It embodies a leisure travelers head for Thailand off. Chinese visitors to the island three times a week.” stronger, more contemporary and Japan, the airline said. state have increased steadily since The increase in frequencies representation of Hawaiian An operating constraint is that 2009: from 41,924 eight years ago to Tokyo means the fleet is fully Airlines’ culture of service and Hawaiian’s long-haul fleet is fully to 161,375 in 2014 and 181,000 utilized for the rest of the year. hospitality,” the airline said. ■
18 / ORIENT AVIATION / JUNE 2017
COVER STORY
New normal for Taiwan’s China Airlines Industry newcomer, China Airlines Chairman, Nuan-Hsuan Ho, has the singular goal of returning his airline to profit as the shadow of politics falls across every facet of the carrier’s operations.
Dominic Lalk reports from Taiwan
20 / ORIENT AVIATION / JUNE 2017 COVER STORY
New normal for Taiwan’s China Airlines Industry newcomer, China Airlines Chairman, Nuan-Hsuan Ho, has the singular goal of returning his airline to profit when the shadow of politics falls across every facet of the carrier’s operations.
Dominic Lalk reports from Taiwan
JUNE 2017 / ORIENT AVIATION / 21 COVER STORY
or years, Taiwanese carriers were excited by an 75,000 seats a weekly between the Mainland and Taiwan. expected breakthrough in cross strait transfer The flag carrier is the largest cross-strait airline in available traffic from the Mainland. They hoped the Chinese seat kilometres (ASK) and holds 30% of the market. government would lift bans on travellers transiting Of the 2.6 million Mainland Chinese tourists who onward from the Mainland to North America and visit the U.S. annually, 60% transit through third party Fbeyond. But not for the first time in Taiwanese aviation, airports such as Hong Kong, Seoul and Tokyo, records the politics intervened. U.S. Department of Commerce. Lifting transit restrictions In May 2016, Taiwan’s pro-independence Democratic that would present Taiwan to the Chinese travelling Progressive Party (DPP), led by Tsai Ing-wen, came to abroad as an appealing alternative to the three other transit power. China Airlines’ strategy for growth was one of the hubs would give CAL access to a large and new segment of first casualties of the victory. the trans-Pacific market. Very quickly after she won office, president Tsai made Two years ago, when Ho’s predecessor, Huang-Hsian it clear her government would not recognise the "1992 Sun, spoke to Orient Aviation, the future for CAL consensus" as the singular foundation for cross strait looked very different. The then boss predicted a major exchanges. Her policy position forced the 58-year-old carrier breakthrough on the issue was likely in 2015. to abandon the Mainland transit passenger strategy that was a But sensitive political relationships are just one of linchpin in its plans for a return to sustainable profits. the challenges CAL faces. The competitive landscape has To conform with the "New Southward Policy" of the become more difficult for CAL in the past two years. An Taiwanese government, CAL had to shift from its former onslaught of low-cost carriers (LCCs) flying to Japan and focus on China’s transit market to connecting passengers South Korea has forced the flag carrier to reduce frequencies from Southeast Asia to its five European destinations and and capacity to North Asia, an operating environment that four gateways in North America, via Taipei. is not expected to change soon. “For Southeast Asia, transfer traffic to Europe and the In the meantime, Mainland Chinese tourists to Taiwan U.S. is strong and there is a very solid tourist customer base slumped 50.2% year-on-year in the first four months of going that way. And don’t forget about the many ethnic 2017, to 610,524, reported the Mainland Affairs Council Chinese in Southeast Asia who go home a few times a year,” (MAC), with figures drawn from National Immigration CAL chairman Nuan-Hsuan Ho, told Orient Aviation at Agency statistics. his CAL Park headquarters in Taoyaun, adjacent to the Tour and independent arrivals dropped by 61% and international airport, last month. “This is very substantial 36.3%, respectively. To date this year, tour groups made up traffic with a lot of growth.” 43.8% of all arrivals. CAL has cut its capacity, which has The Mainland stalemate, however, endures. When improved its cross strait load factor from 77% last year to Orient Aviation asked if a breakthrough was likely 79% this year. this year, the CAL chairman smiled and shook his CAL closed 2015 with a net profit, but returned to head. “Unfortunately, there have not been any the red last year as it began writing off the majority of its developments in the cross strait transfer traffic A340 and B747-400 passenger fleet. “We continue situation. It’s not a very liberal market.” experiencing financial duress because of the Since cross strait flights became retirement of the A340 and B747. This year will be largely unrestricted in 2008, CAL challenging, but we’re looking at a more positive result has expanded its regional network in 2018,” Ho said. to 152 flights a week to 32 “We have a brand new fleet of A350 and B777 cities in China and aircraft which will improve our service quality in the now offers long-haul market. With our comprehensive regional network and improved aircraft rotation and scheduling, we offer better transfer connections than ever.” “Up to May, we saw very strong forward bookings. It’s a very good sign, especially as this time of the year is usually less busy for CAL.” CAL has a fleet of 67 passenger aircraft: six A350-900s,
22 / ORIENT AVIATION / JUNE 2017 More uptime, less downtime.
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24 A330-300s and one A340-300X to go, and six B747- 400s, 10 B777-300ERs and 20 B737-800s. Its subsidiary, Airbus and Nordam to Mandarin Airlines, has six E190s and its Tigerair Taiwan partner with China Airlines budget offshoot operates 10 A320ceo. The A340 will be decommissioned this year and the In January, CAL and Airbus signed a Memorandum B747s will follow by 2018. CAL is expected to have 10 of Understanding (MoU) to jointly develop the airline’s A350s by year-end and all 14 firm order XWBs in 2018. maintenance, engineering and technical training capabil- ities in Taiwan. Under the agreement, CAL and Airbus will “We are very satisfied with the A350 aircraft. We started evaluate technical and business solutions to develop the flying it non-stop on long-haul routes to Europe, which carrier’s services for all Airbus aircraft it operates, including replaced the A340 and B747 aircraft operating via Bangkok. the A350 XWB, A330/A340 and A320. We have a very positive load factor to Europe that is The partners will jointly evaluate and promote CAL’s averaging 87%,” Ho said. retrofit activities and cabin and airframe modifications, Rostering the A350 to Europe meant some capacity as well as considering the expansion of the maintenance changes. CAL’s XWB is configured with 306 seats. The training centre in Taiwan from ab-initio programmes to carrier used to fly a 380-seater B747 to Amsterdam and has courses for mechanics. In addition, they will evaluate the served Frankfurt, Rome and Vienna with 276-seat A340s. benefits of the Satair Group and other Airbus affiliates As for the six options it has for the A350, Ho told becoming key parts providers for CAL. “Through Airbus’ industry know-how, CAL and our Orient Aviation he would fly to France the day after the associated Taiwan Aircraft Maintenance & Engineering Co. interview for discussions with Airbus. “At the moment, (TAMECO) maintenance subsidiary are going to accelerate we don’t think the A350ULR variant is an option for us. our maintenance and engineering capabilities for the major We have direct flights from Taipei to New York on B777s, Airbus aircraft types, including the newly introduced A350 which is our longest route. We have started a deeper XWB,” Ho said. partnership with Delta Air Lines and they are helping us CAL also signed a MoU with the NORDAM Aerospace with connecting passengers through the U.S. gateways,” Maintenance Group