Chapter 1: Introduction and Background
A GEOGRAPHICAL ANALYSIS OF AIR HUBS IN SOUTHEAST ASIA
HAN SONGGUANG (B. Soc. Sci. (Hons.)), NUS
A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF SOCIAL SCIENCES
DEPARTMENT OF GEOGRAPHY NATIONAL UNIVERSITY OF SINGAPORE
2007
A Geographical Analysis of Air Hubs in Southeast Asia
ACKNOWLEDGEMENTS
It seemed like not long ago when I started out on my undergraduate degree at the National University of Singapore and here I am at the conclusion of my formal education. The decision to pursue this Masters degree was not a straightforward and simple one. Many sacrifices had to be made as a result but I am glad to have truly enjoyed and benefited from this fulfilling journey. This thesis, in many ways, is the culmination of my academic journey, one fraught with challenges but also laden with rewards. It also marks the start of a new chapter of my life where I leave the comfortable and sheltered confines of the university into the “outside world” and my future pursuit of a career in education.
I would like to express my heartfelt thanks and gratitude to the following people, without whom this thesis would not have been possible:
I am foremost indebted to Associate Professor K. Raguraman who first inspired me in the wonderful field of transport geography from the undergraduate modules I did under him. His endearing self, intellectual guidance, critical comments and helpful suggestions have been central to the completion of this thesis. A special word of thanks to you Ragu, my supervisor, mentor, inspiration and friend.
All faculty members at the Department of Geography, NUS who have taught me (hopefully well enough!) during my undergraduate and postgraduate days in the university and enabled me to see the magic behind the discipline that is Geography. In particular, Professor Henry Yeung, Associate Professors Victor Savage, Shirlena Huang, Peggy Teo, Tim Bunnell, TC Chang, David Higgitt, Wong Poh Poh and Drs. Carl Grundy-Warr, Pow Choon Piew and Noorashikin Abdul Rahman for their guidance, faith and belief in me all these years.
Dr. Paul Barter from the Lee Kuan Yew School of Public Policy, NUS, whom I had learnt a lot about transport issues, both as an undergraduate and as a postgraduate student.
The administrative staff at the Department, Lai Wa, Pauline, Sakinah, Mrs Chong, Mr Lee, Mr Yong, Mr Tow, Mrs Chee and Mrs Lim for their excellent administrative support and help.
Faculty and staff from the University Scholars Programme who have helped deepen my scholarship and broaden my horizons.
All my teachers from years gone by for teaching me the finer things in life and moulding me into what I am today.
My beloved fellow current and former graduate students Chih Yuan, Daryl, Seeta, Monica, Hanglu, Desmond, Gu Ming, Yunmei, Winston, May, Brian, Choon Hon and Seng Lee who have made these two years of postgraduate studies some of the most memorable in my life.
i A Geographical Analysis of Air Hubs in Southeast Asia
The friends whom I have made (and still continue to cherish) from GeogSoc and the geography honours class. Thank you for all the fantastic memories and continuing to be an important part of my life.
My dearest students (especially those from the Field Studies module), whom I have had the greatest pleasure teaching as a graduate teaching assistant in my time here at the NUS, for challenging me to new heights, both intellectually and pedagogically.
All my anonymous survey respondents who have taken time to do the survey. Especially to my friends who have helped me disseminate the online survey to their contacts.
Mr. Gerald Ng, Air Transport Manager, Civil Aviation Authority of Singapore for granting me an interview despite his hectic schedule from which I derived plenty of rich information used in this thesis.
My two anonymous markers for their time in reading this thesis and their critical comments and insights.
My family for their support and encouragement through undergraduate and graduate schools.
And finally, my fiancé and soon-to-be wife, Shi’an, for her understanding and support throughout my candidature even though it meant a delay in my career and our marriage plans. It is her love that I will cherish and take with me as we journey on the rest of our lives no longer as individuals but as a wedded couple.
