Vol. 23 No. 7 September 2016 orientaviation.com

NATURAL BORN AIRLINE LEADER

His budget carrier was “made in Japan” but it will be an Asian brand, says Peach Aviation boss, Shinichi Inoue

Big Data names Duty free tycoon is an industry and shames “a hands off” investor weapon aviation sinners at Thai AirAsia

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Copyright © 2016 Exxon Mobil Corporation. All rights reserved. All trademarks used herein are trademarks or registered trademarks of Exxon Mobil Corporation or one of its subsidiaries unless otherwise noted. Component photographed courtesy of MD Turbines.

Copyright © 2016 Exxon Mobil Corporation. All rights reserved. All trademarks used herein are trademarks or registered trademarks of Exxon Mobil Corporation or one of its subsidiaries unless otherwise noted. Component photographed courtesy of MD Turbines.

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IMAGES: xom_mjo_print_image_04_layered_071814.psd CMYK 525 ppi, -526 ppi exmo_elh_tm_w.eps Mobil_Jet_BLL_Technology_H_4C_R-TM.eps CONTENTS Volume 23, Issue 7

COVER STORY 26 NATURAL BORN AIRLINE LEADER PUBLISHED BY Shinichi Inoue, the extroverted boss ORIENT AVIATION MEDIA GROUP Mailing address: of Peach Aviation has made his LCC GPO Box 11435 Hong Kong a winner by combining brutal Office: cost discipline with savvy 17/F Hang Wai Commercial Building, 231-233 Queen’s Road East, “made for Japan” marketing Wanchai, Hong Kong Tel: Editorial (852) 2865 1013 E-mail: [email protected] Website: www.orientaviation.com

Publisher & Editor-in-Chief Christine McGee E-mail: [email protected]

Chief Correspondent Tom Ballantyne Tel: (612) 9638 6895 Fax: (612) 9684 2776 E-mail: [email protected] COMMENT MAIN STORY Greater China Correspondent 5 Big Data is a weapon 20 Airlines ignore Big Data bandwagon at their peril Dominic Lalk Tel: (852) 2865 1013 E-mail: [email protected] ADDENDUM 6 “Father of B747,” legendary designer, Joe Sutter, North Asia Correspondent Geoffrey Tudor dies at 95 Tel: (813) 3373 8368 6 UK probes over fraud and bribery E-mail: [email protected] allegations India Correspondent 6 Malaysia Airport operator locks horns with R. Thomas country’s biggest airlines Tel: (852) 2865 1013 7 Stellar returns at Air New Zealand and Qantas E-mail: [email protected] but Virgin Australia still in loss Photographers 7 Thai Airways International accepts first of 12 Rob Finlayson, Colin Parker, Graham Uden, Ryan Peters A350s

Chief Designer Chan Ping Kwan

Printing Printing Station(2008) REGIONAL JETS 18 Asia-Pacific leads demand for regional jet orders ADMINISTRATION

General Manager FARNBOROUGH 2016 AIR SHOW Shirley Ho 31 Asian airlines keep tills ringing at Farnborough E-mail: [email protected]

ADVERTISING INFLIGHT 33 Game changer: Quality Wifi determines Asia-Pacific, Europe & Middle East 8 ’s V Air fails to survive the terrible twos passengers’ airline choice Clive Richardson Tel: (971) 50 554 6608 E-mail: [email protected] NEWS BACKGROUNDERS INDUSTRY INSIGHT

The Americas / Canada 10 cleared to fly to the U.S. after a nine MRO emerging trends in the Asia-Pacific Barnes Media Associates year ban 35 Independent MRO underdogs in airline Ray Barnes 12 Malaysia’s biggest airline group bumps up aftermarket price war Tel: (1 434) 770 4108 Fax: (1 434) 927 5101 against monopoly regulator 37 China’s winning ways boost HAECO Group E-mail: [email protected] 14 China names and shames airline sinners 38 MTU Aero propels ahead 16 Evolution rather than revolution as Thai AirAsia 38 Rolls-Royce announces accounting change welcomes duty free tycoon as new investor 38 Lufthansa Technik expands © All rights reserved 24 European LCC warrior succeeds Mueller as partnership Wilson Press HK Ltd., Malaysia Airlines Berhad’s CEO 38 Thai Airways International seeks partner for Hong Kong, 2016 34 China tops domestic capacity table for region MRO “SMART” hangar

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Big data is a weapon

In 2016, airlines can reach their customers in ways weather-related or otherwise. undreamt of not so long ago. But most importantly, Big Data can be used to Insights and applications drawn from our digital provide individual customers with precisely what they behaviour – both personally and in the work place – want from an airline, fostering loyalty, efficiency and allow carriers to fine tune every part of their businesses, productivity. It is why Airways chairman, from maintenance and catering to staff management and John Slosar, recently said Big Data and data analytics are flight operations. the “next big things” for the airline industry. Use of “the Cloud” has given the industry’s “What we are going to see is that airlines which managers instant access to information across take on data analytics will really learn about customer businesses. The “Internet of Things” is on the way, segmentation and trends in the market and then find introducing a world in which almost everything ways of turning that information into propositions that imaginable will be connected. will attract loyalty from customers. The airlines that do But the most important advance of all, predict the this will be the winners, he said. “Those who don’t will be information technology seers, will be the understanding left behind.” Big Data will deliver to airlines about passenger Today, aviation IT providers are putting a huge effort aspirations and preferences. into developing various IT solutions to enable airlines Mining of Big Data and the use of data analytics, to utilize Big Data information across every segment when properly interpreted, offer information that can of their businesses. Whatever it costs, carriers who keep carriers ahead of their rivals. Its applications can ignore the future by failing to invest in data analytics will improve fuel consumption, saving millions of dollars become industry dinosaurs. They won’t be part of the annually, and deal objectively with disruption, whether future connected world. ■

TOM BALLANTYNE Chief Correspondent Orient Aviation Media Group

COMING COVER STORY INDUSTRY INSIGHT BONUS DISTRIBUTIONS UP IN No turning back Yield hungry Third China Low-Cost Carriers Summit OCTOBER says new Malaysia investors storm Shanghai, China Airlines Berhad CEO, Mainland Chinese Japan International Aerospace Exhibition Peter Bellew aircraft lessors , Japan

The most trusted source of Asia-Pacific commercial aviation news and analysis

ORIENT AVIATION ORIENT AVIATION CHINA

“It has established itself as the primary source of information on industry topics in the Asia-Pacific region”

SEPTEMBER 2016 / ORIENT AVIATION / 5 ADDENDUM

Malaysia airport operator locks horns with country’s UK probes Airbus biggest airlines over fraud and bribery allegations Malaysia’s transport minister, Liow should not have a name change, but Tiong Lai, is stuck between a rock and a that the budget carrier group would Britain’s Serious Fraud hard place as the country’s two biggest be allowed to market it as LCCT. Office (SFO) has launched airline groups slug it out with Malaysia “They (AirAsia Group) can brand and a criminal investigation into Airport Holdings Berhad (MAHB) over promote it and attract more people to suspected fraud, bribery and fees, charges, airport nomenclature fly into KLIA2,” he said. corruption in connection with and substandard terminal and runway That’s not the end of Liow’s commercial airplane sales by maintenance. The most recent flare up woes. Peter Bellew, the new boss of Airbus, parent Airbus Group was the result of the AirAsia Group’s Malaysia Airlines Berhad (MAB), wants said. desire to re-name Kuala Lumpur’s airport passenger service charges “We ourselves detected relatively new low-cost terminal, Kuala Lumpur to be levied at the same rate at KLIA and KLIA2, this issue and self-disclosed Terminal (KLIA2), as LCCT KL (low-cost carrier “Charges for international passengers at KLIA it to the authorities. This terminal Kuala Lumpur). The LCC group want to are US$8.25 more per person than at KLIA2. It is is as an effort of our develop the budget terminal into a regional LCC totally unfair and completely anti-competitive,” enhanced anti-corruption hub. It is planning to spend US$5 million on a he said. For MAB to become profitable it needed (policy). Management has marketing campaign to accelerate its efforts and “a competitive set of charges at our home base” taken robust action and is successfully brand the Kuala Lumpur low-cost that would protect workers’ jobs and create new determined to resolve this terminal as LCCT KL. jobs, Bellew told Malaysia media. The Association issue in cooperation with the MAHB’s managing director, Badlisham of Asia-Pacific Airlines and the International Air authorities,” the Toulouse- Ghazali, who also is the chairman of Kuala Transport Association (IATA) wrote to MAHB to headquartered OEM said. The Lumpur (KLIA), opposes object to the difference in charges at the two investigation is expected to the name change. He believed it confused terminals. IATA said a solution should be sought take several years. passengers and eroded KLIA’s strategy of that would be “revenue neutral to the airport Earlier in 2016, a UK operating both terminals as a singled, integrated operator” and did not discriminate between government agency, UK Export hub. users of KLIA and KLIA2. See page 12: Malaysia’s Finance, halted export credits Last month, a compromise, although probably Biggest Airline Group Bumps Up Against Airport to Airbus, which support an unworkable one, was revealed. Liow said KLIA2 Operator. ■ deliveries to airlines with limited access to commercial funds, citing discrepancies Industry legend, Joe Sutter, dies aged 95 in declarations by the manufacturer on the use of Legendary designer, Joe Sutter, the to have its engines positioned beneath the third party intermediaries aeronautical engineer who led the design of the wing – a Sutter innovation. during sales negotiations. The world’s first wide body passenger and cargo Named by the Smithsonian National Air and action was followed by France aircraft, the double decker B747, passed away on Space Museum as the “Father of the 747”, Sutter and Germany. August 30. lead the design of the B747 from 1965 and saw “Airbus has been informed Sutter, the son of a Slovenian immigrant, had a the Jumbo Jet soar in popularity after it took to the by the SFO that it has opened lifelong passion for aviation that started with part- skies in commercial operations in 1970. He rose a criminal investigation into time work on the Boeing assembly line, a job that in the ranks at Boeing to executive vice president allegations of fraud, bribery funded part of his aeronautical for engineering and product and corruption in the civil engineering degree at the development where he aviation business of Airbus in was closely involved in the Group relating to irregularities . concepts and manufacturing concerning third party After post World War 2 of the B757 and B767. He consultants,” the company studies at the engineering retired from Boeing in 1986 said in a statement. school of the U.S. Navy, Sutter but continued to work as A SFO representative said joined Boeing as an engineer. a consultant at the Seattle additional details of the probe He worked on the design of headquartered manufacturer would not be made public Boeing’s first short haul jet, until this year. He remained until charges were brought the B727 and with another a sought after adviser to forward or the investigation brilliant Boeing designer, Jack airlines and governments dropped. ■ Steiner, on the development until the closing months of his of the B737. It was the first amazing life. ■

6 / ORIENT AVIATION / SEPTEMBER 2016 ADDENDUM

Stellar returns at Air New Zealand and Qantas but Virgin Australia remains in loss

Air New Zealand continues to punch above its weight with the announcement of a full year profit, to June 30, of NZ$463 million (US$338 million), an increase of 42% over the previous year. Earnings were a record, up 70%, to US$806 million, before tax and other items. The airline’s CEO, Christopher Luxon, Orient Aviation’s 2014 Person of the Year, said 8,200 staff not covered by other incentive programs would each receive a performance bonus of $2,500 and the government, which owns 52% of Air NZ, would be paid a dividend of $260 million. Air NZ’s achievement is all the more impressive when it is considered that not so long ago the carrier was in near death mode after a complicated series of investor missteps forced the New Zealand was celebrating the turnaround of the group and all its E190 aircraft, the result of its government to buy into the carrier to keep from a A$2.8 billion (US$1.13 billion) in financially painful capacity war with Qantas. it alive. 2014 to a $557 million profit last year and a The carrier, headquartered in Brisbane, Across the Tasman, in Sydney, Qantas $1.03 billion after tax profit in the 2015-2016 forecast it would spend up to $250 million Group CEO, Alan Joyce, also introduced fiscal year. in restructuring costs in the next two years. some historical perspective to his audience At Virgin Australia’s results For the year ended June 30, Virgin reported when he announced the group’s recording announcement, the mood was more an after tax loss of $224.7 million, almost breaking after tax profit for the year to June subdued. The airline reported a fourth double its losses of 12 months ago. But it had 30. “This is the best result in the 95-year quarter loss of A$228 million (US$170.8 an underlying pre-tax profit of $41 million history of Qantas and the best result in million) as it booked costs for its fleet compared with a loss 12 months ago and Australian aviation, full stop,” he said. Joyce reduction program, including five ATRs increased its overall load factor by 4.5%. ■

THAI accepts first of 12 A350s

Thai Airways International (THAI) became U.S. lessor, CIT Transportation Services, is would fly Bangkok-Chiang Mai and then the eighth operator of the A350-900 at the configured with 32 lie-flat business class be transferred to its first long haul route, end of last month when it took delivery of and 289 economy seats and powered by Bangkok-Melbourne. Previously, THAI has the first of 12 A350-900s it has on order. The Rolls-Royce engines. said it intended to operate its double daily new 321 seat aircraft, which is on lease from Initially, THAI said, its new aircraft Melbourne, Australian services with the A350 as the airliner becomes available to the carrier. Independent global fleet analysts said four of the A350s will be owned by THAI with the remaining eight leased from CIT and Kuwait-based ALAFCO. Airlines operating the A350 are Cathay Pacific Airways, Ethiopian Airlines, Finnair, LATAM Brazil, Qatar Airways, Singapore Airlines and Vietnam Airlines. Airbus has firm orders for 810 A350s from 43 airline customers. ■

Rolls-Royce president civil aerospace Eric Schultz, Airbus CEO and president Fabrice Bregier, Thai Airways International (THAI) president and CEO Charamporn Jotikasthira and Jeff Knittel CIT president transportation services at the first A350 delivery to THAI.