in March. The two parties plan a Ho said. Taipei-based MRO for thrust reversers and other composite Ho admitted the airline was losing money on the five parts in the Asia-Pacific, including nacelles, radomes and times a week service, but he is not alone when it comes to flight controls. It would be the Oklahoma company’s only commercial MRO facility in the region. the route. Hong Kong’s Cathay Pacific Airways signalled trouble this year with its flights to New York and said yields were declining. Singapore Airlines and Thai Airways tenser relations with Beijing, previous uncertainty about the International dropped their nonstop flights to New York CAL/Tigerair relationship and the market pivot from North because they were losing money. to Southeast Asia have conspired to delay the decision. “Everybody is flying into JFK [New York], but not Ho knows he must act fast. Some of CAL’s 20 B737- everybody is turning a profit on the route. It’s a very 800s are almost 20 years old. “We want to lower the average saturated market,” said Ho. But CAL is not prepared to age of our short-haul fleet. We are studying the A320neo relinquish its flagship service. “Even though the profit and the B737 MAX series,” he said, and added he hoped to margin is very low and it’s a very stressful market, it’s still an make a decision about the order this year. important one that you cannot give up. It’s something we “Like I said, I will be visiting France later this week, need to work on,” he said. but I also will be visiting Boeing in June,” Ho said. “Both CAL said its reinvigorated partnership with Delta manufacturers are giving us more or less the same offers on could mend its bottom line on the New York route. “For the items we are considering.” now, the route is unprofitable, but we will retain the current Also on Ho’s to-do list is a replacement for its older frequency into JFK,” he said. A330 fleet in the medium-term. “We have mapped out the Until last month, CAL flew the A350 to Europe and the life cycle for the A330 fleet, but have not made a decision on B777-300ER to North America. It only began operating its replacement yet,” he said. the A350XWB to San Francisco on May 14. From August, “For now, we are focusing on the single aisle order. We CAL will replace its five times a week B747 Vancouver need to determine the market before we decide if we want services with the A350. to replace the A330 fleet one-for-one or if we want to grow “One of the reasons we fly the A350 to Europe is that with the replacement order.” it is much easier to obtain supplies and spare parts when Compared with rival EVA Air’s massive wide body we need them, especially since it’s a relatively new type of backlog, Ho said CAL tended to be “more conservative” aircraft,” Ho said. “As we take more deliveries, we need to because the airline “wants to strike a real balance between roster the A350 into other long haul markets, so we have supply and demand”. requested Airbus to focus more on the North American EVA is forecast to become Taiwan’s largest airline in supply chain in order to support our operations there.” passengers carried and revenues earned by 2018. It has a CAL is overdue for a single aisle order, with the topic on passenger fleet of 33 B777-300ERs with three more on the table for more than two years. But a leadership change, order, two B747s, 10 A330s and 22 A321s.
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O 17T0877_AP_05_OrientAviation_202x273mm_GB.indd 1 O 19/05/2017 17:51 O O
O O O O COVER STORY
In 2015, EVA signed Taiwan’s largest commercial aircraft order in the country’s history: a US$8 billion commitment for 18 B787-10s plus six options, and two additional -300ERs. EVA plans to lease another two -10s and four B787-9s from Air Lease Corporation (ALC). Did Ho believe the market can absorb such steep capacity increases? “Our biggest competitor, EVA Airways, and CAL have a very different customer bases,” he said. “For example, we differentiate ourselves with flights to Europe. EVA offers one-stop connections from Taiwan to Europe via Bangkok. CAL offers nonstop flights with our new A350s.” “We have a totally different frequent flyer base from EVA. They use Star Alliance, but we are a member of SkyTeam. This makes us attractive to some and less attractive to others, but at least we’re not necessarily fighting for the same passengers. The differentiation is very obvious. Consider it like the NBA (U.S. National Basketball Association). The different teams have different fan bases. Each of them is loyal to their base. It’s kind of like that.” From December 1, the airline will return to London CAL is a proponent of after a five-year absence. CAL used to operate into a separate low-cost terminal Heathrow, but will now serve Gatwick Airport three times a week with the A350. “There are slot restrictions at at overcrowded Taoyuan Heathrow. At Gatwick, they are offering good slots. There International Airport. are a lot of services and conditions provided by Gatwick. Full-service and LCC are Gatwick has been very welcoming,” he said. CAL wanted to add Paris to its route map, but did not completely different. win access to Charles de Gaulle Airport. “We do not have The airport needs to build traffic rights to fly into Paris. One problem is EVA flies a separate LCC terminal to cope there, but we’re working on that,” he said. CAL is considering other European destinations this with the onslaught of budget year. “We would really like to fly into Milan, but we are carriers into Taoyuan flying into Rome so the market might not be big enough,” Ho said. Nuan-Hsuan Ho “Recently, a lot of foreign dignitaries have come to China Airlines chairman me and asked for possible developments on routes to their countries. Examples are Brazil, Mexico, Israel, the Czech Republic and even Latvia and Slovakia. A lot of requests are coming in. Of course, they have to fit into the overall network.” CAL joined SkyTeam in September 2011, which increased its international destinations from 118 to 1,052, but this does not exclude the carrier from looking elsewhere for partnerships that could be both lucrative and more convenient for passengers. CAL has code shares with Qantas Airways, China Southern Airlines, China Eastern Airlines, Shanghai Airlines, Xiamen Airlines, Delta Air Lines, Garuda Indonesia, Vietnam Airlines, Korean Air, Czech Airlines, KLM, Alitalia, Japan Airlines, Hawaiian Airlines, Virgin America and WestJet. It has retired its first-class cabin and now offers business, premium economy and economy classes. “We no longer see the feasibility of first class service in the market. Our new business class product is mostly fulfilling the needs of the first-class passenger,” Ho said. The CAL chief had a surprising response to the premium
26 / ORIENT AVIATION / JUNE 2017 COVER STORY
yield decline across Asia-Pacific carriers in the past 18 months. “For us it’s different. We actually have very healthy premium loads. It’s been steady for CAL. We’re very, very satisfied with the launch of our premium economy class,” Ho beamed. “Launching the premium economy class is a reflection of the overall Taiwanese economy. More passengers are able to afford a level of premium nowadays.” Nevertheless, the CAL chairman recognized the growing importance of LCCs.