Songguang August 2007
ii A Geographical Analysis of Air Hubs in Southeast Asia
TABLE OF CONTENTS
Page Acknowledgements i Table of Contents iii Summary vi List of Tables vii List of Figures ix List of Plates x
CHAPTER ONE: INTRODUCTION AND BACKGROUND 1
1.1 Preamble 1 1.2 Air Hubs and Geography 3 1.3 Aims, Objectives and Scope 8 1.4 Significance of Study 10 1.5 Methodology 11 1.6 Outline of Thesis 11
CHAPTER TWO: HUBBING – LITERATURE REVIEW AND KEY CONCEPTS 14
2.1 Introduction 14 2.2 Academic Writings on Air Hubs 14 2.3 Literature on the Geography of Air Hubs 16 2.4 Airports, Route Networks and the Global City Paradigm 20 2.5 The Network Focus in Air Transport 23 2.6 Hubbing and Hub Airports 25 2.6.1 Towards a Typology of Air Hubs 29 2.7 Hubbing – Benefits and Pitfalls 32 2.8 Regulation and Liberalization in the Industry 33 2.9 Chapter Summary 43
iii A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER THREE: AIR HUB COMPETITION AND DEVELOPMENT IN SOUTHEAST ASIA 45
3.1 Introduction 45 3.2 The Nature of Air Hub Competition in Southeast Asia 49 3.3 The Developmental History and Overview of Selected Airports 53 3.3.1 Singapore Changi Airport 53 3.3.2 Kuala Lumpur International Airport 57 3.3.3 Bangkok Suvarnabhumi International Airport 61 3.4 Looking to the Future 64 3.5 Chapter Summary 67
CHAPTER FOUR: METHODOLODY FOR HUB ANALYSIS 69
4.1 Introduction 69 4.2 Data Source 70 4.3 Mapping Airport Networks 71 4.4 Network Matrix Analysis 73 4.5 Shimbel Index Analysis 74 4.6 Flight Frequency/Volume/Schedule Comparison 76 4.7 Connecting Passenger Numbers 77 4.8 Large Scale Quantitative Survey 77 4.9 In-depth Interviews 80 4.10 Chapter Summary 80
CHAPTER FIVE: FINDINGS AND ANALYSIS 82
5.1 Introduction 82 5.2 Network Analysis of Air Hubs in Southeast Asia 82 5.2.1 Spatial Networks of Air Hubs 82 5.2.2 The Regional Networks 83 5.2.3 The Global Networks 87 5.2.4 Network Matrix Analysis 93 5.2.5 Shimbel Index Analysis 94 5.3 Flight Frequencies, Volumes and Schedules 97 5.4 Incentives and Policies to Encourage Hub Development 102
iv A Geographical Analysis of Air Hubs in Southeast Asia
5.5 Air Hubs and National Carriers 102 5.6 The Impact of Low Cost Carriers 105 5.7 ASEAN and Open Skies 109 5.8 Chapter Summary 112
CHAPTER SIX: CASE STUDY – THE KANGAROO ROUTE 114
6.1 Introduction 114 6.2 Background 115 6.3 Intermediacy Analysis 123 6.4 The Current Situation 125 6.5 Supply Side Analysis – Airline Schedules 129 6.5.1 Frequencies and Volumes 138 6.6 Demand Side Analysis – Passenger Survey Findings 140 6.6.1 Airline Choice Factors 141 6.6.2 Airport Choice Factors 143 6.6.3 Kangaroo Route Scenario 145 6.6.4 Real Life Experiences at Hub Airports 148 6.7 Chapter Summary 150
CHAPTER SEVEN: SUMMARY AND CONCLUSION 151
7.1 Summary 151 7.2 Implications of Study & Future Research 152 7.3 Concluding Comments 156
LIST OF REFERENCES 158
v A Geographical Analysis of Air Hubs in Southeast Asia
SUMMARY
This research explores and examines the formation, development and the
current role of airport hubs for civil aviation within the context of Southeast Asia. The
notion of “hub” is explained and the various measures by which hubs are defined are
also critically analyzed. The various processes that lead to or favour hub formation are
also given some mention to draw linkages between the theoretical discussion and real world phenomena. A brief overview of the developmental histories and trajectories of the major airports in the region is then provided to situate the research in its unique socio-economic and geopolitical context. I explain why certain airlines and airports are more successful than others, and how hubbing is used to increase network coverage and reach. The intricate linkages between airlines that use the sixth freedom rights and airports which situate themselves as hubs are examined by looking at the extent to which flag carriers contribute to airport hub formation. I also examine the operations of selected airlines and airports and the pattern of air services through an analysis of spatial networks, establishing the degree of “hubness” of the airports examined. Finally, this research uses the case study of the Australia-Europe air route
(also commonly known as the Kangaroo Route) to illustrate the varying importance and significance of air hubs in Southeast Asia by drawing upon both quantitative and qualitative sources of data.