SEPTEMBER 2016 / ORIENT AVIATION / 7 ADDENDUM

Terrible twos knock out Taiwan’s V Air

What a difference a month can make. When your correspondent spoke to V Air chief executive, Eleni Lung, in August, the mood was light, cheerful even. Lung and her team were preparing the winter season schedule. Fast forward three weeks, and the Taiwanese LCC, controlled by TransAsia Airways, announced it would shut down on October 1, two years after it was launched. “TransAsia Airways passed a board resolution today (August 9), and officially announced service suspension of V Air, its 100%-owned low-cost airline, from October 1,” said TransAsia chairman, Vincent Lin. The TransAsia boss said folding V Air back into the parent company allowed a speedier recovery at the airline group. TransAsia reported a net loss of NT$439 million ($14 million) for the first quarter, easing from a net loss of NT$1.2 billion in zero in 2004 to 20 this year. hopefully in the coming few years we’ll break the previous three months. However, sales Lung said: “there are two runways even. We’re aiming at next year,” she said dropped significantly from NT$10.6 billion in at Taoyuan but they are always under before she, and her carrier, were shown the fourth-quarter 2015 to NT$3.2 billion in the construction. There are hours when we door at V Air. first quarter of this year. The carrier had two cannot use the runways”. Lung added Passengers booked to Osaka and Naha fatal crashes in 2014 and 2015 that killed 91 Taiwanese LCCs were barred from using after September 30 will be transferred people. ’s downtown Songshan Airport. to TransAsia Airways flights, while those Following the disappointing performance, “We don’t feel we have much support travelling to Fukuoka and Chiang Mai will be TransAsia said it would sell or lease its four from the government. For instance, for new rebooked once TransAsia secures the relevant in-service A330-300s. The airline mainly flies route applications we have to compete with route permits. Passengers bound for Bangkok, the wide body jets between Taiwan and Japan. legacy airlines. They have a lot of experience, Busan and Nagoya will be fully refunded. Increased competition has forced it to downsize and hence get a lot of scoring points. For us, as Flights to Manila are already cancelled, to the A320 and A321 on its Japan routes. a new company, we’re at a disadvantage.” while services to Haneda and Ibaraki will be Taiwan’s third-largest airline company, In terms of the dual branding strategy suspended from September 20. following China Airlines (CAL) and EVA Air, will between V Air and TransAsia, Lung said her V Air was not alone in its uphill battle with terminate services to Okinawa, Guiyang and carrier focused on secondary destinations not mounting competition and only marginal Macau from October 30, leaving only Tokyo, served by the parent, including Nagoya and profits. Taiwan media has suggested CAL Osaka, Sapporo, Siem Reap, Palau and twelve Chiang Mai, while TransAsia capitalized on is considering the fate of its Mainland cities in its network. the traditional trunk routes, cross-strait and subsidiary: either to recapitalize it or fold into Only months earlier Lin had said he domestic flights. its unit. wanted TransAsia to build a “hybrid” business V Air has two A321s and two A320s. Lung Potentially a precursor for what is to come, model between a traditional carrier and a said in August the plan was to add two Airbus Tigerair Taiwan has reduced frequencies from budget carrier, effectively signalling that V Air’s planes to V Air’s fleet this year, but already Taipei to Fukuoka, Hakodate and Nagoya, as budget offering faced an uncertain future. cautioned then that “the entire economy in well as from Kaohsiung to Macau and Narita. “LCCs are such a new industry in Taiwan. Taiwan isn’t going too well”, so the carrier was Tigerair Taiwan has admitted its load factors In other countries such as Japan, there is a reviewing its expansion strategy. have dropped on some routes, like Nagoya, lot of government support, and they have Launched in December 2014, V Air last because it has significantly increased its flights specific terminals for LCCs. In Korea, they year reportedly recorded losses of NT$450 to Japan. have protected route permits, but in Taiwan million ($14.3 million). Its bottom line has New CAL chairman, Ho Nuan-hsuan, it is so new that the government does not continued to deteriorate since, with aggregate confirmed the parent company has really protect the LCC companies,” Lung told losses in the first half of this year exceeding established a task force to study the future Orient Aviation. In other words, Taiwanese NT$900 million, nearly half its founding of Tigerair Taiwan. CAL holds an 80% stake LCCs use the same terminal at Taipei Taoyuan paid-in capital of NT$2 billion. in Tigerair Taiwan, its Mandarin Airlines International Airport as their full-service Asked about financial performance, Lung unit 10%, with the remainder owned by counterparts, at the same cost. Budget said V Air was “of course” not profitable yet. Singapore’s . By carriers operating in Taiwan have grown from “But everything is on track as budgeted, so Dominic Lalk ■

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Indonesia cleared to fly to U.S after nine year ban lifted

The poor performance of air safety regulators in some Asia-Pacific jurisdictions has taken a turn for the better in recent months as news broke that Indonesia had its U.S. category one safety rating restored.

Tom Ballantyne reports

fter nine years of excommunication from the U.S. market, Indonesia’s airlines learned Alast month that they can re-start flying to the U.S. In mid-August, the U.S. Federal Aviation Administration (FAA), announced it had restored Indonesia its top tier category 1 rating after a March safety review. Indonesia now complies with International Civil Aviation Organisation (ICAO) standards, an could follow FAA statement said. in serving Europe “With the International Aviation Safety Assessment (IASA) Journal last month. Analysts European travelers are advised approved the funds to hire several Category 1 rating, Indonesian believe it would be hard for the against flying on it when travelling experts from Britain and also the air carriers can establish services Garuda, which is considering the in Asia. Royal Thai Air Force staff to train to the United States and carry destinations of New York or Los In Thailand, a June inspection Thai inspectors in airline audits. the code of U.S. carriers,” the Angeles, with another stop at of all Thai-registered airlines A shortage of auditors has been FAA said. It said that Indonesia another Asian gateway, to make avoided the nation’s carriers blamed for lax supervision of “was not deficient in technical money on the route(s). from being listed as having Thai-registered airlines. Arkhom expertise, trained staff, record The American announcement sub-standard safety practices in said Thailand needs at least 30 keeping or inspection processes”. followed a European Commission the latest audit by the European specialists in the next five years In June, Garuda Indonesia’s (EC) decision to permit three Aviation Safety Agency (EASA). to audit carriers operating in the president and chief executive, Indonesian carriers, Lion Air, Transport Minister, Arkhom country. Trainers of auditors from Arif Wibowo, strongly hinted and , to fly to Termpittayapaisith, said the EASA the air force will be qualified that Indonesia, which lost its top European destinations. Until the announced 214 airlines from 19 military pilots. tier FAA rating in 2007, would summer announcement was countries failed to meet safety The Civil Aviation Authority soon have it restored. He told made, only flag carrier, Garuda standards but “no Thai airlines of Thailand (CAAT) has 23 media at the International Air Indonesia, was permitted to serve were listed”. inspectors available for auditing Transport Association annual Europe. Arkhom said the government with another 10 inspectors from general meeting in Dublin that he Lion Air is the only Indonesian is speeding up its action plan to Britain’s CAA International Limited expected his airline to be flying to airline other than Garuda likely meet ICAO’s safety requirements providing support. Arkhom said the U.S. in 2017. to be interested in broadening its after the organization had sent the government expected to have not network to Europe, but removal eight experts on aviation safety complete its action plan in the operated services between their from the EC black list is significant to help Thailand overhaul its next six months. After that, there home country and the U.S. for for all three of the airlines. If an regulatory system, he said. will be an internal evaluation 20 years reported the Wall Street airline is included on the black list, Thailand’s cabinet recently of the country’s overall aviation

10 / ORIENT AVIATION / SEPTEMBER 2016 safety measures. Hwang Kyo-ahn. India also avoided sanctions A Ministry of Land, although it continues to suffer Infrastructure and Transport serious shortages of regulatory spokesman said the department staff. A recent report prepared by will place much greater Indian industry body, Assocham, importance on safety when both and consultancy KPMG said air full service carriers and LCCs are traffic control officers (ATCOs) assessed for route allocations. increased to 2,600 last year, They will be subject to tighter but there was still a shortfall safety rules, the department said. of approximately 1,500 ATCOs South Korea’s budget airline to serve India’s rapid aviation market has grown rapidly, with expansion. some 24 million passengers India’s Civil Aviation Ministry Private Partnership (PPP) mode Consultancy Group for AAI carried on the country’s six budget is considering authorizing private and then made fully open to the estimated 3,599 controllers will be carriers in 2015. The passenger companies to train ATCOs to private sector, said the joint report, required by 2020. mix was 55% domestic and up to address the staff shortages at which also recommended that In South Korea, the 45% of international. India’s Air Navigation Services partnerships with international government is tightening safety Safety checks at South Korean (ANS). The ANS comes under the ATC training institutes should be rules for budget carriers after a airlines earlier this year revealed authority of state-owned Airports explored. string of accidents. “We’re going LCCs often had insufficient Authority of India (AAI) and the India has ATC training to make sure safety practises security staff and equipment public/private training proposal facilities at the Civil Aviation take root, publish the results of and had failed to follow-up would include upgrading capacity Training College in Allahabad and safety assessments of each airline recommendations such as at existing ATCO training facilities. at Hyderabad airport. A study and reflect them in their route retraining of pilots and engineers “This may be started in Public by the U.S.-based Washington allocations,” said Prime Minister after incidents and accidents. ■

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SEPTEMBER 2016 / ORIENT AVIATION / 11 NEWS BACKGROUNDER

Malaysia’s biggest airline group bumps up against monopoly operator

When is a low-cost airport terminal not a low-cost airport terminal? It’s a question that is pre-occupying the AirAsia Group and its supporters as they lock horns with the country’s airport authority about the branding of Kuala Lumpur’s budget facility.