“They are here to stay,” he said. CAL took full control of its Tigerair subsidiary in 2016, but has no code share or interlining agreements with the LCC. “LCCs usually fly into markets not served by full-service carriers. For us it’s the same. Tigerair serves specific markets that CAL does not serve. But it’s harder in Southeast Asia to differentiate. You usually see two brands in the same market,” he said. “We try to cooperate with each other, for instance in the form of short-term wet leases between CAL, Mandarin and Tigerair, to adjust capacity to demand. “We do not have a seamless product between CAL and Tigerair, but when you are looking at the CAL group of airlines, you may consider Mandarin Airlines. We code share and interline with it. That said, we always are looking for synergies between our three airline brands. It’s primarily about resource sharing under the same roof.” The three airlines have a joint aircraft procurement policy and share crew deployment. CAL wants a separate LCC terminal. “Terminal 3 and the third runway are vital for us to alleviate all the constraints we are experiencing. It something we hope will happen in the near future,” he said. Taoyuan has frequent delays, leading to disruptions in the wider network. “We have a very close relationship with the Taoyuan International Airport authorities. We have set priority for flights for which delays are unacceptable,” Ho said. Whatever the challenges ahead, Ho is prepared for them. “At CAL, our best asset is our employees. This is critical for us to stay sustainable and competitive in the Taiwanese air travel market,” he said. Ho was credited with swiftly and amicably solving last year’s cabin crew strike, immediately after taking over at CAL in June. It was the first time flight attendants in Taiwan had exercised their legal right to strike. Ho’s popularity among the executives at CAL Park was palpable during your correspondent’s visit. The former chairman of Taoyuan Metro Corp. comes across as a very kind and gentle leader. Ho finds his balance in daily exercise. An athlete in college and a record-holder in the scholastic 200m and 400m sprints, a pair of trainers travels with Ho wherever he goes. “It’s very important to me to exercise every day. It keeps me calm and makes me more content when working in the stressful aviation industry.” The 64-year-old jogs at a steady trot for an hour every day, before returning to his chairman's suite. ■
JUNE 2017 / ORIENT AVIATION / 27 NEWS BACKGROUNDER
when it decided not to acquire additional shares in Nok Air, THAI makes progress in a low-cost subsidiary led by CEO, Patee Sarasin. THAI owns 39.2% of the LCC. The THAI leadership search board decided “it was not the right time” for the cash strapped By Dominic Lalk carrier to increase its investment in Nok Air, even if this meant hai Airways its shareholding in the budget International’s (THAI’s) airline may be diluted. acting president Nok has reported several and executive vice consecutive quarters of losses. president of its For the full 2016 year, the LCC Tbusiness aviation unit, Khun lost $95.7 million. In April, Usanee Sangsingkeo, will not THAI said it was to run THAI, be confirmed as permanent Thai Smile and Nok Air with a president at the flag carrier, that joint management and a single much is certain. board of directors. Under the Khun Usanee is not doing cooperation framework, THAI a bad job at the airline. Rather, would be the major international aged 59, she will be hitting carrier; THAI Smile the domestic Thailand’s official retirement age and Indo-China network carrier next year, which bars her from and Nok Air the budget partner. continuing to steer THAI through chief of the airline’s business Orient Aviation understands THAI’s executive vice- its challenging operational aviation unit. She also has been that four candidates, internal president for corporate strategy landscape as well as complicated managing director of THAI’s and external, have passed a and sustainable development, internal issues. ground services department first round of consideration. An Flt. Lt. Montree Jumrieng, said There has long been talk and a director of the in-flight official announcement will be co-operation between the of lifting the cap on the official equipment planning and made later this year. carriers would include routes, retirement age of civil servants in controlling department, the THAI continues to marketing, ground services, Thailand, from 60 to 65, or to 70, Suvarnabhumi Airport Hotel Co. experience financial duress, but it allocation of parking bays and but until now the Department Ltd., Wingspan Services Co. Ltd restructuring measures are finally maintenance services. “In the of Labour has not signed off on and Phuket Air Catering Co. Ltd. having some effect with the future, the three airlines will form changes to the status quo. The search for a new 57-year-old carrier forecasting a an aviation network,” said Flt. Lt. Khun Usanee was appointed president capable of completing return to the black in 2018. Montree, who added the carriers acting president of THAI in the state-controlled carrier’s On May 21, the carrier’s would feed transit traffic onto February. Her previous job was transformation is underway. board made a landmark decision each other’s airlines. ■
a free economic zone. Chen, a Civil Aviation Administration By the book at HNA Group of China employee, and three colleagues, took control of ainland- to become one of the top 500 companies globally, with annual Hainan Provincial Airlines, which headquartered biggest companies in the world. revenues of US$240 billion and had two aircraft in its fleet. conglomerate, By year end 2016, it had achieved an asset value of US$11.6 trillion. Today, the group has 851 HNA Group, its goal when it was listed 353rd HNA Group co-chairman, airplanes after it successfully rode has revealed the in Fortune magazine’s list of the Wang Jian, said the group the wave of economic reforms in Mscale of the group’s ambitions world’s biggest companies. In wanted to control upstream and China in the 1990s. It expanded in a series of six booklets, HNA’s 2015, it ranked no. 454. This downstream industries including its interests into other airlines, Mysterious Code, that include year, it is shooting for inclusion in tourism, hotels, logistics, including HK Express and Hong a preface written by group’s the top 100. financial services and leasing as Kong Airlines, and diversified founder, Chen Feng. HNA’s goal is to be a well as its stable of airlines. The into property, banks, an airport, The booklets outlined the financial holding company seeds of the HNA Group were aircraft lessor interests and group’s 2011-2016 Super X Plan, by 2020, it said, and for it to planted in 1988 when the Hainan hotels, resorts and related service which aimed for the company become one of the top 10 provincial government was made industries. ■
28 / ORIENT AVIATION / JUNE 2017 NEWS BACKGROUNDER
Airlines urged to adapt and ‘sell more stuff’ Distribution is critical to full-service and budget airline operations. In the technologically disruptive world of today selling air tickets or other services is more complicated than ever for airlines. traditional GDSs simply do not have the flexibility to adapt to the modern marketplace, regardless of the time and effort invested in Tom Ballantyne reports in Hong Kong trying to do so,” he said. ABB has developed o-founder of Air infrastructure already in place, Qantas Airways and Shandong connectivity solutions that Black Box (ABB), with minimal changes and low Airlines. Etihad Airways also is a sit separately and apart from Timothy O’Neil- cost. The technology must client. the technology “spaghetti.” It Dunn, told delegates provide an ease and speed of In recent years, it was provides airlines with the tools at the annual UATP implementation that was unheard common to hear predictions of to adapt without losing the Cconference, held in Hong Kong of just years ago, he told his the demise of Global Distribution investment they have made in in April, that his Manchester- audience. Systems providers as airlines their existing infrastructure, be it headquartered company works The two-day UATP expanded offerings on their traditional, new or unique. on a simple premise: “sell more conference covered the own websites. But it has not “It frees airlines to form stuff”. entire gamut of distribution, happened. alliances with ease and speed. O’Neil-Dunn, whose from the world of the travel Airlines, whether full service These airlines combine their AAB forged the way for the agents, technology, payments, or low-cost, want to utilize every routes and products and sell them establishment of the world’s first merchandising and ancillary form of distribution available to as they wish, under the brand low-cost carrier alliance, Value revenue to meeting the sell tickets and ancillary products. of their choice, and in a unified Alliance, said: “The demands