MASTERARBEIT

Titel der Masterarbeit

Past and Future Development of the Airline Industry in South- and North East Asia

Verfasserin ODER Verfasser

Christian Nau, BA

angestrebter akademischer Grad

Master of Arts (MA)

Wien, Mai 2014 Studienkennzahl lt. Studienblatt: Studienrichtung lt. Studienblatt: Betreuerin ODER Betreuer:
A 066 864 Masterstudium Wirtschaft und Gesellschaft Ostasiens Prof. Dr. Rüdiger Frank

2

• 1
• Introduction to the Past and Future Development of the Airline Industry

in South- and North East Asia.........................................................................7

2 Measuring Development of the Airline Industry ...................................... 10

• 2.1
• State of the Art and Existing Literature .............................................................10

The Region “Asia-Pacific” and Focusing on Certain Countries ....................11

Defining Past and Future Development.............................................................12 Methodology: Analysing and Comparing the Airline Industry Development
2.2 2.3 2.4 Divided by Airports, Airlines and Manufacturers........................................................13

2.4.1 Sourcing............................................................................................................... 13 2.4.2 Dividing the Aviation Industry into Categories.......................................................... 14 2.4.3 Airports in East Asia.............................................................................................. 15 2.4.4 North- and South-East-Asian Airlines...................................................................... 16
2.4.4.1 Choice of Airlines........................................................................................... 16 2.4.4.2 Financial Data Development Analysis.............................................................. 17
2.4.4.2.1 Choosing Financial Criteria for Analysis ...................................................... 17 2.4.4.2.2 Passenger Revenue, Total Revenue and Expenses..................................... 18 2.4.4.2.3 Operating Profit and Operating Ratio .......................................................... 18
2.4.4.3 Operational Data Development Analysis.......................................................... 18
2.4.4.3.1 Choosing Operational Criteria for Analysis .................................................. 18 1.1.1.1.1 Available Seat Miles, Revenue Passenger Miles and Load Factor ................ 19 2.4.4.3.2 Passenger Numbers.................................................................................. 19 2.4.4.3.3 Aircraft Utilization Rate............................................................................... 20
2.4.4.4 Key Indicators in Regard to Airline Development .............................................. 20
2.4.4.4.1 Combining Operational and Financial Data.................................................. 20 2.4.4.4.2 CASM: Cost per Available Seat Mile........................................................... 20 2.4.4.4.3 Yield: Revenue per Passenger Mile............................................................ 21 2.4.4.4.4 Calculation of a Profitability Index ............................................................... 21 2.4.4.4.5 Calculation of an Efficiency Index ............................................................... 21
2.4.4.5 Displaying, Analysing and Comparing Results.................................................. 22
2.4.5 Aircraft Manufacturers and the Asia Pacific Market .................................................. 22

• 2.5
• Growth in the Airline Industry.............................................................................23

2.5.1 Defining Growth Factors ........................................................................................ 23 2.5.2 Overall Economic Growth and its Interdependence with the Airline Industry .............. 23 2.5.3 The Impact of Crisis’ to the Airline Industry.............................................................. 24 2.5.4 Population Growth, Urbanization and the Emergence of a Middle-Class.................... 25 2.5.5 The Impact of Falling Prices as a Result of Competition in the Market....................... 26 2.5.6 Alternative Forms of Transportation ........................................................................ 27 2.5.7 Government Regulations ....................................................................................... 28 2.5.8 Tourism as Growth Factor for the Airline Industry .................................................... 30 2.5.9 Other Airline Industry Growth Factors ..................................................................... 32

• 3
• Past Development of the Airline Industry................................................ 32

• 3.1
• Introduction to Asia-Pacific Airline Industry ....................................................32

3.1.1 Development of the Airline Industry until 2000......................................................... 32 3.1.2 Defining and distinguishing Full Service Airlines and Low Cost Carriers .................... 34

3

• 3.2
• Airline Industry Development in North-East-Asia ............................................37

3.2.1 Past Development of Low Cost Carrier Airlines in North East Asia............................ 37 3.2.2 Case Study 1: China.............................................................................................. 39
3.2.2.1 Introduction to the Development of Aviation in the P.R.C. ................................. 39 3.2.2.2 Development of Airline Industry Growth Factors in China.................................. 39
3.2.2.2.1 Economic Growth Development in the P.R.C............................................... 39 3.2.2.2.2 Population Development and Urban Population in China.............................. 40 3.2.2.2.3 Development of Competition ...................................................................... 40 3.2.2.2.4 Development of Alternative Transportation in China..................................... 40 3.2.2.2.5 Development of Chinese Government Regulations ...................................... 41 3.2.2.2.6 Tourism Development in the P.R.C............................................................. 44
3.2.2.3 Airports in China ............................................................................................ 45 3.2.2.4 Airlines in China............................................................................................. 47
3.2.2.4.1 Introduction to Airlines in China .................................................................. 47 3.2.2.4.2 Air China................................................................................................... 47
3.2.2.4.2.1 Introduction to Air China ...................................................................... 47 3.2.2.4.2.2 Statistical Data for Air China................................................................. 48 3.2.2.4.2.3 Financial Development Analysis........................................................... 49 3.2.2.4.2.4 Operational Development Analysis....................................................... 49 3.2.2.4.2.5 Analysis of Key Indicators of Airline Development.................................. 50
3.2.2.4.3 China Southern ......................................................................................... 50
3.2.2.4.3.1 Introduction to China Southern ............................................................. 50 3.2.2.4.3.2 Statistic Data for China Southern.......................................................... 51 3.2.2.4.3.3 Financial Development Analysis........................................................... 52 3.2.2.4.3.4 Operational Development Analysis....................................................... 52 3.2.2.4.3.5 Analysis of Key Indicators of Airline Development.................................. 52
3.2.2.4.4 China Eastern ........................................................................................... 53
3.2.2.4.4.1 Introduction to China Eastern............................................................... 53 3.2.2.4.4.2 Statistic Data for China Eastern............................................................ 54 3.2.2.4.4.3 Financial Development Analysis........................................................... 55 3.2.2.4.4.4 Operational Development Analysis....................................................... 55 3.2.2.4.4.5 Analysis of Key Indicators of Airline Development.................................. 55
3.2.2.4.5 Findings in Regard to Chinese Airlines........................................................ 56
3.2.2.5 Aircraft Manufacturers and China .................................................................... 57
3.2.3 Case Study 2: Japan ............................................................................................. 58