Tom Ballantyne reports

irAsia Group chief to preserve its right to brand the Azharuddin Abdul Rahman, people have travelled through executive, Tony LCC terminal as KLIA2. Fernandes appeared to be in a KLIA2 so far this year. We want Fernandes, and the The AirAsia Group’s conciliatory mood. He tweeted to grow that. (This) will be great head of the airline’s proposed name change, said the discussions were “very good” for the economy.” Malaysia arm, MAHB managing director, and indicated the government But Liow threw a spanner in AAireen Omar, have no doubts Badlisham Ghazali, is confusing had accepted the second terminal the works. He said KLIA2 should about the purpose of Kuala passengers. Misled by LCC was a low-cost facility. not undergo a name change Lumpur International Airport’s branding, they are heading to “The important issue is not despite the fact that at the (KLIA) second terminal. the airport’s now closed former the name but that it’s promoted AirAsia Group it would definitely It is a low-cost terminal low-cost terminal. inside the terminal and to the be known as LCCT2. and they are calling it Low-Cost “Why create the fuss and world that KLIA has a low-cost The sequence of events that Carrier Terminal Kuala Lumpur, confusion? The brand stays. hub with low fares,” he said. He led to this stand-off is one of or LCCT2. They are spending $5 I hope (Malaysia’s) Transport added he was confident that the region’s strangest aviation million on a marketing campaign Minister, Liow Tiong Lai, will ultimately Liow would be able to disagreements of the year. to promote the facility. inform AirAsia. We will see what find a good “win-win” solution Unfortunately, it has emerged But the airport’s operator, happens next,” he said in July. for both AirAsia and MAHB. at a time when Fernandes was Malaysia Airports Holdings After a meeting with the “The goal is to get more of already at odds with the MAHB (MAHB) does not like the idea Transport Minister and Malaysia’s Asean, Asia and the world to use about its planned increases in and is threatening legal action Director General of Civil Aviation, our low-cost hub. One million airport fees and charges at the

12 / ORIENT AVIATION / SEPTEMBER 2016 NEWS BACKGROUNDER

second terminal. the argument. “An integrated At Britain’s Farnborough hub should include seamless Air Show in July, he posted a connectivity between terminals Facebook message that said the that encourages passengers to MAHB “can’t charge passengers interlink and stimulate travel on for its grandiose schemes”. He both full-service and low-cost labelled KLIA2, in its current carriers,” she said. state, as a “Frankenstein “The lack of airside trains terminal” that is “neither and landside buses to connect premium nor low-cost”. KLIA to KLIA2 clearly showed Fernandes is most upset the terminals are not part of an by the fact that AirAsia Group integrated hub. Passengers are airlines make up 98% of the charged RM2 one way for using traffic at KLIA2 and therefore are the only train connecting the two MAHB’s biggest customer at the terminals and the train operates terminal. Yet, said Fernandes, the on a sparse schedule.” airport authority was not willing The low-cost carrier group to consider AirAsia’s requirement wants the MAHB to focus on for a basic low-cost terminal that a dual-hub strategy. The KLIA would reduce the airline group’s MTB could be led by national operating costs. carrier, Malaysia Airlines Berhad, AirAsia Berhad CEO, Aireen and supported by the oneworld Omar, wrote to Liow to seek the alliance, while LCCT2 could government’s support to operate be positioned as the region’s KLIA2/LCCT2 as a hub low-cost low-cost carrier hub. terminal that could make Kuala “AirAsia’s fly-thru traffic Lumpur the Dubai of the East. has grown by almost 50% “We wish to start addressing every quarter, with more and the airport terminal as LCCT2, more travellers flying into Kuala We wish to start addressing which is the true identity of the Lumpur and using it as a transit the airport terminal as LCCT2, terminal. But the MAHB has hub. If MAHB can admit to refused to admit the airport is the importance of LCCT2 as a which is the true identity of the terminal. meant for low-cost carriers,” she low-cost carrier hub, we can But the MAHB has refused to admit the said. work together to strengthen the airport is meant for low-cost carriers Omar said the MAHB had position of Kuala Lumpur and stated the KLIA Main Terminal reclaim the title of Asia’s largest Aireen Omar Building (MTB) and KLIA2 are LCC hub from Bangkok’s Don CEO and executive director AirAsia Berhad planned as an integrated hub, but Mueang International Airport,” there was no evidence to support AirAsia said. MAHB said KLIA2 is when it said both terminals at neither an independent airport KLIA would bear the IATA code nor a hub. It is Kuala Lumpur of KUL. International Airport’s (KLIA) MAHB, which manages and second terminal and was a crucial operates 39 airports in Malaysia part of the KLIA hub. and one international airport in “Although KLIA2 is mainly Istanbul, Turkey, said its five-year used by low-cost carriers, it is business plan was aimed at designed to cater to all types positioning KLIA as an integrated of airlines as it supports the hub that would provide seamless overall KLIA capacity,” the connectivity between full service, airport operator said. MAHB hybrid and low-cost airlines. added KLIA2 is the registered “Successful hubs are name of the terminal under measured by the extent of their the International Air Transport international connectivity. It Association (IATA). Calling it is evident this could only be Poor maintenance by another name would be achieved by leveraging on the KLIA2 (or LCCT2) misleading for passengers and full service carrier network and Malaysia the public. AirAsia countered alliances as well,” it said. ■

SEPTEMBER 2016 / ORIENT AVIATION / 13 NEWS BACKGROUNDER

Mainland regulator names and shames airline sinners

By Dominic Lalk

n an effort to curb Three executives of the malpractice, the CAAC airline’s subsidiary, Henan has published its first ever Airlines, accused of industry blacklist, naming operational negligence and shaming four executives Iand a training school in the process, and banning them from the industry for life. The three aviation leaders who were added to the list were Zhang Pei, Zhu Nan and Li Qiang, the former president, deputy general manager and general manager of Shenzhen Airlines subsidiary, Henan Airlines. The trio rose to ignominy when it nearest airfield. Ding coaxed his fines of 50,000 yuan ($7,515) Once approved, mobile transpired that their lack of subordinates at the flight school if passengers compromise phone and Internet inflight usage oversight and responsibility into keeping the incident under civil aviation safety or “disturb are expected to open the door to contributed to, if not caused, wraps by disassembling the order”. Included under those billions of dollars in e-commerce inadequate training and unsafe light aircraft in secrecy inside a terms are 14 types of undesirable opportunities in addition to operations at the domestic storehouse and attempting to behaviours, including using a giving an airline another way airline, which led to the crash of delete ATC recordings. mobile phone, even in airplane of differentiating itself from its Henan Airlines flight VD8387 on Tianjin’s Civil Aviation mode, smoking, forcibly competitors. the night of August 24, 2010. University of China (CAUC) occupying seats, blocking “From a business The Embraer E190 aircraft hit the Chaoyang Flight Academy was passage ways and gates, perspective, we definitely hope ground some 800 metres short also added to the list after it tried breaking into airports and that there will be a breakthrough of the runway at Yichun Airport to conceal a runway incursion planes, physically harming a crew in the policy review,” Zhang in Northeast China’s Heilongjiang incident involving one of its member, other staff or fellow Chi, a deputy director at China Province amid dense fog. DA40D aircraft at Tianjin Airport passengers. Eastern Airlines has said. “While The aircraft broke apart and that caused a near-miss with a More changes to the I let passengers browse the caught fire, killing 42 of the Tianjin Airlines Embraer coming regulations governing the use of Internet for free, I can at the same 96 passengers on board. The in to land. The CAAC has since mobile phones would appear to time profit from advertisements CAAC attributed the accident to grounded all training aircraft at be forthcoming. A law to amend and onboard shopping. There will pilot error caused by insufficient the flight school. the use of electronic devices on be a big positive return.” training, funding and oversight. The regulator said it would board is underway and the norms Mainland carriers still have The fourth executive to be update the executive blacklist will be relaxed by the end of this a lot to learn when it comes to publicly shamed is Ding Bangxin, regularly on its official website. year or in early 2017, Zhu Tao, inflight connectivity. Among the general manager of Hebei Jinyan As the CAAC is clamping director of the air transportation “Big Three” state-controlled General Aviation, a pilot training down on dishonest industry division at the CAAC has said. airlines – , China Eastern school near Shijiazhuang. He leaders, passengers who The decision is more than three Airlines and China Southern was piloting a light training misbehave also will face years after onboard mobile Airlines – China Eastern and aircraft in the summer of 2013 tougher sanctions. In August, phones were cleared by the U.S. China Southern only offer data when he ran out of fuel and had the CAAC published a new Federal Aviation Administration usage on a fraction of their long- to make an emergency landing draft amendment to the Civil and the European Aviation Safety haul fleets, while Air China does approximately 11 km from the Aviation Law in China to include Agency. not offer the service at all. ■

14 / ORIENT AVIATION / SEPTEMBER 2016 @AFIKLMEM afiklmem.com

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A350_AirFranceIndus_202x273_VA.indd 1 21/09/15 11:46 NEWS BACKGROUNDER

Evolution rather than revolution at Thai AirAsia A new shareholder at an airline often means a new strategy. But not at Thai AirAsia. Founder and chairman of the King Power International Group, Vichai Srivaddhanaprabha, promises it will be steady as she goes at the Bangkok-based budget airline now that he has bought into the low-cost carrier.

Tom Ballantyne reports

hai tycoon and owner “Rest assured management, Power, Thailand’s sole duty-free of English Premier myself included, will continue the operator, are massive. We look League champions, good work TAA always has done. forward to working together, not Leicester City, Vichai The same team of executives and only in Thailand but across the Srivaddhanaprabha, I will continue to manage the group and Asean.” Ttold Thai media he will adopt airline. We remain committed So who is this relative a “hands off” approach to his to growth just as we did when newcomer to Asian airline latest business acquisition, Thai we launched 13 years ago,” ownership? Back in 2007, Vichai AirAsia (TAA). Instead, he will Tassapon said. was ranked 21st in the Forbes’ identify synergies between the TAA is on track to increase list of Thailand’s wealthiest budget carrier and his other its A320 fleet from 48 to 51 by businessmen with net worth of business interests. December and is forecast to carry $200 million. Today, he is ranked The founder chairman 17 million passengers by year fourth, with a fortune of $2.8 of Thailand’s only duty-free end. The LCC has 15 A320-200s billion. He founded his duty-free store chain, the King Power winners, Leicester City, said in on order. Last year, TAA carried retail company, King Power, in International Group, told media: a recent briefing that he may 14.8 million passengers and 1989 with the opening of his first “I have always been interested in have the power to change reported a profit of $30 million. store, selling Thai handcrafts, aviation businesses. We owned management, but that it won’t Vichai’s acquisition has in Mahatun Plaza in central five per cent of Nok Air when it be happening. “We want to see received the corporate blessing Bangkok. was launched, but the stake was TAA’s management maintained,” of Tony Fernandes, AirAsia He later opened a pick-up too small to make a difference.” he explained, and added he has Group CEO, whose group point for customers at Don But he is in a very different no doubts about the talent of retains 45% of TAA. “This Mueang airport, then Thailand’s position now. With his recently TAA’s team. investment proves that Thai international airport. It was a acquired majority equity in TAA’s Vichai purchased his TAA AirAsia’s value proposition significant step for the retailer as holding company, Asia Aviation holding from the Tassapon remains undiminished. The it was the only company allowed (AAV), Vichai can combine the Bijleveld family in June this vote of confidence that comes to sell duty free goods at the strengths of his retail and tourism year for US$227 million, with from one of the most successful airport. empire with the expertise and Tassapon retaining five per family businesses is fantastic,” Vichai’s fortunes really took affordable fares of Thailand’s cent of the carrier in the deal. Fernandes said. off in 2001 with the election of most successful LCC. Tassapon will retain his position “The potential tie-ups Thai Telecoms tycoon, Thaksin “Thai AirAsia will add routes as TAA’s chief executive. between AirAsia and King Shinawatra, as the country’s in China (the major market of prime minister. Thaksin’s pet both companies) and bring Thai AirAsia will add routes project was the construction of tourists to shop at King Power,” Bangkok’s Suvarnabhumi Airport, he said. in China - the major market for the airline which opened in 2006. The 58-year-old tycoon, and the duty free retailer - and Vichai was awarded exclusive who is best known outside rights to operate duty free Thailand for his ownership of bring tourists to shop at King Power outlets at the new airport, a 2016 English Premier League right observers said at the time

16 / ORIENT AVIATION / SEPTEMBER 2016 NEWS BACKGROUNDER

was a licence to print money. He is known to have powerful connections with Thailand’s elite and with its revered royal family. He has donated millions to charities supported by Thai royalty. At one stage had millions of yellow armbands printed which read “We Love HM the King” to mark the 60th anniversary of King Bhumibol’s reign, reported author MacGregor Marshall. According to one local commentators, Vichai’s connections allowed King Power and its chairman to survive during the political unrest of 2006 to 2008 in Thailand. In those years The Bangkok-based LCC plans to have a fleet of 51 A320s by year end Thaksin was removed from office in a coup and a pro-Thaksin party avid supporter of English soccer, by 12 months. serves Changsha, Chongqing, was elected in 2007. The political but when he paid $55 million Also a polo enthusiast, Vichai Guangzhou, Hangzhou, climate heated up with the rise for Leicester City in 2010 it was and his polo playing son, Top, Kunming, Nanchang, Shenzhen, of the anti-Thaksin Yellow Shirt a second tier team. After the often arrive at Leicester’s home Wuhan and Xi’an, as well as movement in 2008 that saw team’s promotion to the Premier games by helicopter and have the Macau and Hong Kong. protesters occupying the city’s League in 2014 he said he would pitch blessed before kick-off by TAA also flies to Yangon Suvarnabhumi Airport as well as spend $240 million to break into monks flown from Thailand for and Mandalay in Myanmar, Phuket’s airport. the top five clubs within three the occasion. where King Power is planning to Like many Thais, Vichai is an years. He beat his own deadline TAA already is performing open duty free stores. Analysts well, but the combination of the said the ability to deliver duty LCC and the duty free empire free goods directly to Chinese could be a potent mix. TAA passengers travelling with TAA claims it is one of the leading and offer cross incentives with airlines operating scheduled the airline and its potentially flights between Thailand and captive customer base is a huge China, with 20% of its revenue opportunity. generated by the Chinese Growth also is forecast market. Both TAA and King to increase from outside the Power say it is not difficult to region. TAA’s long-haul budget see how an alliance with TAA airline, Thai AirAsia X (AAX) has will promote King Power’s retail been aggressively expanding business in China. its network, bringing in more An estimated 10 million tourists to the KPIG’s retail ambit. Chinese visited Thailand last year, It flies six A330s to more than with most of them having direct 20 regional and 29 international exposure to KPIG’s duty free destinations from Bangkok’s Don stores at the country’s two main Mueang International airport. Bangkok airports and regional In June, it launched flights to airports at Phuket and Chiang Muscat in Oman. In 2015, 85,000 Mai. The duty free retailer also tourists visited Thailand from has three dedicated anchor Oman, according to figures stores in Bangkok. from the Tourism Authority TAA flies to all of of Thailand. The numbers are these destinations and also projected to rise above 10% to directly between Thailand’s 100,000 in 2017. Also in June, regional airports and Chinese AAX started direct flights to the AirAsia Group retains 45% of Bangkok budget carrier, Thai AirAsia destinations. From Bangkok it Iran’s capital, Tehran. ■

SEPTEMBER 2016 / ORIENT AVIATION / 17 REGIONAL AVIATION

Asia-Pacific airlines lead demand for regional jets

Airlines with fleets of smaller jets and turboprops have long taken a back seat when orders are announced but as Farnborough proved, there are signs the sector will surge.