Key words: Airports, Air Hubs, Southeast Asia, Kangaroo Route, Spatial Analysis
vi A Geographical Analysis of Air Hubs in Southeast Asia
LIST OF TABLES
Page 1.1 Main Commercial Passenger Aircraft 1935 – 2007 7 2.1 Analytical Research on Hub-and-Spoke Networks 19 2.2 Benefits and Disadvantages of Hubbing 33 2.3 Characteristics of Major Air Travel Markets 41 3.1 International Passenger Traffic for 12 months ending February 2007 48 3.2 Comparison of SIN, BKK and KUL 52 4.1 Sample Network Centrality Matrix 74 4.2 Sample Intraregional Shimbel Index 75 5.1 Regional Foci of the Three Hub Airports 92 5.2 Exclusive Destination cities for the Three Hub Airports 93 5.3 Network Centrality Matrix 93 5.4 Intraregional Shimbel Matrix 95 5.5 Interregional Shimbel Matrix 96 5.6 A Comparison of Key Statistics for the Three Airports 98 5.7 Example of Hubbing by Foreign Airlines 99 5.8a Route Intensity of Selected Destinations 99 5.8b Change in Route Intensity of Selected Destinations 101 5.9a A Comparison of the Main Hub Carriers 103 5.9b A Comparison of the Secondary Carriers at the Three Hubs 104 6.1 Distances on Key Kangaroo Route City-Pairs 116 6.2 Intermediacy Measures on the Kangaroo Route 124 6.3 International Passengers by Uplift/Discharge Country From/To Australia 125 6.4 Traffic on Board Passenger Movements between Australia and International 126 Cities [selected cities on the Kangaroo Route] 6.5 Major Kangaroo Route Permutations 128 6.6a Qantas Flight Schedules on Kangaroo Route 130 6.6b BA Flight Schedules on Kangaroo Route 132 6.6c NZ Flight Schedules on Kangaroo Route 132 6.6d SIA Flight Schedules on Kangaroo Route 133 6.6e MAS Flight Schedules on Kangaroo Route 134
vii A Geographical Analysis of Air Hubs in Southeast Asia
6.6f THAI Flight Schedules on Kangaroo Route 135 6.6g Cathay Pacific Flight Schedules on Kangaroo Route 136 6.6h Emirates Flight Schedules on Kangaroo Route 137 6.7 Route Intensity (Sydney – London) 139 6.8 Weekly Maximum Seat Capacity by Airline 139 6.9a Airline Choice Factors 142 6.9b Airport Choice Factors 144
viii A Geographical Analysis of Air Hubs in Southeast Asia
LIST OF FIGURES
Page 1.1 The Transport System 5 2.1 Themes of Geographic Analysis in Air Transport 17 2.2 Hub and Spoke Networks 26 2.3 Airport Hubbing Level 27 2.4 The Nine Freedoms of Air 38 4.1 Sample Intraregional Network Map 72 5.1 Singapore Changi Airport (SIN) Intraregional Network Map 83 5.2 Kuala Lumpur (KUL) Intraregional Network Map 84 5.3 Bangkok (BKK) Intraregional Network Map 84 5.4 Intraregional Network Map of all Three Hub Airports 85 5.5 Singapore Changi Airport (SIN) Interregional Network Map 87 5.6 Kuala Lumpur KLIA (KUL) Interregional Network Map 88 5.7 Bangkok (BKK) Interregional Network Map 89 5.8 Interregional Network Map of all Three Hub Airports 91 6.1 Early Intercontinental Air Routes 115 6.2a Aircraft Range on LHR-SYD Route 117 6.2b Aircraft Range on SYD-LHR Route 117 6.3a Current Routes – Sydney to the UK 121 6.3b Current Routes – Melbourne to the UK 121 6.3c Current Routes – Perth to the UK 122 6.3d Current Routes – Brisbane to the UK 122 6.3e Current Routes – Auckland to the UK 123 6.3f Current Routes – Christchurch to the UK 123 6.4 International Passengers by Major Airlines 127
ix A Geographical Analysis of Air Hubs in Southeast Asia
LIST OF PLATES
Page 2.1 Four Basic Principles of International Aviation Regulation 37 2.2 Freedoms of Air 39 4.1 Map Showing Selected Transit Airports for Online Questionnaire Survey 78 4.2 Sample Itineraries for Questionnaire Survey 79 6.1 QF and BA Codesharing Options on Kangaroo Route 131 6.2 Itinerary choice for Questionnaire Survey 146
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CHAPTER ONE
INTRODUCTION AND BACKGROUND
A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER ONE: INTRODUCTION AND BACKGROUND
1.1 Preamble
Civil aviation and air transport has transcended its original role as a facilitating
medium for the carriage of goods and passengers over a sparse network of domestic and international linkages and evolved into an indispensable tool of mass transport in the world today. It has radically impacted our lives, and is perhaps one of the primary avenues by which forces of globalization are manifested today. Overcoming the friction of distance, and providing added convenience and time savings over other forms of transport, air transport is arguably the only form of transport that is three- dimensional (Bamford & Robinson, 1978: 42) since aircraft are not tied to the surface and have the ability to fly over terrestrial obstacles which have been important dividers of societies over space and time.
