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Asia-Pacific Airlines ‘Old Hands’ at Dealing with Industry Volatility

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Asia-Pacific Airlines ‘Old Hands’ at Dealing with Industry Volatility Vol. 26 No. 9 November 2019 orientaviation.com SEASONED AVIATION HAND Managing volatility is the name of the industry’s game says AAPA boss Andrew Herdman as the region’s airlines navigate political and economic upheaval AirAsia Group going IATA’s NDC “a once in a Saudia eyes Asian back to basics for generation opportunity” pilgrims to Mecca long-haul expansion for airline industry for growth Now you can accept payments in virtually any form. Saying yes to alternative forms of payment means saying yes to new streams of revenue. Our payment solutions integrate easily with your current systems, helping you accept AFPs at a lower cost. And navigate the global payments market with ease. A more complete payment program starts with UATP. Learn more at UATP.com. CONTENTS Volume 26, Issue 9 COVER STORY 14 SEASONED ORIENT AVIATION MEDIA GROUP 17/F Hang Wai Commercial Building, AVIATION 231-233 Queen’s Road East, Wanchai, Hong Kong Editorial (852) 2865 1013 HAND E-mail: [email protected] Website: www.orientaviation.com Association of Asia Pacific Mailing address: GPO Box 11435 Hong Kong Airlines director general, Andrew Herdman, sees Publisher & Editor-in-Chief beyond the present Christine McGee E-mail: [email protected] slump to blue skies for Associate Editor & the region’s airlines Chief Correspondent Tom Ballantyne Tel: (612) 9638 6895 Fax: (612) 9684 2776 E-mail: [email protected] Asia Editor Will Horton COMMENT EXECUTIVE PROFILE Tel: (852) 2865 1013 5 Challenging agenda for region’s airline summit 20 Saudia Air CEO, Jaan Albrecht, going after Asia’s E-mail: [email protected] religious pilgrim traffic to meet government growth targets North Asia Correspondent ADDENDUM Geoffrey Tudor 6 Pain continues for Hong Kong’s aviation industry Tel: (813) 3373 8368 as protests enter sixth month E-mail: [email protected] 6 Qantas CEO plans re-fleeting, a head office staff Photographers cull and a Project Sunrise decision Rob Finlayson, Graham Uden, 7 AirAsia Group going back to basics for planning Ryan Peters international expansion says boss Tony Fernandes Chief Designer Chan Ping Kwan INDUSTRY ADDENDUM ASIA-PACIFIC MRO & COMPONENT NEWS Printing 25 AJW Group sets up joint venture in Hong Kong to Printing Station(2008) develop Mainland market 25 AFI KLM E&M increases parts supply with new ADMINISTRATION teardown subsidiary General Manager 25 Lufthansa Technik and Collins Aerospace sign Shirley Ho A380 MRO landing gear agreement E-mail: [email protected] NEWS BACKGROUNDERS 25 China accredits CALC’s aircraft disassembly joint 8 NDC “once in a generation” opportunity for venture ADVERTISING airline industry 25 AAR trials MRO drone inspections at Miami shop 10 Japan Airlines prefers Malaysia Airlines joint 25 TP Aerospace adopts Ideagen software to Asia-Pacific, Europe & Middle East venture to equity support global expansion, with a focus on the Christine McGee 12 Airlines pay price for punitive new tariffs Asia-Pacific Tel: (852) 6438 3379 E-mail: [email protected] 23 Region’s air cargo business does it hard 26 CFM commits to US$1 billion engine MRO deal with Colorful Guizhou Airlines The Americas / Canada TECHNOLOGY Barnes Media Associates 26 All Nippon Airways parent developing outdoor Ray Barnes Tel: (1 434) 770 4108 Avatar robot Fax: (1 434) 927 5101 PEOPLE E-mail: [email protected] 26 ATR appoints Eric Segura to senior management [email protected] team 24 Asia world’s worst performer in global air freight 26 Safran chooses CEO in waiting, Olivier Andries Follow us on Twitter @orientaviation industry, latest International Air Transport 26 BOC Aviation names CCO for Asia-Pacific and Association figures report Middle East NOVEMBER 2019 / ORIENT AVIATION / 3 GEnx-1B Available for short- or long-term lease and “pooling-like” preferred access. [email protected] www.willislease.com +1 561.349.8950 COMMENT Asia-Pacific airlines ‘old hands’ at dealing with industry volatility As the year comes to a close, several challenges persist for rate. There also must be improved integration of ATM systems Asia-Pacific carriers that are peculiar to the region. across the region, especially as passenger numbers are forecast Top of the list are ways to counteract the negative impact of to increase to eight billion a year by 2038. the Sino/U.S. trade war on airline profitability. There is one other industry challenge that attracts focused There is some optimism the global economic giants will attention from the region’s airlines. Despite outstanding reach a partial solution to their trade conflict in coming weeks. industry results in reducing greenhouse gases from flying, the In the meantime, the present stand-off has inflicted plenty of message has not made it to the people who count: present and economic pain on the air freight business, a