Tom Ballantyne reports

espite the fact that duopoly of Brazil’s Embraer and and economics that the E190-E2 Turboprops will also be the Commercial Canada’s Bombardier. Mitsubishi brings, while still maintaining in demand, said European Aircraft Corporation is producing two versions of the a high level of cockpit manufacturer, ATR. It forecasts of China’s (COMAC), MRJ, which can seat 78 to 92 commonality with the existing 3,000 new short-haul routes ARJ-21 regional jet passengers. E-Jets. This means an easy will be flown by turboprops Dmade its June commercial debut The Japanese jet made its transition for our pilots when in the next two decades ten years behind schedule does inaugural flight last November they operate both the current fed by demand for regional not mean it is without customers. with the manufacturer scheduled E-Jets and the E-Jets E2.” connectivity. After the ARJ21’s first flight to deliver its first aircraft, to Overall, the future for Almost 50% of the new with Chengdu Airlines, China launch customer All Nippon regional flying appears services will be in the Asia-Pacific, Aircraft Leasing Co. (CALC) Airways, in mid-2018. It has favourable. In its latest market including the forecast fastest placed a $2.3 billion order for 427 orders for the jet, including outlook to 2035, Embraer growing market, . 30 of the aircraft type, with options and purchase rights. projected global airlines will About 1,400 new routes are options on another 30, at the At Embraer, the Brazilian require 6,400 new jets, worth predicted to be established in the Farnborough Air Show. It is the manufacturer has signed a firm US$300 billion, in the 70-130 Asia-Pacific, followed by North largest single order for the 78-90 order for five of its new E190-E2 plus seat sector, 2,300 aircraft in America (800) and Europe, Africa seat jet. They will be delivered regional jets plus purchase rights the 70-90 seat market and 4,100 and the Middle East accounting in the next five years to an as for another five of the aircraft 90-130 aircraft. for the rest. yet unnamed Indonesian carrier with Indonesia airline, Kalstar The Asia-Pacific will lead To 2035, ATR anticipates that CALC associate company, Aviation. Established in 2007, demand with 31% of the market an annual average growth rate Friedmann Pacific Asset Kalstar connects passengers followed by North America in regional traffic of 3.9%, or Management, is supporting. to cities in the province of (26%), Europe (18%) and South 2,800 new turboprop aircraft Mainland funded COMAC will , an area known for America (11%). worldwide. Demand for establish maintenance and mining and agriculture. regional connectivity is not only after-sales offices in Indonesia as The airline operates increasing in key markets such as part of the deal. an E190 and two E195s on India and China but also in Iran, The Chinese manufacturer domestic routes in Indonesia. Japan and the U.S., ATR said. was not the only new entry “Kalstar Aviation has taken By 2035, the Asia-Pacific, manufacturer to breakthrough at a differentiated path in the excluding China, will have Farnborough. Mitsubishi Aircraft Indonesian market by utilizing the world’s largest fleet of Corporation, the maker of current generation E-Jets, operating turboprops, up Japan’s first passenger jet, won and soon the E2s, to grow from 640 in 2015 to 1,180 in an order for as many as 20 of its their business sustainably and 20 years. China’s turboprop new MRJ (Mitsubishi Regional provide their passengers with an fleet is forecast to increase Jet) from Swedish leasing unparalleled cabin experience,” from 35 in 2015 to 320 by company, Rockton. said John Slattery, president 2035. ■ It was the second order for and chief executive of Embraer the airplane following a deal Commercial Aviation. John Slattery, CEO Embraer earlier this year to sell 20 of the Said Kalstar’s chief executive Commercial Aircraft: Brazil’s Embraer has sold five of its new jets to U.S. lessor, Aerolease Andi Masyhur: “We are looking E190-E2 jets with five options Aviation. The MRJ is Japan’s forward to the enhanced to Indonesian regional airline, attempt to break the regional-jet performance Kalstar Aviation

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013_202x273_24-787_ICV2_RZ01.indd 1 12.02.16 17:03 MAIN STORY AIRLINES IGNORE THE BIG DATA BANDWAGON AT THEIR PERIL Big Data and data analytics offer airlines more opportunities to determine travel trends than at any time in history. Carriers must apply the insights of data mining now to stay ahead in the region’s brutally competitive industry.

Tom Ballantyne reports

20 / ORIENT AVIATION / SEPTEMBER 2016 MAIN STORY

athay Pacific Airways chairman, John Slosar, and benefit from new revenues and increased loyalty.” said in May that unless airlines are spending big Utilizing data analytics to retain customer loyalty is only on Big Data and data analytics today they will one example of the opportunities Big Data provides for be falling behind. The airlines that are will be airlines. Malaysian low-cost carrier, AirAsia, is using cutting winners, he said. Those that don’t will be the edge data capture and analytics technology to keep its fares Closers. And he’s far from being alone in his prediction. low. At Garuda Indonesia, president director and CEO, Arif It operates GE’s Flight Efficiency Services (FES) to Wibowo, has said the carrier is “strengthening its IT implement precision navigation services, flight data analytics backbone”. “I am sure from the trend of the digital economy, and fuel management services. The data-driven services e-commerce has to be improved as soon as possible and that is produce cost savings and increase aircraft utilization. By why Garuda has to be very strong in high-tech. We have to using FES AirAsia hopes to save between $30 million to $50 build a very strong IT base,” he said. million in the next five years. Speaking at a recent conference in Helsinki, Qantas In 2015, Singapore Airlines (SIA) wrote a five-year Group chief executive, Alan Joyce, said the “biggest contract to use Rolls-Royce’s Big Data analytics to reduce fuel opportunity” Qantas has is harnessing Big Data and consumption across its fleet. And earlier this year the carrier expanding on the techniques it can use to leverage it. signed up for Amadeus’ Altéa Network Revenue “We have to tap into the future by using this Big Data Management, Dynamic Pricing and Altéa Group Manager and take these opportunities now. Qantas has been collecting Solutions. “A changing landscape requires a revolutionary customer data for 30 years,” he said, “with more nuggets of approach,” said Julia Sattel, senior vice president, airline IT at information added to each Amadeus. individual’s profile over time.” “Traditional revenue Slosar, speaking at a recent What we are going to see is management systems are no Lunch with Orient Aviation in that airlines that take on data longer adequate to support the Hong Kong said: “What is data complex needs of network analytics? It is using Big Data to analytics really learn about carriers and this is where ‘Big understand better the trends of customer segmentation and Data’ creates opportunities for your customers or your trends in the market. They can more sophisticated practices,” operations and then finding a she said. way to extract advantage from find ways of turning that information Cathay Pacific also uses data those trends. For instance, in into propositions that will attract analytics to significantly reduce planning the proposition you are loyalty from your customers. fuel costs and to inform its crew going to make to the market and shift deployment decisions. place. The airlines that do this Analytics software processes “The airframe and engine will be the winners information about employee manufacturers have done a skills, the aircraft on which they fabulous job of making the John Slosar are trained, destination data and aircraft more reliable and more Cathay Pacific Airways chairman special breaks to optimize airline predictable. As a result, flight schedules. The process has operations and engineering are better and better and certainly boosted productivity and reduced staff downtime at the more systematized. airline. “This has allowed the rocket science in the last 10 years to Hainan Airlines is using a new data intelligence tool, shift towards revenue management, which developed in the which assists airlines in adopting the best Big Data 90s really. It devised strategies using data technology to technologies. “Understanding our business performance in optimize revenue streams for the airline. the context of the wider marketplace is essential as we develop “If you can get 2% or 3% more out of your revenue and refine our business strategies,” said Jack Li, director, streams, in an industry where you only make 2%-3% profit International business division at Hainan. margins, that means you double your profit.” “Amadeus Booking Analytics allows us to understand But now, Big Data is coming in to play across every exactly the source of our bookings, both in terms of origins aspect of an airline’s operations, from maintenance to revenue and destinations and points of sale. We can determine how management and marketing to staff deployment and fuel this compares with our competitors and make more effective management. strategic decisions.” “The companies that are more likely to succeed in the Data analytics can be efficiently integrated into an airline travel industry will be those that embrace Big Data and to make all the operational gears move more smoothly, experimentation,” said the head of travel intelligence at the resulting in reduced scheduling issues, fewer lost bags, less Amadeus IT Group, Pascal Clement. delays and lower overall costs. But most importantly, data “They’ll try out new ideas and approaches to increase analytics can guide airlines towards marketing strategies that their operational efficiency, enhance the customer experience provide passengers with what they really want when they are

SEPTEMBER 2016 / ORIENT AVIATION / 21 MAIN STORY

considering airline travel choices. advanced users of Big Data and data analytics today could be (JAL) has begun the first overhaul of its seen to be world class in this space in the next decade. main computer system for 48 years to better understand the According to global consultants, McKinsey & Company, needs of its customers. The carrier configured its own clairvoyant airlines can improve travel margins by 5% to 10% passenger services system, which handles reservations and and it does not take magic to achieve these results. “The secret ticketing, in 1969 and has been using the same one ever since, is insights from Big Data and analytics that offer a albeit with tweaks along the way. prescriptive solution to business disruption. It’s always a hard Next year the airline will switch to a new cloud service at call to hold a flight or leave passengers behind, but airlines no a cost of $828 million. Until now, JAL has not been able to longer have to guess about the right decision. Now they can make full use of the vast volume of its customer data because use real-time data to make the best choice in any given separate databases have managed reservations, ticketing, the situation,” it said. mileage program and other services. The consultancy said an example of the application Managing this data in the Cloud is expected to facilitate would be an airline deciding if it would hold a plane for 15 analysis of the Big Data. The airline plans to crunch minutes. “In reality, it will take 32 minutes for the passengers passenger data to determine the most popular food on and their bags to make it onto the plane because of specific specific routes and flights so menus can meet true demand. gate locations and airport traffic conditions. If the plane Better management of flight management and airport waits, the airplane will miss its takeoff slot and eight other services support is planned by 2020. passengers will be in danger of missing their connections at Chinese carriers also are the destination airport. focusing on increasing their ability “Without analytics, there’s to do business using Big Data. If we see there’s an expected no way to take all these factors Analysts report that China’s weather event in Sydney, into account when making a business analytics services market rather than wait for it and react, decision. The airline has to reached U$1.4 billion in 2014, up make its best guess and deal 16.4% from 2013. In the next five we can go to our customers with the consequences. Add years it is expected to grow to $3 the night before. Then they analytics to the equation and billion. the airline can run an algorithm Seattle-based Tableau have options. They can delay their that considers the arriving gate Software recently set up meeting or take their chances. information, walk and bag operations in Shanghai where one They are taking control of transport time between gates, of its customers is China Eastern the cost of re-booking Airlines (CEA), China’s second that choice, with analytics passengers and the frequent largest and the world’s ninth putting the decision back in flyer status of the affected largest carrier by scheduled the customer’s hands passengers. Now the airline can passengers. CEA uses Tableau to foresee that the 15-minute hold analyze market research, optimize Paul Fraser will likely turn into a 30 or 40 its “Origin-to-Destination” routes Qantas Airways head of operations minute delay and make a and increase revenue. decision accordingly. How is James Pu, senior executive of that for clairvoyance?” networking and revenue at CEA, said: “In six months, we’ve If an airline uses analytics to examine travel data about its developed nine dashboards for separate uses. Now we have past delays, it might realize that having specific airplane parts 500 people who use the dashboards to analyze marketing, on hand can reduce them. McKinsey & Company said that our competition, the other carriers and our more than 80% of all warning lights are caused by the same flights-to-revenues. three parts. “When the warning light flashes, airlines can use “It is easy for everyone who uses Tableau to drill down, data analytics to proactively alter the flight schedule using a past the peel of the orange and to the core,” he said. One year combination of predictive analytics and historical data,” it said. into using Tableau, the airline reported a 2% increase in Qantas uses data analytics to more quickly respond to revenue, which represented about $200 million. disruption and has been able to reduce the number of flights Cathay Pacific’s Slosar said there was no doubt that with reported late by 60%. “At the Qantas Operations Centre, we revenue management becoming more systemized, the next want better predictive analysis on what’s going to happen big move is to Big Data and data analytics. each day,” the airline’s head of operations, Paul Fraser, said. “This is going to be very important. What we are going to “If we see there’s an expected weather event in Sydney, see is the airlines that take on data analytics really learn about rather than wait for it and react, we can go to our customers customer segmentation and trends in the market and then the night before. Then they have options. They can delay their find ways of turning that information into propositions that meeting or take their chances. They are taking control of that will attract loyalty from your customers,” he said. choice, with analytics putting the decision back in the He said airlines that may not be known as the most customer’s hands.” ■

22 / ORIENT AVIATION / SEPTEMBER 2016 +

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Maint_E_202x273_Orient_Aviation-USD_20160905_01.indd 1 02.08.16 09:48 NEWS BACKGROUNDER

European LCC warrior succeeds Mueller at Malaysia Airlines

Malaysia Airlines Berhad CEO, Peter Bellew, is determined to maintain the pace of reform set by “airline crisis boss” Christoph Mueller, who resigned from the carrier nine months into his three-year contract “for personal reasons”.