Stephen Wheatcroft, an eminent air transport scholar commented in the
beginning of his 1964 book Air Transport Policy that hardly a day went by without
any new developments in air transport and that he faced problems keeping up with a
constant flow of new material. Back then, some of the issues he was concerned with,
amongst others, were the reasons why governments needed to control entry to routes,
airline capacity management strategies, and the economic impact of bigger and faster
aircraft (cited in Hanlon, 1996: v). More than four decades later, new developments in air transport are still constantly appearing, albeit at a much faster rate. Many of the issues highlighted by Wheatcroft in 1964 are still pertinent today, some with different
foci, in particular, the contemporary trend towards deregulating the industry and how
state interests coincide or come into conflict with industry trends.
1 A Geographical Analysis of Air Hubs in Southeast Asia
In 2005, aviation transported two billion passengers annually, with 40% of all tourists using air transport (ATAG, 2005). The air transport industry generated a total of 29 million jobs globally (through direct, indirect, and induced impacts), and aviation’s global economic impact is estimated at US$2,960 billion, equivalent to 8% of world Gross Domestic Product (GDP) (ATAG, 2005). The world’s 900 airlines have a total fleet of nearly 22,000 aircraft (ICAO, 2006). They serve some 1,670 airports through a route network of several million kilometres (ACI, 2005).
As one of the fastest growing economic regions of the world, Asia is a hotbed for aviation activity. The region has recovered from the financial and economic turmoil of the 1997 crisis and is now on an accelerating path to development with trade being the key driver. The densely populated region of Southeast Asia (over 500 million inhabitants) in particular has seen tremendous growth in the aviation sector over the past decade and remains one of the fastest growing aviation regions in the world today. However, it is not unique from any other aviation region in the world insofar as regulation of air services is concerned. In many instances, the state (as I shall show) plays a pertinent and central role both regulating and promoting the air transport industry.
Forty years on from Wheatcroft, at a meeting with senior management and union officials of Singapore Airlines (SIA) in December 2005, Singapore’s Minister
Mentor Lee Kuan Yew highlighted the challenges facing the national carrier SIA and
Changi Airport in light of rapid and new developments in the civil aviation industry.
In particular, given the uncertain outlook in the wake of skyrocketing fuel prices, he
2 A Geographical Analysis of Air Hubs in Southeast Asia
stressed the Singapore government’s priority in safeguarding Changi Airport’s status
as an air hub, even if this was to come at the expense of SIA.
“As long as we remain a hub, whichever airline succeeds or fails, Singaporeans will benefit and jobs increase” (Lee Kuan Yew, 2005, cited in The Straits Times, 30th December 2005)
Lee’s statement in itself was symptomatic of global and regional
developments of air transport in the past decade which have brought about profound
changes not only in the way governments structure their aviation policies, but on
business decisions relating to airline and airport management, and also on how
scholars and researchers study and approach air transport as a discipline – not unlike
what Wheatcroft was interested in 40 years ago. It is within such a context that this
thesis was conceptualized and developed, framed around the academic confines of
aviation studies, and in the wider sub-discipline of transport geography in general. In
particular, the formation and development of air transport hubs in Southeast Asia forms the focus of this thesis. A personal interest arose out of Lee’s statement as I wanted to understand the whole notion of a “hub”, and why in Singapore’s case it was deemed even more important than the national carrier. The following section draws linkages between air hubs and the discipline of Geography as I explain why a phenomenon that seemingly stems from an operating business model warrants a geographical perspective.