of challenges of the changing Vice president sales United and integrated online shopping day-to-day operations make it models at both budget and full Airlines, Jake Sefolia, said people environment in any currency and easy for airlines to lose focus on service airlines. today buy tickets differently, in 13 languages.” the customer and innovations UATP is recognized as the receive information differently Similarly, payments continue that would strengthen their world’s leading global payment and interact with their itineraries to evolve from traditional systems business. On top of that, solution, owned and operated by differently. such as credit cards to direct incumbent technology players the world’s airlines and accepted “Maybe this whole area was payments from banks and the are doing their utmost to prevent by thousands of merchants not as ripe for disruption as we all new generation of options. UATP change through innovation.” for air, rail and travel agency thought back in 2006 when the president and chief executive, The ABB leader delivered a payments. It connects airlines to U.S. carriers started the whole Ralph Kaiser, told delegates keynote address at the Universal Alternative Forms of Payment that opt-in thing,” he said. the company is seeing new Air Travel Plan (UATP) Airline can expand reach and generate But GDSs have shown agility developments every six months. Distribution conference in Hong incremental sales globally. It by adapting to the needs of “It’s not just the types of Kong. Before a gathering of the offers easy-to-use data tools, all categories of carriers who payment. There is everything world’s leading players in the DataStreaSM and DataMineSM, merchandise and sell content from credit cards to alternative distribution, including senior It also provides in new ways. GDSs such as payments such as bitcoin and executives from airlines, travel comprehensive account details to Amadeus, Sabre Travel Network, global payment systems like agents, Global Distribution Issuers and corporate subscribers Travelfusion and Travelport have Apple Pay,” he said. Systems (GDS) and IT providers, for accurate travel management. adjusted their products to a Most conference delegates he said the travel industry risks Accepted worldwide as a form different marketplace. said the long-term winners in the “becoming another notch in the of payment for corporate Not everyone agrees with new payment provider space are belt of Apple, Google, Facebook business travel by airlines and Sefolia. O’Neil-Dunn believed yet to be identified, but they all and Amazon if it fails to adapt to travel agencies, its Asia-Pacific the travel industry, and airlines in agreed on one vital tenet of the a changing market place”. customers are Air New Zealand, particular, are victims of the very business: the winners will have The solution lies in intelligent Air Niugini, China Eastern Airlines, technology that fueled their early given the airlines what they need technology that attaches to Japan Airlines, Malaysia Airlines, successes. “It is now clear that at the best price. ■
JUNE 2017 / ORIENT AVIATION / 29 NEWS BACKGROUNDER
and management and sharing of this information across No more lost luggage airlines, airports and ground handlers, Since 2007, the rate of Tom Ballantyne reports mishandled baggage has fallen 70% because of investment ew industry data in technologies and process has revealed the improvements by the world’s percentage of airlines and airports, SITA said. passenger bags Critical points in the bag lost or delayed handling process are moving bags Nby airlines is dropping fast. A between airplanes or carriers, recent report by aviation IT and when bags have a higher risk of communications group, SITA, being mishandled, particularly if said that in 2016 the rate of connections between flights are mishandled bags was the lowest tight. on record. In 2016, 47% of bags were SITA said 5.73 bags per From that date every bag must parcels are now tracked. delayed when being transferred thousand passengers were be tracked and recorded at four SITA president, Air Travel between flights or airlines. mishandled last year, a 12.5% mandatory points: at check-in, Solutions, Ilya Gutlin, said: “soon Mandatory tracking at this point improvement over 2015, despite at aircraft loading, at transfer the days of not knowing where in the process will provide real- an increase in passengers carried between carriers and when the your bag is will be a thing of time data that will avoid delays. to 3.77 billion for the reported 12 bag is delivered to a passenger. the past. We are on the brink Mishandled baggage carries months. Once the resolution is in of a new era in airline baggage a significant cost for airlines. Even better results will be place, airlines will be able to management because the world’s Despite a 12.25% drop in the achieved when the International share the information with their airlines have committed to bag mishandling rate, the global Air Transport Association (IATA) passengers and code share tracking baggage journeys”. bill for recovering and reuniting regulation, IATA Resolution partners about the journey of Tracking passenger passengers with their bags was 753, takes effect in June 2018. their luggage, just as air freight baggage requires data capture $2.1 billion last year. ■
delegates he expected airport ICAO calls out ASEAN countries traffic to increase to only 80 movements per hour, up from the current 76 movements, when for infrastructure failures Terminal 3 is fully functioning. At Kuala Lumpur Tom Ballantyne reports Indonesia,” he said. the Asia-Pacific. Terminal 3 was International Airport, Terminal Mishra told delegates at opened to international services 2 (KLIA2), primarily a low cost nternational Civil Aviation a Bangkok travel and tourism last month, but initially only six terminal dominated by AirAsia Organization (ICAO) Asia- summit that all ASEAN countries gates were operational and all of flights, is reporting strong Pacific regional director, Arun need to comply with the ASEAN them were allocated to Garuda growth. Malaysia Airports Mishra, has joined the huge Open Sky policy or the ASEAN Indonesia. Holdings Bhd (MAHB) said chorus of Asia-Pacific airlines Single Aviation market to The flag carrier intends to the terminal, opened in 2014 Icalling for faster, smarter airport increase regional and domestic move all its flights from Terminal and designed to handle 45 and air traffic infrastructure connectivity and allow the 2 to the new facility eventually, million passengers annually, development in the region. association’s airlines to fly freely but that won’t happen until Piers had 24 million passenger traffic “Despite the Association across the region. 1 and 2 are completed in July or movements in its first year. In of South East Asian Nations Although several airport August. The new terminal has 2016, the numbers grew to (ASEAN) destined to be the and air traffic developments are 65 immigration counters, 30 27.6 million and there is no fastest growing tourism market underway, progress is slow and auto-gates and 17 aircraft parking abatement in demand in 2017. in the world, the region’s can be mismatched to airlines’ stands. It can accept the A380. At the summit, AirAsia Group growth remains constrained by needs. Terminal 3 will not solve CEO, Tony Fernandes, urged the insufficient and uncoordinated An example is the new airport congestion in Jakarta. region’s governments to build development of airports to Terminal 3 at Jakarta’s Soekarno- Flight navigation Airnav more low-cost carrier dedicated support an adequate tourism Hatta International Airport, one Indonesia’s operation director, airports to accommodate the economy, including Thailand and of the most congested airports in Wisnu Darjono, told summit sector’s expansion. ■
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Sydney’s second airport finally receives go ahead
It has taken more than half a century of fierce political debate but finally construction of Sydney’s second airport will commence next year, with the Australian government footing the bill.