By staff reporters

hristoph Mueller quite a few locals who had been prematurely departed beneficiaries of the flag carrier’s Malaysia Airlines gravy train. Berhad (MAB), Last February, MAB reported bound for Emirates its first monthly profit for almost CAirline on July 1, two months a decade. But then Mueller earlier than originally planned, in a dropped his bombshell. A few truncated resignation period that weeks after the positive profit disappointed the airline reformists report, he truncated his three- at the Kuala Lumpur-based flag year contract and announced his carrier and also his industry fans. resignation because “of personal In his place, after a three reasons beyond my control” from month global executive search, September 1. At that stage, he is the airline’s former chief planned to serve on the airline’s operating officer, Peter Bellew board from September. (51). Irishman Bellew, who lists Rocked by Mueller’s decision, distance running among his media critical of the airline hobbies, became MAB’s CEO on said some MAB staff were not July 1. He is charged with getting interested in improving the Mueller’s reforms, aimed at carrier’s performance or ridding returning the carrier to profit in it of suspected corruption. They 2018, across the finishing line. alleged the last straw for the His job will be difficult, former CEO, who also criticized although he is neither a the work ethic of some MAB newcomer to the airline nor carrier was preparing for its turnaround CEO of Aer Lingus, staff, was the return to service, a novice in managing airline re-making under the 100% arrived in Kuala Lumpur a few without his knowledge or staff and operations. His last ownership of the country’s months after Bellew. His new approval, of a B747. In a second job before he moved to Kuala Khazanah Nasional sovereign executive team, heavily weighted shock, at least to the outside Lumpur was director of flight wealth fund. In the previous towards expatriates, launched world, Mueller brought forward operations at Ryanair, a carrier March, MAS MH370, a B777 Malaysia Airlines Berhad from the his departure from MAB to June that has attracted controversy flight bound for Beijing from ashes of MAS on September 1 30. He is now Emirates Airline’s under the leadership of its Kuala Lumpur, disappeared on last year. Chief Transformation Officer, founder, Tony O’Leary. Among March 8 – with the aircraft and Mueller’s three-year program in charge of digitilisation at the the senior positions Bellew held all passengers and crew onboard eliminated a third of the airline’s carrier. at Ryanair was head of sales and yet to be found. A little more workforce, deep cleaned the In a July 8 interview, his first marketing where he was credited than four months later, the fleet, canceled unprofitable since he became CEO, Bellew with successful media campaigns airline’s MH17 aircraft was shot routes, upgraded inflight said a challenge “would be that made a hefty contribution to down over the Ukraine, killing all service and terminated several managing the cultural differences the LCC’s sales. onboard. overpriced third party provider of staff”. The fifty-one-year-old, He arrived at MAS as COO Former CEO Mueller, contracts. And, it has been who has a keen eye for economy in January 2015, as the stricken most recently the successful alleged in the media, annoyed at the carrier, emphasized

24 / ORIENT AVIATION / SEPTEMBER 2016 NEWS BACKGROUNDER

saving money would not mean progress” in the past year at “The digital experience when success of our national airline.” compromising on safety or the MAB, Bellew said. “Our first booking with Malaysian Airlines As the Dublin-based LCC’s quality of the airline’s products quarter showed performance will see significant investment director of flight operations and services. indicators were on track. Yield in 2016-2017. From the choice Bellew oversaw 70 bases around To illustrate his determination was up 23.4%. Costs were down of seats and the quality of the Europe and a fleet of 320 aircraft. to achieve its target of sustained 32.9% and our bottom line is Nasi Lemak (a Malay fragrant rice He is credited with creating a profitability by 2018, Bellew ahead of budget,” he said. dish cooked in coconut milk and training organization for 600 said MAB would launch flights The airline had fuel savings of Pandan Leaf) to time of travel, new pilots, built employee from Kuala Lumpur International 10,000 tonnes in the first quarter we should ensure the needs of representative council structures Airport’s second terminal (KLIA2) of this year. “We will stop doing each guest, with their different in 19 countries, opened 61 next year because charges at the things that lose money. We will individual preferences, are met.” overseas bases and introduced facility were lower than at the rebuild our relationships with the The selection of Bellew as new technologies to reduce costs main terminal - by an average of travel trade globally. We will lead Mueller’s successor was near to across the airline. $8.25 per passenger, or $1,350 a worldwide marketing initiative guaranteed as he has played a A graduate of Trinity College, for each flight. to promote the wonders of critical role in putting in place Dublin, he began his career in the “On one daily flight this Malaysia,” he said. the former CEO’s turnaround travel business, ironically dealing simple saving will be $500,000 “We will start routes from plan. As MAB chairman, Nor with a very young Ryanair, and per annum. We will pass these various Malaysian airports Yusof, said: “Peter has been a was the founder and CEO of Irish savings onto customers with to new, unserved ASEAN key figure in the airline’s senior online travel agency, vbnets.com. lower fares. Each and every (Association of South East management team responsible He was general director cost of everything we do will Asian Nations) destinations. A for executing the biggest and of Kerry Airport in southwest be checked minutely each day new website, mobile app, trade fastest transformation in our Ireland and managing director without any change in quality,” reservations system and airport history. Peter’s appointment of Drive Ireland before he joined he said. equipment will be in place in the will pave the way for a smooth Tony O’Leary’s executive team in There had been “great next 12 months. transition to ensure the continued 2006. ■

SEPTEMBER 2016 / ORIENT AVIATION / 25 COVER STORY NATURAL BORN AIRLINE LEADER Shinichi Inoue, the extroverted boss of Peach Aviation, the first “made in Japan” low-cost carrier, has built the airline’s success on brutal pricing discipline and person-to-person marketing intelligence.

Geoffrey Tudor reports from Tokyo

oint venture budget carrier CEO, Peach Aviation run as a financially independent entity. Ltd’s Shinichi Inoue is a very different kind of As Japan’s first LCC, Peach was launched in March 2012 Japanese boss. Fluent in English and Mandarin and with domestic services from Osaka to Sapporo and Fukuoka. never too busy to stop and chat with his staff, he is International flights commenced two months later to , a tieless and tireless leader of a new type of Japanese South Korea. At year-end 2012, the airline had added Hong airline:J a successful low-cost carrier. Kong and Taipei (Taoyan) to its groundbreaking operations. Good humoured as well as approachable, Inoue takes In November of its inaugural year, Peach had carried more inspiration and ideas from his workers – from ground staff to than one million passengers and was the first Japanese LCC the cabin and the cockpit – as well as his manager lieutenants – to hit the magic million mark for seats sold. It also became the when setting strategy at Peach. first home-grown LCC to make an operating profit, achieved It is this approach of believing that employee feedback in its second year of business, to March 31, 2014. builds an accurate picture of customer reactions, demands and Peach followed up that success with two consecutive years trends that has been a significant factor in Peach’s success and of increased revenue and profits, which has allowed the airline also that of Inoue’s squire ship of the carrier. to pay off its accumulated losses and to start the current year, He is also acknowledged by colleagues as “having a bit ending March 31, 2017, with a clean financial slate. of the show man” about him with an eye for good publicity. In the 12 months ended this March 31, Peach reported When Peach was launched in early 2012, he donned a captain’s operating revenue of 47.939 million yen (US$475,620) and uniform and posed with flight attendants for the occasion, a earned an operating profit of 6.181 million yen. Net earnings rare example indeed of a Japanese CEO lightening up for the were 2.744 million yen. Average seat load factor was 86.7% cameras. and the number of revenue passengers was 4.55 million. Inoue was ’ (ANA) director of In the current year, Peach is forecast to carry between five corporate affairs Asia before he moved to Peach Aviation Ltd to and six million passengers, increasing to six to seven million in work on its formative strategy in 2011. He was a clear favourite the following year. to head the team that set up Peach and was appointed its CEO These estimates could be on the low side as inbound traffic and Representative Director, and later its president when the continues to record strong growth. Inoue said Peach passengers budget carrier was formally established. could reach 10 million for the 2018 year. Despite some industry scepticism about the Japanese According to the Japan National Tourist appetite for budget flying, Peach Aviation became the first Organization (JNTO), visitors to Japan in the Kansai based “Asian regional” airline with an original business January-June period this year grew 28.2 % over the model. Based at Kansai International Airport in Osaka, it was same months a year ago, to a record 11,713,800. set up as an unconsolidated subsidiary of ANA Holdings and is The figures topped the 10-million threshold for

26 / ORIENT AVIATION / SEPTEMBER 2016 SEPTEMBER 2016 / ORIENT AVIATION / 27 COVER STORY

At Peach, Inoue attributes four factors critical to the LCC’s Bred for success strong performance: operational quality, cost management, branding and innovation. Shinichi Inoue, the Representative Director and CEO “Since we started we have tried hard to explain to of Peach Aviation Limited, was born and raised in the Shonan district of Kanagawa Prefecture, a region adjacent customers that they should see us as a ‘flying train’ so people to Tokyo and bordering the Pacific Ocean to the south. would perceive aircraft as an everyday mode of transport,” said Inoue (58) graduated in law from the prestigious and Inoue. internationally successful private Waseda University in “With our range of low fares this ‘train’ concept has been l982. The highly regarded tertiary institution has produced well-accepted and more and more people are enjoying low-cost seven prime ministers and scores of leaders of industry, travel. We are changing people’s lifestyles – and making air including the maverick founder of Sony. From 1982 until travel a normal everyday event.” 1990, Inoue worked for Mitsubishi Heavy Industries in Led by Peach, the low fares created by Japanese LCCs have thermal power plant development. attracted customers who had never flown. Women, retirees, He moved to All Nippon Airways in 1990 and until students and, increasingly, business travelers, are all marketing 2011 held senior management positions at the airline, both in Japan and overseas, before he took on Peach Aviation. targets for the carrier. Married with three sons, he has maintained his family Travelers who had used express buses or sea ferries can now home in Shonan, where he enjoys reading for relaxation, fly on an LCC for the same price, but the journeys are much particularly non-fiction history. shorter. Retirees who have the time to travel now do so more Last November, Japanese Prime Minister, Shinzo Abe, frequently thanks to the low fares offered by LCCs. To cater established a panel that is developing a program aimed at particularly for this market, Peach has developed its “Active increasing overseas visitors to Japan to 40 million by 2020. 60” fare campaign. Chaired by Abe, it includes 10 cabinet ministers and seven Another promising market is staff at Japanese banks and outside expert advisers, including Inoue, the only airline trading companies as well as members of the civil service who industry representative on the panel. are regularly posted to provincial offices, usually without their families. LCCs help these families stay in touch at weekends the first time for a first half performance. and holidays. It was the fifth consecutive year that first half visitor Female office workers, especially young working women numbers had increased, said JNTO, with the growth led by with limited vacation time, can book LCC packages such more international flights and cruise ship visits. as one-day shopping or gourmet dining trips from Osaka The original target for foreign visitors was 20 million by to Seoul, South Korea. Female travelers from Taipei fly to 2020, the year of the Tokyo Olympics, but that target was Okinawa for beauty treatments. reached last December. By 2020, inbound visitors to the country The airline is paying special attention to young female could increase to 30 million, said Japan’s tourism officials. travelers interested in style and casual luxury. The Peach livery, Clearly, Peach has shown that the LCC business model for example, attracts many “selfie” photo takers among female can succeed in Japan, despite the country’s unique commercial flyers of all nationalities. aviation environment. Before it launched, Peach asked local residents in the But in 2012, sceptics predicted Japanese LCCs would fail Kansai region what they would like to experience as an airline because of the country’s stringent regulations and Japanese passenger. travelers’ demands for highly personalized service. They had many responses. One was for the airline to