1.2 Air Hubs and Geography
Geography as an academic discipline, loosely defined, refers to the study of
patterns and processes over space. Transport, thus, provides an avenue for interaction
to take place over space, connecting distant places and facilitating movement between
3 A Geographical Analysis of Air Hubs in Southeast Asia them. Transport provides a fundamental foundation for the building blocks of societies – labour, capital, territory – and intersects with the human and physical environment in ways that have profound geographical consequences (Keeling, 2007).
As a subset of economic geography, transport geography was initially concerned with the location of economic activities and the monetary costs of distance.
Over time, it was recognized that transport geography deserved to be a sub-discipline in its own right for it is characterized by a defining set of axioms which dictate the way transport geographers go about their work. Haggett (2001) described the core elements of transport geography by its systematic nature in studying transport nodes, networks and demand (see Fig 1.1). In transport geography, geographers focus on the spatial organizations and patterns created by (and for the purposes of) movement of people and goods over space. Transport studies also examine the concepts of movement, flow and activity patterns. Transport nodes like airport terminals also occupy an important place in space and constitute the basis of a complex spatial system. These ideas are integral to the field of geography as they provide some measure of “spatial interaction” and “areal association” both between and within places (Ullman, 1954). Although the field of transport studies has traditionally been dominated by economists and engineers, the multidisciplinary nature of the field provides geographers opportunities to contribute through spatial analysis at different scales. No other discipline places emphasis on interactions between the local and the global, and deals with complex issues such as safety, aesthetics, working conditions, gender, deprivation, the environment, governance and heritage within a single framework.
4 A Geographical Analysis of Air Hubs in Southeast Asia
Figure: 1.1: The Transport System (source: Rodrigue, J. (2005))
Given the broad overview of transport geography, let us now focus on one of the core modes of transport geography which forms the backbone of this thesis. Of all the different modes of transport known to man, air transport is arguably one of the most impactful and revolutionary. Together with shipping, air transport is one of the truly global forms of transport. From being a service initially targeted at the delivery of small quantities of high value items (postal mail) and a link between colonies, air transport has become the main mode of transport for people as they transverse the world today. Air transport has played a key role in the globalization of the world by breaking down the barrier of distance and allowing fast and efficient transport between any two points on the globe, providing impetus for the development of numerous service industries such as banking and tourism.
The notion of a “shrinking world” can largely be attributed to the advent of air
transport. At the same time, the air transport system is also one that encompasses
interrelationships among various economic, political, technological and socio-cultural
elements and thus presents itself as an arena where the geographer could contribute
5 A Geographical Analysis of Air Hubs in Southeast Asia
through the synthesis of diverse and complex linkages eminent in this highly dynamic
system (Ong, 1995). This is especially pertinent in the era of globalization where
flows and linkages between places dominate the focuses of many geographers.
However, what we often fail to acknowledge is that air transport is a key mode used
by these “flows and linkages” which include on the basic level the movement of
people and goods/cargo, but also that of ideas, cultures and identities. The very notion
of “connectedness” as denoted by air links between cities in the world remains a key
tenet in the global economy. For “global cities” such as London and New York, “the
international airport is both a vortex drawing together people, goods, information, and
money from across the world and a window though which the global reach of such cities extend” (Leinbach & Bowen, 2004: 298).
The central component of air transport (apart from the aircraft) is the airport.
This is the interaction point for passengers, cargo and the aircraft. Airports dictate
where aircraft land and where passengers and cargo go to. In the global airport
network, there are complex orders and hierarchies which manifest into the dominance
of huge nodes we come to know as “hubs” or mega-airports where there is the
confluence of a large number of carriers, passengers and cargo.
The air transport industry is extremely sensitive to technological developments
in aerospace, especially in terms of capacity or range increase in aircraft which allow
airlines to expand or extend their markets. Today, the forerunners in innovation in
terms of aircraft development are the Airbus A3801 and the Boeing 777-200LR2 in terms of capacity and range respectively. Such technologies enable the never-before-
1 The Airbus A380 has a maximum capacity of 555 (3-class seating) or 840 (1-class seating). 2 The Boeing 777-200LR has a maximum range of 17,446km.