3.2.3.1 Introduction to Japan as one of the World’s Strongest Economies..................... 58

3.2.3.2 Development of Airline Industry Growth Factors in Japan ................................. 58
3.2.3.2.1 Economic Growth Development in Japan .................................................... 58 3.2.3.2.2 Population Development and Urban Population in Japan ............................. 59 3.2.3.2.3 Development of Competition in the Japanese Airline Industry....................... 60 3.2.3.2.4 Development of Alternative Transportation in Japan .................................... 60 3.2.3.2.5 Development of Government Regulations in Japan...................................... 60 3.2.3.2.6 Development of Tourism in Japan............................................................... 62
3.2.3.3 Japanese Airports.......................................................................................... 62 3.2.3.4 Airlines in Japan............................................................................................. 64
3.2.3.4.1 Introduction to Japan’s Airlines................................................................... 64 3.2.3.4.2 Japan Airlines ........................................................................................... 64
3.2.3.4.2.1 Introduction to Japan Airlines ............................................................... 64 3.2.3.4.2.2 Statistical Data for Japan Airlines ......................................................... 64

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3.2.3.4.2.3 Financial Development Analysis........................................................... 66 3.2.3.4.2.4 Operational Development Analysis....................................................... 66 3.2.3.4.2.5 Analysis of Key Indicators of Airline Development.................................. 67
3.2.3.4.3 All Nippon Airways..................................................................................... 68
3.2.3.4.3.1 Introduction to All Nippon Airways ........................................................ 68 3.2.3.4.3.2 Statistical Data for All Nippon Airways .................................................. 69 3.2.3.4.3.3 Financial Development Analysis........................................................... 70 3.2.3.4.3.4 Operational Development Analysis....................................................... 70 3.2.3.4.3.5 Analysis of Key Indicators of Airline Development.................................. 71
3.2.3.4.4 Findings in Regard to Japanese Airlines...................................................... 72
3.2.3.5 Aircraft Manufacturers in Japan....................................................................... 73

• 3.3
• South-East-Asian Airline Industry Development..............................................73

3.3.1 Introduction to the Development of South East Asia................................................. 73 3.3.2 Development of Growth Factors Affecting the ASEAN Region.................................. 74
3.3.2.1 Government Regulatory Policies on the Regional Level: Open Sky in ASEAN.... 74 3.3.2.2 The Asian Financial Crisis and its Influences onto the South East Asian Aviation Industry 76
3.3.3 Low Cost Carrier Emergence and Development in South-East Asia.......................... 77 3.3.4 Case Study 3: Singapore ....................................................................................... 78
3.3.4.1 Introduction to Singapore’s Development......................................................... 78 3.3.4.2 Development of Airline Industry Growth Factors in Singapore ........................... 79
3.3.4.2.1 Introduction to the Development of Growth Factors in Singapore .................. 79 3.3.4.2.2 Economic Development of Singapore ......................................................... 79 3.3.4.2.3 Population Development and Urban Population in Singapore ....................... 80

3.3.4.2.4 Development of Competition within Singapore’s Airline Industry ................... 80

3.3.4.2.5 Development of Alternative Transportation in Singapore .............................. 81 3.3.4.2.6 Development of Government Regulations ................................................... 81 3.3.4.2.7 Development of Tourism in Singapore ........................................................ 82
3.3.4.3 Airlines in Singapore ...................................................................................... 83
3.3.4.3.1 Singapore Airlines ..................................................................................... 83
3.3.4.3.1.1 Introduction to Singapore Airlines ......................................................... 83 3.3.4.3.1.2 Statistical Data for Singapore Airlines ................................................... 83 3.3.4.3.1.3 Financial Development Analysis........................................................... 85 3.3.4.3.1.4 Operational Development Analysis....................................................... 85 3.3.4.3.1.5 Analysis of Key Indicators of Airline Development.................................. 85
3.3.4.3.2 Findings in Regard to Singaporean Airlines ................................................. 86 3.3.4.3.3 Low Cost Carriers in Singapore .................................................................. 86
3.3.4.4 Aircraft Manufacturers and Singapore.............................................................. 87 3.3.4.5 Airport Development in Singapore ................................................................... 87
3.3.5 Case Study 4: Malaysia......................................................................................... 88
3.3.5.1 Introduction to Malaysia’s Development........................................................... 88 3.3.5.2 Development of Airline Growth Factors in Malaysia.......................................... 88
3.3.5.2.1 Economic Growth Development in Malaysia................................................ 88 3.3.5.2.2 Population Development and Urban Population in Malaysia ......................... 88 3.3.5.2.3 Development of Competition ...................................................................... 89 3.3.5.2.4 Development of Alternative Transportation in Malaysia ................................ 89 3.3.5.2.5 Development of Malaysian Government Regulations ................................... 90 1.1.1.1.2 Tourism Development in Malaysia.............................................................. 90