28 / ORIENT AVIATION / SEPTEMBER 2016 COVER STORY

commence Kansai-Narita flights so housewives could take their children to Tokyo Disneyland for the day. Cardboard creativity “These families don’t have the time to spend a night away Outstanding among the innovations that Peach has from home, but by taking early and late flights they can pack introduced into the industry are self-service check-in in a visit to the Magic Kingdom - and save on the hotel cost – kiosks made largely of cardboard. in a day,” Inoue said. “By using cardboard for the exterior of the kiosks, it’s Low fares offered by Peach on routes to Okinawa, the easier to update branding and advertising imagery and it semi-tropical island south west of mainland Japan, have reduces overall manufacturing and transportation costs,” influenced local real estate trends. Kansai residents have been said Inoue. buying condominiums as second homes for weekend and The airline worked with an Osaka company, Yaneura holiday stays, which was unthinkable just a few years ago. Design, on the kiosks, which are taller than previous Initially, Peach concentrated on the market in the Kansai models and stand out in the terminal building. The 32-inch area, a district with a population of around 20 million centered touch screens are more than double the size of the screens on conventional kiosks and are much more customer around the commercial centre of Osaka and Kyoto, the ancient friendly. capital. It was a good place to learn. Peach can split the large screens to display advertising “Almost from the very beginning we were accepted,” or other promotional content alongside the step-by-step said Inoue. “Kansai people have this strong, mercantile self-service check-in instructions. The top half of the screen background. They readily took to the concept of the low-cost can display messages to prompt queueing passengers to carrier style. prepare their passports so check-in is speeded up. Kiosks “At the same time, they are very demanding. They expect automatically select the language used at the time of value for money. We found that if we satisfied the typical booking. Kansai customer, we satisfied anybody.” Cardboard kiosks cost 80% less than traditional On flights in and out of their main base at Kansai units and have been installed at Kansai airport since last October. International airport, Peach cabin crews make their announcements in the distinctive Kansai dialect, which has a rich and unique vocabulary; a practice that receives high marks northeastern Japanese city of Sendai when he outlined the from passengers. airline’s plans for Sendai to be a Peach base by the northern “But the crew speaking that way must be authentic Kansai summer of 2017. At present, the airline flies up to four times folks,” said Inoue. “I’m from near Tokyo. If I were to attempt daily between Osaka Kansai and Sendai. to speak the Kansai dialect, it would not go down well.” “Taipei, Kaohsiung, Seoul, Pusan and Hong Kong, Peach flies to 14 domestic and 10 international routes routes where the required flight time is within four hours, are from its bases at Kansai, Naha and Narita. “We’re considering candidates, but other destinations are being studied,” he said. a variety of possibilities for our domestic network and also for “The majority of inbound Peach passengers are individual overseas expansion,” he said. travelers looking for unique travel experiences in Japan. Not so “We regard potential Peach destinations as those that can long ago, every overseas visitor wanted to visit Tokyo, but that be reached within four hours from one of our base airports, is changing.” whether they’re in Japan or in other countries. Four hours is Recently privatized Sendai Airport is the gateway to scenic the practical range of our A320 equipment.” Tohoku in Japan’s northeast. It has suffered a tourism slump Last July, Inoue made this point to local media in the since the March 2011 earthquake and tsunami, but is working hard to hike back visitors. The region’s spectacular scenery and hot spring resorts will benefit from a national government backed promotion drive in 2016 aimed to increase the 500,000 visitors to the region in 2015 to 1.5 million by 2020. To build its traffic, Sendai is offering attractive landing fees to airlines. The carriers, in turn, have put cheaper air fares into the market that are increasing passenger numbers. Hotel stays, shopping and sightseeing are up. “That’s what LCCs can do,” said Inoue. “It’s a win-win situation.” Twelve months ago, Peach once again raised eyebrows when it launched daily flights to Taipei from Tokyo’s , using late night-early morning slots. In February this year, it followed up with similarly timed flights to Seoul. “We’re looking forward to opening up our third and fourth international routes from Haneda,” said Inoue, without specifying any destinations. Constraints at Haneda limit Peach and other LCCs to

SEPTEMBER 2016 / ORIENT AVIATION / 29 COVER STORY

enter the fleet by March 2018. “We basically plan to double the fleet to around 40 aircraft by the end of 2020 or fiscal year end of March 31, 2021,” said Inoue. A constant concern for Peach is the supply of cockpit crew. This, Inoue noted, is a worldwide issue. Peach is coping, but two years ago the young carrier was forced to cancel more than 2,000 flights between May and October because of a captain shortfall. Cabin attendants are a different story, with Peach recruiting staff in Osaka and Naha. It also is hiring cabin crew from Taiwan and South Korea and trains them at the All Nippon Airways’ centre in Osaka. “We don’t seek applicants with previous cabin service experience, but look for at least a high school education as well as basic health checks and a pleasant personality,” said Ioue. “When we advertised for our first cabin crew intake in 2011, there were about 2,000 applications for 100 places.” Among Peach’s 800 employees motivation is high. Inoue’s philosophy is: “Work hard, have fun”. Peach has been criticized for its on-time performance, which was 80.7% in 2015. Inoue admitted Peach had to improve on this metric. “We’ve been concentrating on sustaining a higher completion rate, which was 99.3% for the 2015 fiscal year. We are now addressing the on-time operation rate, based on Ryanair’s model of around 90%,” he said. We really want to be Recently, several of the region’s budget airlines formed an Asian brand, not just the Value Alliance. Members include Vanilla Air, an ANA Holdings airline carrier, Singapore Airlines-affiliated Scoot; a Japanese brand. The biggest Cebu Pacific Air, NokScoot, Tigerair Australia and Jeju Air. challenge for Peach is to develop Was Peach interested? our business model to maturity. “We’re certainly paying attention to any industry development, but our priority is to maintain the fundamentals We are still developing and of the LCC business model and attract our customers by our have some way to go. unique style,” he said. ■ After the Lehman Shock in 2008, Ryanair was the only airline to Online barriers tumble generate profits. That was completely The reliance of LCCs on direct sales for their bookings due to their lower fare structure. via the internet was cited as a potential problem for budget airlines in Japan where customers traditionally relied on We want to be like that. agents or telephone bookings for their travel arrangements. We’re still working on it. After four years, the percentage of Peach’s online sales, irrespective of being direct or via intermediary sales, is Every day is a challenge more than 90%. Peach doesn’t disclose the detailed figures for the percentage of mobile sales, but it is very high and Shinichi Inoue has been continuously growing. Peach Aviation CEO The airline does not have a mobile application, but is considering developing an application with timing to be decided. arrivals and departures between 11 pm and 6 am, so likely Meanwhile, direct sales, irrespective of online or routes could be to cities already on the Peach network such as offline, are approximately 98%. Some customers still want Kaohsiung or Hong Kong. to use retailers so Peach offers package tours with Japan Other destinations Inoue is considering are in South Travel Bureau and H.I.S. Travel, but the demand is not that East Asia beyond Peach’s Naha hub. The airline also is big, said Inoue, who added the airline did not sell them. contemplating an overseas base which would very probably be Nor does the carrier offer the ‘Do It Yourself’ dynamic at an airport served by the airline. packaging of air fare plus hotel through intermediaries, an Peach flies 17 A320s, with more of the aircraft type to be option some carriers provide. delivered by year end. Another two A320s are scheduled to

30 / ORIENT AVIATION / SEPTEMBER 2016 FARNBOROUGH AIR SHOW

Asian airlines keep tills ringing at Farnborough

Asian airlines carried the week at the recent Farnborough Air Show where they signed multi-billion dollar orders for mostly single aisle jets. It confirmed the region as the world’s largest future air passenger market.

Tom Ballantyne reports

he big aircraft $980 million. All the other orders manufacturers may were from Chinese airlines and have sold around $62 went to Boeing. billion worth of jets at Donghai Airlines ordered the Farnborough air five B787-9 Dreamliners ($4.07 Tshow in July, but the sales figures billion) and Kunming Airlines were a long, long way from the signed up for 10 B737MAX record $204 billion signed at the worth $900 million. Ruili Airlines previous UK show in 2014. converted its Memorandum of The 2014 book may have Understanding to a firm order been inflated by the massive for six B787-9s at list prices of orders of the Middle East airlines, $1.68 billion, Xiamen Airlines but the big shift downwards this agreed to buy 30 B737MAX for year definitely defined the times $3.39 billion and an unidentified as the Asia-Pacific’s continuing Chinese customer will take 30 moment. and together with emerging airlines. Boeing won orders and B737 MAX and NGs for $3 More than half of this year’s economies, further population commitments for 182 aircraft at billion. Farnborough deals, estimated at concentration and wealth $26.8 billion. Airbus and Boeing remain $34.35 billion, were written with creation, strong air traffic growth But the real story was in the extremely bullish about their Asia-Pacific airlines. will be fueled. We are ramping detail. No major orders from big sales. With a record backlog of And as analysts forecast lower up production to meet market full service carriers were signed, 13,500 aircraft between them, global sales will continue, mainly demand for our leading aircraft with the exception of a $2.85 they have sufficient orders to because most major carriers products. We will also ramp up billion purchase of eight A350- keep their production lines have large orders scheduled for our customer service offerings to 1000s by Virgin Atlantic. The humming for a decade at current delivery into the next decade, the meet the increasing demands of new order essentially replaced an output rates. evidence continues to highlight air transportation.” earlier agreement for A380s. Nevertheless, some analysts that aviation’s centre of gravity is At Farnborough 2016, Airbus The largest order was for 100 have cautioned that economic moving east. won the battle for orders, but A321neo from AirAsia, valued at risks, ranging from slowing Airbus chief operating not by much. It secured 279 $112.6 billion, followed by part growth in China to Britain’s officer, customers, John Leahy, orders and commitments worth Qantas-owned Jetstar Pacific’s decision to leave the European said in the manufacturer’s $35 billion, at list prices, from commitment to A320s worth Union could cause orders to most recent forecast: “while start to dry up or be cancelled, established European and North particularly for larger twin-aisle American markets continue More than half of this year’s jets. to grow, the Asia-Pacific is the Farnborough deals, estimated at Both major manufacturers engine powering growth in the $34.35 billion, were written have raised their forecasts for next 20 years. airliner demand in the next “China will soon be the with Asia-Pacific airlines two decades. Boeing estimates world’s biggest aviation market airlines will need 39,620 new

SEPTEMBER 2016 / ORIENT AVIATION / 31 FARNBOROUGH AIR SHOW

aircraft worth $5.9 trillion in the will order 13,458 new aircraft, next twenty years, an increase of Airbus and Boeing said demand valued at $2.25 trillion, and that 4.1% over its 2015 forecast. for single-aisle jets, rather than 9,074 of the new aircraft will be “Despite recent events single-aisle jets. that have impacted the global twin-aisled aircraft or four-engine Post his Farnbough Air financial markets, the aviation extra-large aircraft, are the drivers of Show order, AirAsia Group chief sector will continue to see executive, Tony Fernandes, said long-term growth, with the their revised upward forecasts his airlines fly close to 1,000 commercial fleet doubling in flights every day to more than size,” said Randy Tinseth, vice it said, predicting particularly worth $2.35 billion to 2035, with 120 destinations in 24 countries. president marketing at Boeing strong growth in China and India. single-aisles attracting 11,160 “We recorded a robust load Commercial Airplanes. Boeing Airbus and Boeing said orders, or 74% of all orders. factor of 85% in the first quarter forecasts airline passenger traffic demand for single-aisle jets, Boeing believes air traffic will of 2016, up eight percentage will increase 4.8% a year in the rather than twin-aisled aircraft or increase at an annual average 6% points from the same period last same period. four-engine extra large aircraft, per year and that by 2035 the year,” he said. Airbus has raised its 20-year is the driver of the revised region will account for 48.7% of “We are confident of forecast to 30,070 new aircraft, forecasts. Of the 279 orders the worldwide airliner demand. maintaining this momentum. The up 500 from its previous Airbus signed at Farnborough, China is expected to contribute A321neo will help us to meet estimate, and predicts passenger 269 were for its A320 family. an increase of 6.2% per year, ongoing strong demand as well traffic will increase at an average Boeing did not mention Boeing said. as reduce our cost per Available of 4.5% a year. “Middle classes China specifically in its forecast. Airbus sees growth being Seat Kilometre across the group. in emerging markets will double It expected the Asia-Pacific to driven mainly by China and It will translate to lower air fares to 3.5 billion people by 2035,” order 15,130 new airplanes India and said the Asia-Pacific for our guests.” The A321neos the AirAsia Group has ordered will be “operated on our most popular routes and especially at airports with infrastructure constraints. It will allow us to bring in higher passenger volumes with the same slots, providing immediate benefits to the airports”. Vietnam’s Jetstar Pacific sees similar advantages with its new A320s. “This agreement marks a milestone in our development,” said Le Hong Ha, the carrier’s chief executive, at Farnborough. “The new aircraft will allow us to expand our operations on our international network from Vietnam as part of the wider Jetstar Group. With low operating costs and a comfortable cabin, the A320 enables us to offer our passengers a quality, value-based product in a highly competitive market environment.” Based in Ho Chi Minh City, Jetstar Pacific is a joint venture between Vietnam Airlines (70%) and the Qantas Group (30%). The airline operates a fleet of 12 leased A320 Family aircraft, flying to 28 domestic and regional destinations. ■

32 / ORIENT AVIATION / SEPTEMBER 2016 INFLIGHT ENTERTAINMENT

Reliable WiFi determines passengers’ airline choices

High quality onboard WiFi is vital for both retaining and attracting customer loyalty, said a recent industry survey.