6 A Geographical Analysis of Air Hubs in Southeast Asia
seen scale in terms of passenger movement between two cities, and give us the ability to connect virtually almost3 any city-pair in the world today via a single non-stop
flight.
Year of First Speed Maximum Range at Aircraft Seating Capacity Commercial Service (km/hr) Full Payload (km) Douglas DC-3 1935 346 563 30 Douglas DC-7 1953 555 5,810 52 Boeing 707-100 1958 897 6,820 110 Boeing 727-100 1963 917 5,000 94 Boeing 747-100 1970 907 9,045 385 McDonnell 1971 908 7,415 260 Douglas DC-10 Airbus A300 1974 847 3,420 269 Boeing 767-200 1982 954 5,855 216 Boeing 747-400 1989 939 13,444 416 Boeing 777- 1995 905 13,420 305 200ER Airbus A340- 2003 886 15,800 313 500 Boeing 777- 2006 945 17,446 303 200LR Airbus A380 2007 930 14,800 555 Table: 1.1: Main Commercial Passenger Aircraft 1935 – 2007 (source: Leinbach, T.R. and Bowen. J.T. (2004), cited in Rodrigue, J. (2005) Updated by author.
The very notion of a “hub” implies some kind of geographical confluence of
activity, in this case aviation activity. Since the whole essence of the geographical
discipline maintains a strong spatial element, air hubs present the perfect opportunity
for geographers in that they involve the coagulation of aircraft, passengers and cargo
in some kind of a spatial hierarchy. This spatial hierarchy may take the form of a
regional gateway, or a global centre for aviation activity depending on the air hub in
question. Thus there is a strong correlation between airport hub intensity and
extensiveness and the global reach of any city in the world. A significant portion of
3 Chapter 6 presents the case where given current technology, certain city pairings (e.g. London – Sydney) are now possible to connect via a direct flight but the reality is that such flights have not taken place due to a variety of reasons explained later.
7 A Geographical Analysis of Air Hubs in Southeast Asia
Chapter Two is dedicated to illustrating some of the issues relating to air hubs which I
have briefly introduced above.
1.3 Aims, Objectives and Scope
This thesis has the primary aim of providing a critical understanding of hub
airport formation and development in Southeast Asia by adopting a geographical
framework. I seek to explore why certain airlines and airports are more successful
than others, and how airlines use hubbing to increase their network coverage and
reach. The intricate linkages between airlines that use the sixth freedom rights and
airports which situate themselves as hubs will be discussed by looking at the extent to
which flag carriers contribute to airport hub formation. Thus, an overview of airport
development (which is intrinsically related to the fortunes of the flag carrier) will be
essential to establish an understanding of past and contemporary trends. Next, I also
examine the operations of selected airlines and airports and the pattern of air services
through an analysis of spatial networks, establishing the degree of “hubness” of the
airports examined. Thirdly, this paper also seeks to use the case study of the
Australia-Europe air route (also commonly known as the Kangaroo Route) to illustrate the varying importance and significance of air hubs in Southeast Asia.
Although not the central focus of this thesis, the impact of Low Cost Carriers (LCCs) on air hub development shall be alluded to, especially in the light of increased regional competition by states to become the dominant air hub in Southeast Asia.
Finally, I seek to situate my findings in the broader socio-economic context of the region. This involves the application of established conceptual frameworks to aviation geography and the relation of the issues at hand with those regarding the larger question of globalization of economic activities.
8 A Geographical Analysis of Air Hubs in Southeast Asia
As early as 1978, Robinson and Bamford in their flagship book Geography of
Transport observed the importance of the Southeast Asian region in the air transport
industry. They noted that “because south-east Asia is a great ‘cross-roads’ [sic] of the
world, the region has assumed a very significant role in international aviation while
the very varied physiographic character of the region together with the sparsity of
alternative modes of travel both within and between several political units have promoted internal air links” (Robinson & Bamford, 1978: 193). Southeast Asia’s airline industry has come a long way since the 1940s when fledgling flag carriers were being developed to the early 1970s which heralded the entry of wide-bodied aircraft that enabled these carriers to drastically increase their capacities. Although
Southeast Asia did not contribute a sizable amount of traffic, its airlines were situated conveniently at stopover locations along expanding long-haul routes, and inbound tourism was growing rapidly (Hooper, 2005: 336).