Tom Ballantyne reports
acquarie’s Sydney Airport Group, operators of Australia’s major gateway, MKingsford Smith International Airport, held the first option to build and operate the city’s second airport at Badgerys Creek, but after three years up the Western Sydney Airport convenience to the centre of airport competing with Sydney of mulling the commitment, Corporation (WSAC) to oversee Sydney. Airport could yield significant the answer turned out to be a the project. Competitive tenders Analysts believe Badgerys benefits to consumers and definite “no thanks”. will soon be launched for Creek will evolve primarily into airlines,” it said. The reason, said the the design and construction, a low-cost airline hub that will Just how much competition airport’s CEO, Kerri Mather, was scheduled to begin in the second attract air cargo and private jet Badgerys Creeks will present to financial risk. The decision was half of next year. The airport is business. Qantas Airways chief Sydney’s main airport remains expected, given the company planned to open in 2026. executive, Alan Joyce, who has to be seen. But one Australian has said Badgerys Creek would Australian Prime Minister, warned against building a “Taj businessman has said the be a “challenging investment Malcolm Turnbull, said it was a Mahal”, has hinted the new airport government was spending too proposition”. vitally important project for the could be a base for the carrier’s much on the project. Risky or not, the Australian country that will create 20,000 budget airline, Jetstar. John Wagner, along with his government has decided another jobs by the early 2030s and “Standsted [in London] is very brothers, built Brisbane Wellcamp airport is a necessity for Sydney. 60,000 in the longer term. clearly a low-cost airport. It’s the Airport near Toowoomba, In the conservative Coalition A second airport for Sydney biggest hub for Ryanair, which Queensland. He claimed he could government’s annual budget was first mooted some 70 years has the biggest operation across build Badgerys Creek for much less last month, US$3.8 billion was ago. Successive governments Europe,” he said. than the government is spending. set aside for the project. The have either announced the project Australia’s competition Wellcamp (Cathay Pacific Airways first stage will involve a terminal would go ahead or shelved it. watchdog, the Australian operates cargo flights out of capable of handling up to 10 Kingsford Smith is becoming Competition and Consumer the airport) has a 2.87 kilometre million domestic and international increasingly congested and its Commission (ACCC), said in runway that can handle aircraft as passengers a year and a single expansion is hampered by a March an independent or big as a B747. 3,700 metre runway. The design night curfew and a cap of 80 government-owned airport at Wellcamp was built in 19 allows for a second parallel runway movements an hour on flights. Badgerys Creek would be a win months and 10 days and cost and expansion of the terminals Badgerys Creek, which lies in the for airlines and the passengers A$200 million (US$145 million). As to cater for 37 million passengers heart of Sydney’s western suburbs; they carry. well as building Badgerys Creek for annually by 2050 and 82 million is a major engine of growth for “This has raised the possibility less money, Wagner said he could a year in 2063. Badgerys Creek is the state. of increased competition with have it up and running in three 50 kilometres west of Sydney’s city Most full service carriers Sydney Airport to the long-term years – five years ahead of the centre. are expected to continue to use benefit of consumers and the government’s scheduled opening The government is setting Kingsford Smith because of its economy. A second international of the facility. ■
JUNE 2017 / ORIENT AVIATION / 31 INDUSTRY ADDENDUM
Malaysia Airlines extends agreement with AFI KLM E&M BRIEFLY… Kuala Lumpur-headquartered Malaysia responsiveness, so it was a logical decision Airlines and AFI KLM E&M have expanded to extend our cooperation,” said Malaysia their agreement to cover component parts Airlines technical director, Paul Kear. ■ Mobil Jet Oil approved for supply for all of the B737 800s in the MAB fleet. Pratt & Whitney engines An earlier component support contract that covered 35 of the aircraft type was Engine manufacturer, Pratt & enlarged in May to 54 B737 airliners and a Whitney has approved the use of larger range of part numbers. Component high performance capability Mobil support for Malaysia’s flag carrier is provided Jet Oil 387 for its PW4000 engines. by the European MRO and Boeing. The PW4000, first introduced in 1984, “The support implemented by AFI KLM has and does power the airlines that E&M for our fleet of B737-800s stands fly Airbus’ -300s, -310s and -330s out for both its service quality and its and Boeing’s -747s, 767s and 777s. The multi-year approval evaluations were carried out on various PW4000 Asia’s MRO business to double by 2027 engines. All Mobil Jet branded oils, which include Mobil Jet 11 and Key findings in the Oliver Wyman 2017-2027 new deliveries, which will reduce the average Mobil Jet Oil 254 as well Mobil Jet Oil Fleet and MRO study forecasts the aircraft age significantly. But fleets will age 387, have been approved for use in Asia-Pacific will record annual MRO growth as aircraft stay in service to meet increased PW4000 engine models. ■ of 4.4% for the next ten years, with MRO passenger and cargo demand, leading to a business to equal Europe and North America greater emphasis and importance for aircraft by the end of the next decade. MRO,” the report said. Alsim sells simulator to This growth will compel MROs to “Rising labour costs, coupled with Indonesia training school build new facilities and train the workforce temporary infrastructure and capacity necessary to keep up with rapidly rising restraints in the region are likely to force French simulator manufacturer, Alsim, MRO demand in the Asia-Pacific, Oliver Chinese airlines to look to countries south has sold one of its AL250 simulators to Wyman said. and east to fulfill maintenance needs,” the Indonesia’s Banyuwangi pilot academy “Much of China’s growth will come from consultancy concluded. ■ in East Java, Indonesia. Alsim’s Audrey Jeffroy said the European Safety Aviation Lufthansa Technik develops ground handling location Agency and the Federal Aviation Administration qualified simulator was software launched last year and was the first of its type to be operated in Indonesia. Global MRO, Lufthansa Technik, has created program in April and is online at Hamburg “This will increase our presence in a tracking software solution, GSE 4.0, and Frankfurt airports where more than Southeast Asia and is the beginning of which can locate all equipment required by 1,500 ground support equipment items are a great collaboration between our two airport ground support equipment teams. GSE 4.0 connected. companies,” Jeffroy said. ■ The digital location software “will make the All trackers are equipped with onboard time-consuming search for ladders, trailers, sensors that can be configured flexibly and loaders, tugs, towbars, start-up devices and be extended to include such management China controlled CDB air conditioning units a thing of the past”, said processes as fuel levels on ground support wins Mainland single the MRO. Lufthansa begun a GSE 4.0 pilot vehicles. ■ aisle aircraft leases
AerFin acquires Saudia Air’s 15 Embraer 170-LRs CDB Leasing Aviation Lease Finance, a wholly-owned Irish subsidiary of China AerFin Ltd, which specializes in aircraft end of the aircraft completing their final flight in Development Bank Financial Leasing of life solutions, has accepted Saudi Arabian December last year. Co. Ltd, has delivered a B737-800 to Airlnes’ fleet of 15 Embraer 170-LR airplanes, AerFin CEO, Bob James, said: “the Saudi the Jinan-based Shandong Airlines and including all spares parts, engines, tooling and 170 fleet is barely 10 years old, so while we a new A320-200ceo to China’s Loong equipment necessary to support the fleet. expect some aircraft to be reduced to spares, Air. CDB has leased 16 airplanes to The E170s, which have commonality with eight aircraft have had D checks in the last Loong Air, which has its headquarters in the E175 and E190s, entered into service with 12 months and provide excellent lease Hangzhou. ■ the Middle East airline in 2005 with the last candidates.” ■
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Jeppesen and IBM’s The Weather Company to cooperate
Jeppesen and IBM have agreed The is the clear leader in providing accurate, sources and establishes a unified weather Weather Company would become the personalized and actionable weather experience across airline operations primary weather source for all Jeppesen and services and insights for the global aviation to increase operational efficiency and Boeing aviation products. The IBM-owned industry. There is strong demand across performance. All of this will have an impact forecaster will provide Boeing’s operations our customer base to use The Weather on the bottom line,” Sain said. centres and pilots with access to the same Company as our core weather service.” The The Weather Company’s real time weather information, which will build Weather Company will replace all previous forecast services and weather briefings confidence and collaboration when critical weather sources for Jeppesen flight deck will be available for all Jeppesen aviation operational decisions must be made. and flight planning services. market segments: airlines, business aviation Jeppesen chief operating officer, “This agreement will eliminate operations, general aviation pilots and Ken Sain, said: “The Weather Company potential variance between disparate data military operations. ■
SITA Lab experiments with Hololens
SITA Lab, the research arm of SITA, has operational control centre (AOCC) in a mixed released early results of research completed at reality environment. Hololens opens the Helsinki Aiport in association with Microsoft possibility of accessing the AOCC from any Hololens, a project developed to analyze location on or off site which gives experts the management airport operations in a mixed option of input to situations remotely. reality environment. “Mixed reality, which combines Hololens is the world’s first self-contained augmented and virtual reality, is more than a holographic computer. It allows users to new interface. It is a new way of looking at the engage in digital content and interact with world and allows things to be done in a new holograms in the world around them. Running way,” said SITA Lab. Microsoft’s Windows 10, it blends the physical “It enables digital and physical data to “We need to learn how to interact in this and digital worlds. exist together. Our early research shows there environment. In the same way that we moved One element of the Helsinki project are potential uses for airlines and airports from computers to smartphones and voice used the Hololens to reproduce the airport for operations, maintenance and training. recognition, now we go beyond the screen.” ■
Thales forecasts the future of IFE
IFE systems of the future will interact with communications that will engage with individual in-seat solution coupled with connectivity that passengers, generate ancillary revenue and passengers. “We are going to go into a period moves to a revenue line? We believe it is an deliver customized content to each airline seat, where it’s about engagement. An individual’s untapped area and an opportunity for revenue. Thales InFlyt Experience CEO, Dominique ability to access the internet and catch up on social We are talking about a new relationship with the Giannoni, has forecast. networks is changing the game,” the company’s seat back.” Schreiner said families will be able to At Thales’ new IFE final integration and CFO, Fred Schreiner, told media in May. plan their holidays from the seatback: booking test complex in Irvine, California, its system “How do we move from an in-seat system, restaurants and exploring street level views of a developers are working on IFE screens and where an airline is looking at cost line, to an city’s sights. ■
AJW wins deal with new Cambodian airline
Global specialist in the supply of aircraft and by-the-hour component support contract with our partner. It has the technical expertise engine components, AJW, has won a power- the A320 fleet of start-up Cambodian carrier, JC and customer service track record we (Cambondia) International Airlines. are seeking for the component support “Winning this highly competitive contract requirements of our new fleet.” is a testament to AJW’s capabilities from one of The Cambodian carrier is named after its the region’s growing airlines,” director of sales Chinese owner, the Yunnan Jingcheng group, at AJW China, Nick Ward said. which also operates China’s Ruili Airlines. Based The airline’s engineering and in Phnom Penh, it received its Air Operator’s maintenance department director said: Certificate in March and launched services with “We are pleased to have selected AJW as a return flight to Macau on March 17.■
JUNE 2017 / ORIENT AVIATION / 33 INDUSTRY INSIGHT THE IMPACT OF BIG DATA ON AVIATION IN THE ASIA-PACIFIC No place to hide from impact of Big Data
Big Data applications are transforming aviation. Chief correspondent, Tom Ballantyne, outlines its importance in creating pathways to bigger profits at the region’ airlines.