Tom Ballantyne reports

study by diversified conducted by analysts, Kelton aerospace Global, last April and published Passengers are serious about getting technology and in July. It found passengers were manufacturing more frustrated with current the best inflight WiFi experience possible. conglomerate, inflight WiFi than they were in To avoid losing passengers and revenue, AHoneywell Aerospace, has 2014. airlines need a connectivity service warned airlines they risk losing Nearly three out of every customers if their onboard WiFi four passengers would switch that is reliable all the time, disappoints passengers. airlines if another carrier offered no matter where they fly The survey of more than faster and more reliable WiFi. 1,000 flyers was done in the Additionally, the survey said, Carl Esposito U.S., but the findings reflected a passenger annoyance was Vice president, marketing and product management, worldwide trend, including the growing. In the last 12 months, Honeywell Aerospace preferences of airline travelers in 22% of passengers said their the Asia-Pacific, Honeywell said. inflight WiFi was extremely The Honeywell survey available for their entire journeys The Honeywell Aerospace reliable, compared with an said airlines must deliver high (90%) and be fast enough to Connectivity 2016 Survey was approval rating of 27% in 2014. standard IFE WiFi because: stream audio or video from sites • Travellers expect reliable like YouTube and Netflix (83%). onboard WiFi connections to • Millennials, who are born keep in touch with friends and between 1982 and 1999, are family, complete work or be the most connected generation entertained. In 2016, more to participate in the survey. They than one in five (21%) of survey also are the first full generation respondents abandoned their to grow up in the digital age with preferred airline for one with news, entertainment, commerce better onboard WiFi, an increase and social networks at their of 4% over 2014. fingertips. • Inflight service is clearly a • If airlines want to earn top priority for passengers and the business and loyalty of influences the flight bookings of Millennials, one of the largest 68% of airline travelers. consumer groups worldwide, • Six in 10 travelers said they must offer the best global they would most likely feel in-flight WiFi service. disappointed or frustrated if they • More millennials than older travelled on a plane that did not generations - 73% versus 63% have inflight WiFi. - said WiFi availability influenced • Eighty four per cent of the flights they book and they respondents want an inflight want speed to stream content WiFi service that matches the (89%). More than one in four quality of their work and home Millennials (27%) had switched WiFi. from their preferred airline to an More than 90% of passengers want quality WiFi available for their • Most travelers said a reliable airline with better in-flight Wi-Fi entire airline journey WiFi connection has to be options. ■

SEPTEMBER 2016 / ORIENT AVIATION / 33 NEWS BACKGROUNDER

China remains at the top of Asia-Pacific domestic air travel table

By Tom Ballantyne

he unstoppable passengers took scheduled airline Haneda (7.6 million, a decrease of China Southern Airlines (109.3 expansion of journeys in 2015, which was an 7.4% ), Melbourne -Sydney (7.2 million) and Ryanair (101.4 Asia-Pacific airlines increase of 7.2%, or 240 million million, down 2.2%) and Beijing million), respectively. continued across airline trips, compared with the Capital-Shanghai Hongqiao (6.1 Three Asia-Pacific and the globe in 2015, previous 12 months. million, up 6.1%). Middle Eastern carriers were Tthe International Air Transport The Asia-Pacific also swept Among the world’s largest among the top five freight airlines Association’s (IATA) said in the board in airport performance. domestic markets, India recorded for the 2015 calendar year, but its latest World Air Transport Both the top five international/ the fastest passenger growth in the air cargo business remained Statistics (WATS) report. regional passenger airport 2015, at 18.8%, in a market of in the doldrums, the WATS The year book of pairs and the top five domestic 80 million domestic passengers. statistics revealed. the industry’s worldwide passenger airport pairs operated It outpaced Russia (11.9% Global air freight and mail performance said the region’s within the region. growth in a market of 47 million tonne kilometers increased by airlines carried 1.2 billion The world’s leading domestic passengers), China 2.3% last year against a capacity passengers in 2015, which international/regional routes (9.7% growth in a market of 394 increase of 5.8% for the 12 was 34% of the world’s in 2015, compared with 2014, million domestic passengers) months. As a result, the freight airline market. The expansion were Hong Kong-Taipei (5.1 and the U.S. (5.4% growth, in a load factor dropped by 1.6%. The added 10% more travelers to million passengers, up 2.1%), market of 708 million domestic five leading airlines for scheduled Asia-Pacific airlines in the period -Singapore (3.4 million passengers). air cargo carried were FedEx reviewed. passengers, down 2.6%), Despite China’s dominance, Express (7.1 million), United Parcel The record breaking Bangkok Suvarnabhumi-Hong the region had only one Service (4.5 million), Emirates numbers were well ahead of Kong (3 million passengers representative, China Southern Airline (2.5 million), Cathay Pacific Europe (26.2% of traffic or and a 29.2% increase), Kuala Airlines, in the top five airlines Airways (1.6 million) and Korean 935.5 million passengers) and Lumpur–Singapore (2.7 million ranked by combined domestic Air (1.5 million). North America’s 24.8% or 883.2 passengers up 13%) and Hong and international passengers The 3.6 billion airline million passengers. The growth Kong-Singapore (2.7 million carried. Reflecting strong passengers carried in 2015 were also outpaced expansion in the passengers and down 3.2%). domestic business, the U.S.’s the equivalent of 48% of the Middle East, where Gulf carriers Domestically, compared with American Airlines (146.5 million), Earth’s population. Airlines also had a 5.3% global market 2014, the top five city pairs in the Southwest Airlines (144.6 transported 52.2 million tonnes share in 2015, or 188.2 million world in 2015 were Jeju-Seoul million), Delta Air Lines (138.8 of cargo, at a value of $6 trillion. passengers; an increase of 8.1% Gimpo (11.1 million, up 7.1%), million) were the top three The industry produced some $2.7 over 2014. Sapporo-Tokyo Haneda (7.8 carriers in the world for total trillion in economic activity and Worldwide, 3.6 billion million, up 1.3%), Fukuoka-Tokyo passengers carried, followed by 63 million jobs. IATA said. ■

34 / ORIENT AVIATION / SEPTEMBER 2016 INDUSTRY INSIGHT MRO EMERGING TRENDS IN THE ASIA-PACIFIC

his customers were not forced into buying his engines or sign up for Independent MROs service contracts. If the matter does progress at the EC, Airbus, Boeing, underdogs in after Rolls-Royce, General Electric, Honeywell, United Technologies and Pratt & Whitney are expected to defend their sales strategy with market price war the full force available to them under EU law. Original equipment manufacturers (OEMs) continue to build At Britain’s Farnborough Air Show in July, Airbus published their businesses in the maintenance, repair and overhaul (MRO) its first Global Services Forecast aftermarket with the sector worth a forecast $3 trillion in the next (GSF). It predicted that in the two decades. But airlines are unhappy and assert they are being next two decades the industry aftermarket services sector would overcharged and restricted by the scope of MRO contracts. be reach US$3 trillion. Airbus said MRO spend would grow from $53 billion this year, at an average annual growth rate of Tom Ballantyne reports 4.6%. MRO specialist consultancy, ICF International, has estimated irline MRO MRO income would reach $96 aftermarket billion by 2025, underpinned services is lucrative by rising demand for engine business for major and component services in the aircraft and engine Asia-Pacific and other emerging Amanufacturers and equipment markets. suppliers. It also is becoming a Despite the verbal major arena of conflict between skirmishing between airlines and OEMs and their customers. manufacturers about MRO costs, Tony Tyler, until recently a OEMs are intensifying efforts to distinguished director general expand their MRO aftermarket and CEO of the International Air businesses. With the accelerating Transport Association (IATA), said demand for new routes and the earlier this year that when it comes region’s expanding fleets, the to aftermarket services airlines Asia-Pacific is the largest market have “little alternative but to sign for MRO business and the training on to long-term maintenance of pilots and technicians. and parts agreements containing Europe and North America Rolls-Royce aircraft engines earned 51% of total revenue from pricing escalations that are often combined will account for aftermarket contracts in 2014 above the inflation rate”. approximately one third of the Privately, airlines are Late last year, the chief component suppliers about the total MRO market spend, said increasingly uneasy about the executive of European airline issue. So far, no official inquiry Airbus. “Moreover, with the power wielded by equipment group IAG, Willie Walsh, has been launched but Brussels ever increasing growth of the suppliers, who are controlling threatened legal action over is sufficiently concerned by the commercial aircraft industry, a market formerly serviced the increasing cost of repairing complaints to explore whether the with Airbus’ OEM expertise, –largely – by third party MRO his aircraft and accused growing hold of OEMs on airline Services By Airbus will deliver companies. Some carriers have manufacturers of “restrictive MRO could be anti-competitive. value-adding and quality services said equipment suppliers of are practices”. Not surprisingly the OEMs for its customers worldwide – on a withholding crucial information Walsh’s allegations led to who have commented on par with the quality of the aircraft on products, such as manuals and intervention by the European the claims strongly deny the which we deliver,” says Laurent technical drawings, to ensure that Commission’s competition allegations. Philippe Petitcolin, Martinez, senior vice president of only they or their partners can authorities, which sent out chief executive of GE’s engine Airbus’ Services business unit. provide spare parts or carry out dozens of questionnaires to partner, Safran, said Walsh’s Services By Airbus is the high-quality maintenance. airlines, engine makers and complaints were unjustified and unit responsible for providing