Even within the region, air transport remains the predominant mode of
transport due to its geographical incontiguity consisting of mainland, insular and
archipelagic maritime states. Recent developments in Southeast Asia like the
development of new airports and the rise of Low Cost Carriers (LCCs) have made the
region an interesting and exciting context to study air transport. Although a
comprehensive study of all airlines and airports in the region is long overdue and
extremely warranted, space and information constraints dictate otherwise and render
such a task unfeasible for the purpose of this thesis. The scope of analysis for this
thesis covers the three major and arguably most important hub airports in Southeast
Asia - Singapore Changi Airport, Kuala Lumpur International Airport, and Bangkok
9 A Geographical Analysis of Air Hubs in Southeast Asia
International Airport (Don Muang and Suvarnabhumi); and their relationships with
their respective flag carriers namely - Singapore Airlines, Malaysia Airlines, and Thai
Airways. These carriers and airports were chosen on the basis of their high impact levels and larger share of the Southeast Asian air transport market. The analysis is focused solely on passenger traffic and the situation with freight and mail (although important in its own right) is omitted due to length constraints.
1.4 Significance of Study
Contemporary literature on air transport focuses either on the commercial aspects of air transport, or the policy, planning and management perspectives.
Similarly, scholars often choose to focus their work on the airlines, airports or state and industry issues. Little in contrast has been written on the relationships between different components and sectors in air transport. The regional approach adopted by this thesis differs from the sectoral approaches outlined above. I aim to fill one small part of this lacuna in academic literature through this research on air hubs in Southeast
Asia.
An understanding of such airport-airline relationships will enable us to better
account for the rise and demise of airlines and airports in the region, as well as to be
able to examine different developmental trajectories taken by different
airlines/airports from a historical context to better explain and predict future trends in
air transport. Thus, the findings of this thesis serve not only as a descriptive tool to
better understand Southeast Asian air transport, but also to some extent an analytical
one to make conjectures for future tendencies for hubbing as a strategic priority for
states.
10 A Geographical Analysis of Air Hubs in Southeast Asia
1.5 Methodology
This thesis firstly adopts a somewhat historical perspective by first providing
the contextual background on the developmental trajectories of the selected hub
airports. This is achieved primarily through a literature review of published secondary
sources and annual reports of these airports. I shall attempt to provide an extensive
literature review of works relating to both airline and airport development in the
region, as well as more general works on air transport in- and outside of the
geographical discipline. An analysis of newspaper articles will also be undertaken to provide additional information not available from official sources as well as to provide the media perspectives on such issues. A spatial analysis of past and present airline route networks and airport spoke networks will be provided to determine the extent to which hub airports are dominated by flag carriers. This is done through a chronological mapping of airline and airport networks by deriving information from airline flight timetables and other aviation-related reports and documents. A theoretical investigation of the degree of connectivity of hub airport will allow us to measure the “hubness” of the airports. Using the case study of the Australia – Europe
“Kangaroo” Route, a large scale quantitative survey with Australian travelers will provide an empirical insight into factors which affect consumers’ airline and airport hub choice.
1.6 Outline of Thesis
A rough outline of this thesis is as follows. In Chapter Two, a review of the
literature on air hubs will be undertaken. This not only highlights the works that have
been done to date, but also seeks to provide conceptual underpinnings to this study.
11 A Geographical Analysis of Air Hubs in Southeast Asia
The issue of regulation and liberalization in the air transport industry will also be discussed, paying attention issues of air rights and conventions. This chapter serves as
a foundation for many of the themes and trends discussed in the later chapters.
Chapter Three focuses on the developmental experiences of the selected
airports in the region. In particular, the histories of main international airports will be
traced and future expansion plans will be given some examination. An overview of
their current and future operating capacities will also be provided.
Chapter Four deals with the methodological issues pertaining to this research.
The choice of research methods will be justified and the methods themselves
explained in this chapter of the thesis. Limitations of the employed methods will also be critically discussed.
Chapter Five presents the findings of the research and provides an empirical
examination of the current status of air hubs in Southeast Asia. I examine the degree
of “connectedness” of the various airports and the extent to which the national airline
is dominant in hub formation. Also, a periodic analysis will be provided to see
temporal changes in the statuses of the air hubs. The notion of a regional “open skies”
policy will also be considered as a necessary tenet for the continued success and
survival of air hubs in Southeast Asia.