ig Data and its impact on aviation has gripped the industry. At every major conference, from airline and airport Boperations to MRO, customer service and marketing, safety and security, it is central to industry discussions. It’s mind boggling ability to scope out information that is critical to selling more airplane Asia-Pacific airline Big Data adoption driven by a richer emerging middle class “millenials” travel seats, delivering more accurate expectations and low-cost carrier competition MRO and making giant leaps forward in airliner production is Group, Xilin Yuan. said the B787 and the A350 are digital natives – the low-cost losing jobs in the industry and “Huawei is cooperating with even more connected than the carriers,” DLA Piper said. making flying more efficient and its partners to provide innovative, passengers they carry. According However, as the volume and cheaper for airlines, manufacturers differentiated, and advanced to Airbus, even its A380 variety of data increases, so too and passengers. ICT hardware and software superjumbo, which first flew a do the challenges associated In Dubai last month, infrastructure for aviation decade ago, collects information with the use of Big Data. For Chinese global information and customers, which will enable on more than 200,000 aspects of many organizations, navigating communications technology giant, them to embrace the benefits every flight. the complex landscape of data Huawei held a summit, Leading of digital technologies, remain In a paper published in April, protection, privacy and cyber New ICT, The Road to Digital competitive and thrive in the DLA Piper, a global law firm with security laws will be critical to Aviation, to explore innovative ICT digital era.” offices in more than 40 countries unlocking the full power of Big solutions for aviation. By the end of 2016, Huawei including the Asia-Pacific, said an Data, advanced analytics and Leading ICT technologies are had provided ICT products, effective digital strategy is critical machine learning,” the global law bringing digital collaboration, solutions and services for more for the long-term success of any firm forecast. cloud computing platforms than 40 airports, airlines, and airline. In a recent interview, vice and Big Data analytics to the air traffic control authorities “The role of digital president and general manager aviation industry. Digitalization worldwide. Customers included technology has changed from of Thales Avionics Worldwide can dramatically optimize more than 15 airports with a source of marginal efficiency Services for Americas, Ken passengers’ travel experience, more than 30 million passengers gains to the foundation for Coleman, said aircraft connectivity increase airports’ operational annually, including the 10 busiest transformation. Increasingly, “is a critical first step but it is what efficiency and ensure public airports in China by passenger airlines recognize the need to we do with this that will really be safety and operational security traffic. innovate to stay ahead of legacy transformative for both the front- at airports,” said the president At the Aero-Engines Americas competitors and to pre-empt the and back-ends of the airline. of the Transportation Sector in Conference in San Antonio, Texas, disruption of established business “For example, adding to Huawei’s Enterprise Business earlier this year one speaker models by ambitious and nimble critical safety services, improving
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operational performance, MRO work more predictive for its providing a seamless ground/air clients. All of the engine-makers, experience for passengers and from Pratt & Whitney to General increasing revenue for airlines. Electric and CFM are improving Predictive maintenance, which their offerings to carriers by uses Big Data to deliver parts employing Big Data information. to airline customers when they Boeing and Microsoft signed need them, is an industry game an agreement last year to build changer. Before Big Data entered a cloud-based platform for the the sector, MRO managers were U.S. plane maker’s portfolio of left to beg, borrow or steal to commercial aviation analytics ensure the right parts were tools. They are working towards available at the right time. transferring many of Boeing’s was achievement of a “true” market opportunities, digital The goal was always to keep commercial aviation applications digital transformation of back-end technology must be applied. planes in the air and not in the to the Microsoft Azure cloud. systems, internal processes and “The rise of ‘the digital repair cycle. Without a predictive “Boeing’s expertise and end-to-end customer interaction consumer’ is prominent in understanding of when parts extensive aviation data resources models. the aviation sector, where a were needed, the goal was not coupled with Microsoft’s cloud “This means much more than significantly greater proportion always achievable. Companies technology will accelerate creating a ‘digital wrapper’ for of customers have an online seeking a competitive advantage innovation in areas such as their existing business models. presence compared with other tap suppliers who use Big Data to predictive maintenance and Many aviation businesses are very industries,” DLA Piper pointed give them an edge over rivals. flight optimization, allowing large, complicated organizations out. Rolls-Royce, the world’s airlines to drive down costs and that support hundreds of different “With the use of digital second-biggest aero engine improve operational efficiency,” business processes in multiple technology projected to rise manufacturer, was one of the said Boeing vice president Digital regions and countries. To adapt dramatically, with estimates first OEMs in the industry to use Aviation Kevin Crowley. to the digital world, many are ranging from 13 billion to 50 data generated by its engines for Airbus has established a seeking to consolidate and billion connected devices by 2020, innovation. The UK-headquartered corporate venture capital fund, simplify these processes across companies are engaging with company offered its customers Airbus Group Ventures, and their entire business, centralize customers by online purchasing an MRO package based on the A3, a technology and business their technology landscape and journeys, social listening, feedback number of hours its engines innovation centre in Silicon Valley, update their platforms in order to apps and links with other players kept an aircraft flying. It is now a aimed to define the future of make efficiency gains and better in the aviation, travel and tourism standard industry practice. flight. support strategic aims, such as the industries. “Today, the average life IT leaders such Amadeus, transformation of the customer Airlines are customer apps cycle of an airplane engine is up Honeywell, Sabre, SITA and Thales experience.” to check in online and acquire to 50 years,” said vice president are heavily involved in constant Industry experts said virtual boarding passes, but to sales in the Americas for MTU research and development of passenger demand expansion is announce real time flight delays Maintenance, Christoph Heck. systems to better utilize Big Data driven an expanding middle class and boarding times. Luggage Lufthansa Technik (LHT) is information. in emerging markets, lifestyle tracking to help people make tight blending digital analytics with its DLA Piper said the major expectations of millennials and transit connections will soon be engineering expertise to make challenge for the aviation sector cheaper airfares. To capture these widespread. Now onboard WiFi is becoming a reality, some airlines are considering cabins with sensors built in to seats to monitor passengers’ tiredness, temperature or hydration levels that will automatically adapt the airline environment or prompt crew to take a particular action. So, the bottom line is: the application of Big Data is a critical element for the success of any airline from the cabin to the MRO hangar and from the airport gate to safe landing at the destination of every airliner. ■