SEPTEMBER 2016 / ORIENT AVIATION / 35 INDUSTRY INSIGHT MRO EMERGING TRENDS IN THE ASIA-PACIFIC

Maintenance, Upgrades, Training one of the world’s top 10 MROs, from technicians that not all MROs 51% of total deliveries in 2014 and Flight Operations for Airbus said recently; “We are seeing provide. and controls around a third of the customers. a new level of competition. The shift to advanced aftermarket services business for Another company with a Manufacturers are intensifying materials such as composites its products. Significantly, 80% strong dependency on the Asia- their efforts to increase their part mean new strategies, techniques of CFM’s next generation LEAP Pacific market, is Britain’s Rolls- in the entire supply chain. These and schedules are needed engines are to be bundled with Royce. Last year, the manufacturer are big challenges. They will have compared to the more mature long-term service agreements. restructured its engine MRO consequences for margins.” Chris metallic processes of MRO In the past, airframe network and established a global Doan, of Oliver Wyman, estimated shops. Similarly, advances in manufacturers traditionally customer service center (CSC) that 15% to 20% of MRO data analytics and the shift to have held a lower proportion chain to improve responsiveness spending could be redistributed predictive maintenance are of aftermarket MRO business. to airline clients. as a result of the changes to the introducing requirements that Boeing’s GoldCare offering It should have happened traditional practice of airlines not all third party MRO providers covers around 1,600 aircraft, the years ago, as Rolls-Royce’s when buying MRO services. would be able to accommodate. equivalent of 15% of its active TotalCare power-by-the-hour In a report earlier this Airlines that typically spend fleet. “However, motivated customer-support program serves year, Frost & Sullivan analysts between 10% to 15% of annual by the need to recover heavy 85 airlines that fly 14 million hours said the MRO landscape was revenues on direct maintenance development costs and capitalize a year. “disrupted” by the emergence costs, are facing significant unit on the projected growth in MRO The manufacturer’s installed of new technologies and the maintenance pricing. IATA said the revenues, the airframe OEMs have engine base has grown from growing presence of OEMs in average maintenance cost in 2013 redoubled their efforts to secure 2,160 units to more than 4,500. the aftermarket. The aftermarket was $1,167 per flight hour, $3,021 Long Term Service Agreements Rolls-Royce, the world’s second- provides a variety of critical per flight cycle and $3.1 million (LTSAs) at the point of aircraft biggest largest maker of aero services, including engine, per aircraft per year. sale,” said Frost and Sullivan. engines, generates 52% of its civil components, base and line Today, for a wide-body “Combined with the aircraft revenue from after-sales maintenance, with engine aircraft, the MRO cost could reach technological complexity of the services. It is understood the maintenance accounting for $5 million annually. As fleets age latest airframe designs, restrictive service business is so lucrative that around 40% of total maintenance and carriers start to incur the costs licensing agreements and strategic Rolls-Royce will sell its engines at cost, they said. of major maintenance milestones, intellectual property advantages, a loss in return for a long-term “These services have largely such as C and D checks, airlines these offerings make it more service contract. been provided by in-house are exposed to a growing difficult for non-affiliated MROs to At Farnborough this year, (‘captive’), airline third party maintenance burden. As a result, compete,” said the report. Rolls-Royce announced an and independent MRO service airlines are focused on reducing As the airframe, engine and extension of its Trent Services providers, with OEMs playing MRO expenditure. component OEMs cement their Network to Abu Dhabi, where a more limited role. However, Historically, engine OEMs presence in the aftermarket, the it will operate an approved aggressive forays by engine have been relatively successful development of collaborative maintenance centre (AMC) and airframe OEMs into the in cultivating strong aftermarket OEM-MRO partnerships will be network. It will provide aftermarket were re-shaping relationships with airline essential for MRO survival. maintenance for the Trent the sector, forcing traditional customers. By leveraging the Most analysts agreed that XWB engine that powers A350 aftermarket service providers technical complexity and material- as more new generation reliable aircraft, a practical decision to re-evaluate their value intensity of engine maintenance aircraft come on stream, that when the orders of A350s in propositions,” said the Frost & activities, significant barriers to will have longer gaps between the Middle East are tallied up. Sullivan report. entry have been established in maintenance checks, third party Other engine makers also had a MRO service demand also both the wide-body and rapidly MRO demand will plateau. successful show, with GE Aviation is being reduced or displaced growing narrow-body markets. Another aviation consultancy, signing up a number of airlines because new aircraft need less In the wide-body aftermarket, The Cavok consultancy, believed for its TrueChoice aftermarket frequent maintenance, overall Rolls-Royce is an acknowledged the presence of more planes with package. GE’s joint venture CFM maintenance needs, airlines are aftermarket leader. In 2014, it advanced technology in airline International engines amassed buying greener fleets that require held held 24% of the wide-body fleets will result in decreased MRO more than $8 billion in engine fewer shop visits and the Middle aftermarket by engine volumes an demand. It advised to develop orders and service contracts at East is displacing demand at 83% of its commercial transport “aggressive and innovative plans the show. traditional maintenance hubs. engine fleet was covered by for growth” if they want to remain It is clear the aggression Technology factors also its TotalCare service. Fifty two competitive in the market. of the OEMs’ efforts to secure are having an impact on airline percent of civil aerospace revenues The industry should anticipate airline aftermarket business is MRO practice. A modern fleet were earned from aftermarket more such improvements as airlines changing the MRO landscape. promises improved reliability, services. use broadband connectivity to Wolfgang Weyness, senior vice but also increased maintenance GE-Snecma engine joint bolster maintenance proficiencies, president at Lufthansa Technik, complexity, which requires skills venture, CFM, accounted for it forecast. ■

36 / ORIENT AVIATION / SEPTEMBER 2016 INDUSTRY INSIGHT MRO EMERGING TRENDS IN THE ASIA-PACIFIC

growing segments in the world.” Once completed, the 250,000 China’s winning ways square feet hangar, the size of 40 basketball courts combined, will be the largest hangar the boost HAECO group company has ever built. “This hangar will Swire Pacific’s Hong Kong Aircraft Engineering Company (HAECO) has accommodate up to eight hit a purple patch in profits. Its operations in Mainland China are paying narrow-body aircraft or two wide-bodied aircraft and dividends and the MRO Group is expanding globally, including developing two narrow- bodied aircraft its business jet completions company. simultaneously,” Kendall said. The hangar will be finished late next year with the first customer Tom Ballantyne reports scheduled to come through the door in January of 2018. AECO’s shareholders lower than 12 months earlier and Another HAECO subsidiary, could not be happier. that the business for airframe and Private Jet Solutions (PJS), was They are receiving component maintenance services a prominent exhibitor at July’s a special interim in the second half of 2016 would European Business Aviation dividend after the be stable. Convention & Exhibition (EBACE) HHong Kong headquartered Its line services capacity is on in Geneva. HAECO PJS has company posted a 337.4% spike the rise and HAECO plans to hire an engineering house in San in interim net profit, to $143.2 more staff. In the first half of the Antonio, Texas and operates million. The result was boosted by year, it increased its employees the first Asia-Pacific Airbus the $103.8 million made from the by 1.1% (189), to 16,892. The approved and Boeing licensed sale of Hong Kong Aero Engine company has committed to cabin completion centre in China Services Ltd’s interest in Singapore hiring 350 aircraft maintenance at the HAECO’s Xiamen campus. Aero Engine Services Pte Ltd. But HAECO Group CEO, Augustus personnel by year end. Seasonal In June, at an ABACE business even with that factor excluded, Tang: HAECO plans to add 350 factors will affect business in the jet exhibition in Shanghai, PJS staff to its 16,900 member work group profit increased by 29.1%, current six months, he said, as announced it had become one force by year end to $42.3 million. there is usually less demand for of the five worldwide authorized On closer examination the MRO has access to the aircraft maintenance during the service centers for Airbus however, the results were mixed certification process of the U.S. northern summer. Corporate Jets (ACJ). across the group. HAECO’s Federal Aviation Administration. HAECO is continuing its At Geneva’s ABACE, PJS operations in Mainland China are In July, HAECO Xiamen overseas expansion. Last month, unveiled an agreement with winners - there has been a surge redelivered its 2,500th aircraft in its Americas division broke ground Rockwell Collins to distribute in the cash contribution from its the thirty-year history of the MRO on a fifth hangar at its facility in its in-flight entertainment (IFE) units there - but net profit from and modifications company. It Greensboro, North Carolina. “It systems and products. The the MRO’s Hong Kong operations has completed more than 1,000 offers jobs for a proposed 500 pact gives the maintenance fell by 17.2%, to $10.6 million. B747 redeliveries, 250 B767s, more employees, which is really and completions company HAECO’s Xiamen facilities 200 B777s, 170 A330s and 650 important to us,” said Jim Sokol access to the sales and support include specialist shops for narrow-body inputs, including at HAECO Americas maintenance network of the U.S. electronics cabinetry, veneer finishes, the world’s first B747-800BCF operations. “Those aircraft and communications company, upholstery and other cabin passenger-to-freighter conversion. maintenance employees will work an important factor sustaining décor work. In addition to its To date, it also has delivered inside the $60 million hangar on business jet operations in the authorization from the Civil 60 freighter conversions on planes from around the world. Asia-Pacific. Aviation Administration of China B737s, B747s and B757s. HAECO “Beyond our evident focus on “Establishment of the to operate as a Mainland MRO, Xiamen’s offerings include a U.S. registered aircraft, we have dealership by HAECO PJS allows the company holds Part 21 line services network on the expanded our approvals to cover both companies to provide the approval from the Hong Kong Mainland, technical training, parts those from regulators in China region’s private end business jet Civil aviation authority. manufacturing and private jet and the Middle East,” said Richard customers and operators with Part 21 approval means the services. Kendall, HAECO Americas chief a broader range of products European Aviation Safety Agency HAECO chief executive, executive. and services, which are more validates HAECO’s supplemental Augustus Tang, said demand for “We can build demand for cost-effective and reliable,” said type certificates. And through airframe services in Hong Kong the services we provide with Henry Chan, PJS’s commercial vice the HAECO Americas division, in the first half of the year was aircraft operators in the fastest president. ■

SEPTEMBER 2016 / ORIENT AVIATION / 37 INDUSTRY INSIGHT MRO EMERGING TRENDS IN THE ASIA-PACIFIC

MTU Aero Engines propels ahead

TU Aero Engines the MRO segment amounted reported its third to Euros 464.5 million making consecutive this the third successive quarter quarter of record with record figures,” said revenue from chief program officer, Michael Mits MRO division in late July, with Schreyogg. business proving particularly brisk The engine repair business for maintenance of engines for is under pressure, wrote the single aisle A320s. Financial Times, as major In the first six months of manufacturers have lowered 2016, MTU’s revenues increased their prices for airline after- in the commercial and military period, when revenue increased revenue was the V2500 engine market contracts, which has put maintenance sectors. MTU Aero’s by 18%, to Euros 893.3 million for the A320 family, the company pressure on revenue targets for MRO business registered the (US$1.012 billion at press time). said in its profit announcement. third party supplies such as MTU highest growth for the interim “The principal source of “Second quarter revenues in Aero, the newspaper said. ■

BRIEFLY…

Rolls-Royce announces The agreement includes planning, and China. But Thai Airways International is accounting change sourcing, purchasing, logistics and inventory hoping to leap frog its rivals by building a new management of 15,000 part numbers. Satair facility that “would be the best in the region”. ritish Engine group, Rolls-Royce, after started to supply the expendable material The “smart” hangar will be built at it posted its interim results earlier for Cathay Pacific’s flight simulators, upfront U-Tapao airport south of Bangkok and will Bthis year said it would no longer take stocking of outstations and the airline’s central serve as a computerized“hospital” for aircraft, revenues from its MRO contracts before the stock in Hong Kong from May. ■ according to THAI executive vice-president, engines were delivered for repairs. The engine Chalermpon Intarawong. manufacturer and MRO provider will now bill THAI has MRO facilities at the airport, clients as work is done. Lufthansa Technik but is in talks with Air France with the goal Until this change was announced, expands China Airlines of setting up a joint venture between THAI Rolls-Royce had brought forward profits from partnership and the European airline. “We need a huge its decade long after sales MRO services to amount of money to build a smart hangar, but compensate for the initial losses the company hina Airlines (CAL) and global MRO, in terms of value, it can be used for up to 30 suffered when it sold engines to airlines. It is Lufthansa Technik AG, have expanded years,” said Chalermpon. estimated that after market MRO contracts C their partnership to include total The “smart” hangar will run all airline make up to 50% of earnings for the major component support for Taiwanese carrier’s checks and repairs on computer systems. engine manufacturers. ■ A350 fleet. The Total Component Support TCS Aircraft will be scanned to identify engine, package requires the Hamburg-headquartered fuselage, cockpit and cabin defects. MRO to provide CAL with maintenance, Inspections will be supported by high- Cathay Pacific Airways reliability monitoring and enhancement and definition cameras and robots which can even signs an A350 contract logistics support for the airline’s A350 aircraft be controlled to check inside the fuel tanks. with Satair when needed in Europe and The Americas as THAI hopes to draw business away from well as the Asia-Pacific. the established MRO operations elsewhere atair Group has won its first A350 Lufthansa Technik has been supplying in the Asia-Pacific, but specifically from customer with the completion of a deal material for CAL’s A330 and A340 fleet under Singapore, Hong Kong, China’s fast growing Sthat requires the wholly owned subsidiary a TCS contract since 2010. ■ airlines like Malaysia’s AirAsia Group. of Airbur S.A.S. to provide Integrated Material The flag carrier has decommissioned Services (IMS) for Cathay Pacific Airways’ almost half of its fleet of about 100 aircraft ordered fleet of 48 A350XWB aircraft. In THAI seeks partner for in the last three years as it attempts to turn May, the airline’s first A350-900 was delivered MRO “smart” hangar around its struggling business. The company to the carrier’s headquarters in Hong Kong. needs to keep its repair unit active. It has Under the terms of the IMS contract, Satair will he Asia-Pacific’s major maintenance, increased its third party MRO customers by supply an end-to-end supply chain package for repair and overhaul (MRO) businesses 10% in 2016, to 40% of its total maintenance the carrier’s expendable material. T are centred in Singapore, Hong Kong business, said Chalermpon. ■ 38 / ORIENT AVIATION / SEPTEMBER 2016 No.1 Asia-Pacific commercial aviation magazine

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