major contributor future airline passengers. to the profits of several Asia-Pacific carriers. A separate political It is unlikely the latest wave of European climate change dispute between Japan and Korea has contracted passenger movements calling for people to stop flying will take hold in the numbers at airlines which earn significant income from their Asia-Pacific, a region utterly reliant on air travel. networks across North Asia. Herdman correctly pointed out aviation has a good story to Also critical to the operations of several airlines in the tell about CORSIA (Carbon Offsetting and Reduction Scheme region will be the circumstances surrounding the re-entry to for International Aviation), but so far, no one has successfully service of the globally grounded MAX 737 fleet. converted the technical and political strategy into digestible In our cover story this month, AAPA director general, messages that engage the general public. Andrew Herdman, said it would be very hard to coordinate a Ask the International Air Transport Association (IATA) and simultaneous recertification and re-entry into service of the the Air Transport Action Group. For more than a decade, they aircraft type to all its operating airlines. have been tireless in their efforts to spell out the industry’s Even after the software modifications and revised training goals of being carbon neutral from next year over 2005 figures regulations are approved, implementing these changes with and achieving a 50% reduction in CO² by 2050. multiple airlines across the world and then returning hundreds IATA is launching a campaign to counter “flight shaming” of aircraft to flying is a logistical mountain to climb. Airlines also that is impacting on passenger bookings in several European will have to persuade the travelling public the MAX was safe to countries. “It is difficult to measure and beyond European fly, he said. borders we have seen nothing, but it will come [to other Beyond these complex issues, there is the ever-present regions],” said IATA director general and CEO, Alexandre de need for more aviation infrastructure to be built and at a faster Junaic. We have been warned. ■ TOM BALLANTYNE Associate editor and chief correspondent Orient Aviation Media Group 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” NOVEMBER 2019 / ORIENT AVIATION / 5 ADDENDUM Pain continues for Hong Kong’s aviation industry The latest monthly statistics Hong Kong government to offer to the other side of the downturn. markets. The fall-off will have a for Hong Kong airlines, to financial support to the industry All carriers operating to serious impact on the financial September, show Cathay Pacific because of the “significant Hong Kong are suffering from performance of its 100%-owned Airways passenger numbers impact” the protests have had on reduced demand into Hong regional subsidiary, Cathay declined by 7.1% for the 30 days passenger traffic. Kong. They have reacted to Dragon. reported with inbound passenger “Maintaining aviation the long months of protests, Rival Hong Kong Airlines has numbers plummeting 38%. The connectivity is critical to and often riots, by reducing cancelled 6% of its schedule and worsening situation, as anti- Hong Kong,” IATA said. “The frequencies or cancelling routes. is planning to terminate Hong government protests continue government should consider Airport Authority Hong Kong Kong-Los Angeles next February. into a sixth month, has put the financial relief measures to said the decline in passenger It confirmed it was adjusting full-service carrier on course to a support the 330,000 jobs and numbers is worsening. In its schedules to Vancouver, full-year loss, for the third time in 10.2% cent of GDP (Gross September the airport handled Bangkok, Osaka, Tokyo, Okinawa, four years. Domestic Product) dependent on 12.8% fewer passengers, or 4.9 Sapporo, Seoul, Haikou and The dramatic drop-off in the aviation and tourism sector.” million travelers, 710,000 fewer Nanjing. passenger and cargo traffic in the IATA’s call followed a similar plea passengers than a year earlier. In IATA said the trend is “almost Special Administrative Region from the Hong Kong Board of August, the decline was 12.4%, unprecedented” for major of Hong Kong has prompted Airline Representatives which or 851,000 fewer passengers markets. “While passenger the International Air Transport asked that fees and services be than in the same month in 2018. numbers were impacted directly Association (IATA) to ask the reduced to help airlines make it Swire Pacific, which holds by the temporary closures of the majority equity in Cathay Pacific, airport [on August 12 and 13], issued a profit warning early this more broadly, demand for travel month and said underlying profit to Hong Kong as a final tourism was expected to be lower in 2019 and business destination and a compared with 2018, primarily connection point has softened,” because of a worse-than- it said.
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