JUNE 2017 / ORIENT AVIATION / 35 INDUSTRY INSIGHT THE IMPACT OF BIG DATA ON AVIATION IN THE ASIA-PACIFIC
Getting to the heart of the engine
By Tom Ballantyne
ngine manufacturer hub in Singapore and separate and MRO, Pratt & facilities in China, Taiwan and Whitney, has developed New Zealand. a software tool, Large numbers of new A320s EngineWise, that uses and A321neo aircraft, equipped EBig Data collection to forecast with Pratt & Whitney geared If you went back twenty years and and improve maintenance turbofan (GTF) engines, have been across all its commercial aviation ordered by the region’s airlines. looked at the data you could not do product family. “The aftermarket business anything with it. The computing power EngineWise , said Pratt & in Asia is very healthy. We are was not there. The storage Whitney’s executive director, Asia going to add a V2500 facility Pacific, Kevin Kirkpatrick, provides in Shanghai. We need to make was not there. But now it is. constant monitoring of engines sure we keep up and support our This is a tremendous opportunity, produced by the Pratt & Whitney customers. We are going to be in parent as well as Pratt & Whitney airlines where traditionally Pratt not only for airline cost management, Canada and International Aero has not been because the GTF is but passenger satisfaction. Engines. doing well,” he said. We are pulling that data today and it’s It is about real time “We have been hiring and intelligence that will predict and expanding the network that we allowing us to predict engine behavior to prevent engine disruptions before provide customers. We are going the benefit of every customer they occur, said Kirkpatrick. to be everywhere as it relates to “If we can harness that, and support for customers. “You will Kevin Kirkpatrick we have shown that we can, it see more investments announced Pratt & Whitney’s executive director, Asia Pacific drives down costs and allows us this year and subsequent years to to better predict maintenance and support that GTF engine. I can’t already made in Asia is the engines and allow the airline allows airline to plan downtime. give details but yes, you will see introduction of new coating customer to see inside an engine. It helps allocate shop visit space that in the near future.” technology at the OEM’s “But I’m going to take it one step more efficient and improve The GTF engines are Component Solutions facility in beyond that,” said Kirkpatrick. planning at our facilities,” he said. collecting data from day one of Singapore. Known as 279/284 “Once you start to digitize “In the past, there would be entry into service and Pratt is coating, it allows for the the workings of an engine, snapshots, but these snapshots collecting and astounding 5,000 application of two protective you can take digital images of would only be of a handful of parameters from each engine. It coatings on engine parts at other engines and look for non- parameters. Now, we capture predicts 11 total petabytes (PB) the same time which adds conformances. Computer power the full flight cycle. Now we are of data will be generated across assurance to the engine’s optimal allows analysis of the good versus going to be looking at constant the fleet by the time it reaches performance. a bad part in that digitalization. monitoring of literally hundreds of maturity in 2030 and, at maturity, It is the first of the OEM’s “It provides enhanced parameters. the GTF engine fleet will generate units outside the U.S. to offer inspection techniques where the Kirkpatrick will be offering more than 2 petabytes of data the technology which reduces computer is helping you do that EngineWise to Asia-Pacific annually, equivalent to a new logistics and shipping costs for the inspection. It is a little far into the carriers in a region where the American Library of Congress region’s airlines and turns around future but we are experimenting Connecticut-headquartered OEM every year. the process to six days. with things like that today,” he has invested millions in its service Among the investments Pratt can now digitize its said. ■
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Frantic pressure of keeping up with customer expectations
By Dominic Lalk in Las Vegas
ig data and data Pacific head of commercial for analytics now offer airlines at Amadeus, told Orient airlines greater Aviation. opportunities to Amadeus has one up on its determine travel larger, Texas-headquartered rival. Btrends than at any time in history. “As a distribution partner, we are Asia-Pacific airlines must apply helping Chinese airlines such as the insights obtained from Spring to reach more travellers data mining to stay ahead as around the world through our the digital means of attracting global travel agency network. customers to airlines becomes Dasha Cyril Most of the Chinese carriers Kuksenko Tetaz ever more varied. have come to us to power their In May, travel technology realized this during the process of carrier to a full service competitor international websites, and we provider, Sabre, held its Airline working on the decision support to Qantas. Vietnam Airlines are working with them to not Technology Exchange (ATX) in Las system of flight operations.” and Philippine Airlines also have only power their online bookings, Vegas. It was attended by more When implementing new benefitted from her expertise. but also help them understand than 400 airline representatives. technology, airlines often face Since those early days in the preferences and behaviours Delegates included 80 experts the challenge of upgrading their building the business in the region, of travellers outside of China and from the Asia-Pacific, including software and hardware while Sabre now has Air China, China tailor their websites and online representatives from all 17 HNA the carrier continues its 24/7 Eastern Airlines, China Southern experiences to the unique needs Group carriers. operating cycle. Airlines and the HNA Group as of each market,” Tetaz said. Information shared at the The relationship between clients. The latter has contracted The European travel Sabre gathering included results enhanced technology, improved Sabre to roll out products to technology provider has entered from a Forbes Insights and Sabre service and more revenue has support and improve the HNA commercial agreements on the project that asked 100 operations, become clearer for Garuda carriers’ IT solutions and passenger Mainland with Air China, China marketing, IT and finance Indonesia. “We want to grow experience. Southern Airlines, Hainan Airlines, executives from the world’s largest the IT at Garuda to improve Sabre is now working on Xiamen Airlines, Sichuan Airlines airlines to identify their primary our customer experience and extending its solutions from and Beijing Capital Airlines. strategies for the next three to five enhance revenue,” said Iwan parent Air China to the carrier’s The world’s big three GDS years. Joeniarto, director of operations Shenzhen Airlines subsidiary, and airline solutions providers – Customer experience was for Garuda. The Indonesian full Kuksenko said, and added the Amadeus, Sabre and Travelport their top brand promise, at service carrier has shifted much of four groups represented 80% of – have come a long way to fight 61%, as well as the number one its customer-facing and internal the China market so Sabre is “very obsolescence and carve out measure of success in disruption systems to cloud-based solutions comfortable” with its Mainland new revenue streams through management (72%). to simplify operations, reduce IT footprint. innovative technology. “Data quality is absolutely infrastructure demands and allow But white spots remain. Sabre Corp. CEO and former the greatest challenge for the for easier updating. “We’re not having a relationship airline top executive, Sean Menke, overall IT strategy,” said Air China’s Asia-Pacific Sabre Airlines with Spring Airlines today and told Orient Aviation at the Sabre deputy general-manager of Solutions vice president and that’s a major player that we need conference in Las Vegas. “With system organisation control (SOC), general manager, Dasha to work on,” she said. shopping, we are seeing a massive Wan Qingchao. “With incomplete Kuksenko, joined Sabre 12 “Chinese airlines are amount of data processing. It’s or inaccurate data, it is impossible years ago. One of her first expanding their presence globally. not going to slow down because to deliver high quality products, assignments was the technology These carriers understand that of the technological complexity no matter how excellent the transformation at Virgin Australia. to fill airplanes, they cannot rely airlines require to sell their algorithm is and how intelligent She had to facilitate the airline’s on targeting Chinese travellers products and services. My job is to the system. Our company has shift from a hybrid low-cost alone,” said Cyril Tetaz, Asia- make sure we are the enabler.” ■
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MRO transformed by Big Data
By Tom Ballantyne
wo of Asia’s major airlines are the first carriers in the world to sign up for a maintenance service Tprogram that utilizes connectivity and data analytics to improve maintenance quality and reduce airline downtime. Last year, Cathay Pacific Airways became concerned Power Unit (APU) predictive industry, not only for Honeywell safely and on time”. its aircraft cabins were too hot maintenance service that will but for our competition, looked Davis said the data analytics during the Hong Kong summer identify potential mechanical at the core engine,” said Davis. could be extended to an so it approached major avionics issues or failures before they “That’s important for cost, aircraft’s brake system. “We and software giant, Honeywell, happen. China’s Hainan Airlines’ but typically the core engine can the way airlines use their to solve the problem. fleet of more 50 A330s will was not the cause of a line brakes and recommend the best Scientists from the U.S. be similarly equipped. The maintenance interruption in combination of brake energy and company and other industry aerospace company also will the operational day. It’s almost brake wear for the alternate cost experts got to work and install the system on Hainan’s on always the line replaceable units, savings,” he said. developed a software solution to order 40 A330s. the LRUs, the components that The aircraft’s environmental the problem which they tested Honeywell vice president are on the APU. control system (ECS) could on Cathay Pacific’s 61 A330s. airlines Asia Pacific, Brian “We took months and be part of the system. “In The results were little short of Davis, said the deals were months of data and interpreted areas where you have air astounding. monumental and not only it. We accomplished all of this contamination, for example in Using existing data links for Cathay Pacific and Hainan without adding any sensors or some parts of China, airlines can on the aircraft, successful Airlines “but for the aerospace a single ounce of weight to the carry out preventive maintenance analysis of trial data returned a industry as it undergoes a digital aircraft. It was just looking at before an ECS system becomes 35% reduction in operational transformation that is changing the data. A lot of smart people clogged. It could avoid a disruptions, with a false positive the industry as we know it”. put their heads together and significant delay and probably a rate of less than 1%. The new The Connected APU service came up with an algorithm that cancellation,” he said. system saved the airline several works by using an existing data predicts [an APU problem] with a Davis said we are just hundred thousand dollars connection on the plane to less than 1% false failure rate.” starting “to press the edge of in the operation and cost of download APU maintenance and “Honeywell’s GoDirect “Big Data”. “Honeywell has maintenance of a single aircraft fault data to predict impending Maintenance Services a huge amount of content on system, the auxiliary power hardware failures. Those failures offering helps us maintain this both the A350 and B787. We are unit (APU), a unit produced by are routinely the highest cause commitment by reducing the taking off about 844 terabytes Honeywell and also its aerospace of APU interruptions. That data number of auxiliary power unit of data in a 12-hour flight. That’s competitors. is then shared with Honeywell downtime events and improving about 27,000 32 gigabyte iPhone After the successful test and analyzed and then presented our first-time fix rate. We plan 7s fully working at the same time. program concluded, Cathay to an airline’s maintenance team to explore how to expand the That is potential of information Pacific signed on the dotted line in an easy-to-understand, visual offering to additional aircraft we can pull off these aircraft.” for Honeywell’s new GoDirect manner. The data identifies systems,” said a Cathay Pacific “With some of this Big Data, Maintenance Service for its faults in the APU, avoiding an spokesman. if I can know real-time winds and A330 fleet and is considering unscheduled maintenance event. Hainan’s Airline’s chairman, temperatures then ultimately an extension of the software How did Honeywell achieve Xie Haoming, said the Honeywell an airline could save 2%-4% on diagnosis system to its B777s. the results? “We asked why the system “reduces downtime, its fuel bill. All of a sudden, the The Hong Kong carrier’s APU was shutting down. We keeping our planes in the air light goes on at airlines about the fleet will be outfitted with found that the predictive trend more often to transport our meaning and value of Big Data,” Honeywell’s Connected Auxiliary monitoring that existed in the passengers to their destinations he said. ■
38 / ORIENT AVIATION / JUNE 2017 No.1 Asia-Pacific commercial aviation magazine
ORIENT AVIATION SPECIAL REPORTS 2017
JULY/AUGUST PILOT AND TECHNICAL TRAINING IN THE ASIA-PACIFIC BONUS DISTRIBUTIONS: APATS, Marina Bay Sands, Singapore; 6th China International Aviation Services Trade Fair, Shanghai, China
SEPTEMBER AIRCRAFT LEASING IN THE ASIA-PACIFIC BONUS DISTRIBUTIONS: IATA World Financial Symposium; China Air Finance Development Summit, Tianjin, China; Aviation Expo China, Beijing, China
OCTOBER KEEPING YOUR AIRLINE SAFE IN THE CYBER ERA BONUS DISTRIBUTIONS: MRO Asia-Pacific Singapore; IATA World AVSEC conference
NOVEMBER KEY ISSUES THAT KEEP ASIA-PACIFIC AIRLINE CEOS AWAKE AT NIGHT BONUS DISTRIBUTIONS: AAPA Assembly of Presidents, Taipei, Taiwan; Asia-Pacific Air Finance Conference, Hong Kong, China
DECEMBER/JANUARY LOW-COST CARRIER REPORT: THE WINNERS AND THE LOSERS IN THE ASIA-PACIFIC BONUS DISTRIBUTIONS: Orient Aviation Person of the Year Awards Dinner, Hong Kong, SAR
ADVERTISING ENQUIRIES TO ORIENT AVIATION MEDIA GROUP SALES DIRECTORS: The Americas / Canada Europe, the Middle East & the Asia-Pacific RAY BARNES CLIVE RICHARDSON E-mail: [email protected] / [email protected] E-mail: [email protected]
ORIENT AVIATION MEDIA GROUP: ORIENT AVIATION • E-ORIENT AVIATION • ORIENT AVIATION CHINA • ORIENT AVIATION‘S WEEK IN THE ASIA-PACIFIC • WWW.ORIENTAVIATION.COM A never-ending story. I N
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Lufthansa Technik is synonymous with innovation. Thanks to creative engineering work and cutting- edge research facilities, we constantly set new standards. Alongside the continuous further development of maintenance, repair, and overhaul procedures, we develop new technologies, cabin products, and servicing processes for aviation. Always striving for the highest quality and safety standards, we are able to guarantee technological excellence. Lufthansa Technik AG, [email protected] Headquarters: +49-40-5070-5553 Hong Kong: +852-2846-6370
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