The sixth and penultimate chapter presents a case study of the Australia –
Europe Kangaroo Route. Flight frequencies, volumes and schedules are compared and
using travelers’ choice analysis, this chapter will allow us to see the “other” side of air
12 A Geographical Analysis of Air Hubs in Southeast Asia hub development from the user’s perspective. The findings from this case study will also add an empirical dimension to issues and themes discussed in this thesis.
Finally, the concluding chapter reviews and summarizes the issues raised in this thesis and highlights some of the results and conclusions of this study.
Suggestions for some directions for future research will also be provided at the end of the chapter.
13
CHAPTER TWO HUBBING – LITERATURE REVIEW AND KEY CONCEPTS
A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER TWO: HUBBING - LITERATURE REVIEW AND KEY CONCEPTS
2.1 Introduction
This chapter reviews the literature published on the topic of air hubs in
transport geography and other related fields. I will focus on the importance of
“networks” in approaching transport geography. This chapter also presents a study
framework which highlights the key factors and concepts that are the building blocks
of the study and the relationships among them. In particular, the notion of “hubs” and
“hubness” will be analyzed in detail, and various means by which scholars define and
measure air hubs will also be presented as a foundation of this thesis. The two
contravening and arguably most pertinent trends in air transport, that of regulation and
liberalization will also be presented as they have significant impact on hub formation.
2.2 Academic Writings on Air Hubs
The general issue of hubs in air transport is studied by scholars from a wide-
ranging number of disciplines, including economics, history and many others. The
multi-disciplinary nature of the topic enables researchers to publish in a variety of
journals that transcend these disciplines such as Journal of Air Transport
Management, Journal of Transport Geography, Transportation Research, Journal of
Transport Economics and Policy as well as many others which are more discipline specific.
A significant proportion of works in the literature deal with the economic and
operations research aspects of air hubs – concerning themselves with costs, pricing,
and scheduling analysis. The rise of hub-and-spoke networks spawned a wave of
14 A Geographical Analysis of Air Hubs in Southeast Asia
works in economics that deal primarily with pricing strategies by both airlines and
airports. For instance, Kanafani & Ghobrial (1985), Spiller (1989) and Hendricks et
al. (1995) describe how hubbing affect airport economics. Berechman and Shy
(1998), Pels et al. (1998) and Schipper et al. (1998a) provide an analysis on spatial equilibriums and optimal networks. Others adopt a more airline-centric focus, like
Bittlingmayer’s (1990), Berechman et al.’s (1994) and Hendricks et al.’s (1997)
works on airline entry and exit; Brueckner and Spiller’s (1991), Zhang and Wei’s
(1993), Oum et al.’s (1995), Nero’s (1996) and Schipper et al.’s (1998b) pieces on
airline competition; and Park’s (1997) work on airline alliances. Increasingly, the
environmental aspect of air hubs have also come under academic scrutiny, spawning
papers like Nero and Black’s (1998) piece on including environmental costs in airport
pricing.
Another strand of focus on air hubs stems from the business and management
streams, where authors have written extensively on issues like competition,
(de)regulation, policy implications and business strategies all in relation to hub-and-
spoke network structures. Some of these works include McShan (1986), Hansen
(1990), Button & Lall (1999), Hanlon (1999), Adler (2001), Chin (2001), Shy (2001),
Doganis (2002, 2006), Albers et al. (2005), Alderighi et al. (2005) and Gillen &
Morrison (2005). Worthy of special mention is Button’s (2002) seminal article which
presents a summary of the hub-and-spoke network of American domestic air routes
and provides a contemporary review of some of the arguments for and against hub
formation.
15 A Geographical Analysis of Air Hubs in Southeast Asia
Although not as extensive as the previous two strands of economics and
business oriented literatures, there exist also a small number of authors who have
written on hub airports from a different approach where the focus is on the social and
political implications of hub networks and flag carriers. Such works include
Raguraman (1997), Gottdiener (2001), Pascoe (2001), Wood (2003), Fuller & Harley
(2004) and Aaltola (2005). Topics include the roles of flag carriers in nation building, the cultural significance of air hubs, symbolism and imperialism, and the social networks in terminal spaces of hub airports.
The issue of air hub development and competition has not only gained
prominence amongst professional academics, but there is also strong interest from
students pursuing tertiary and higher degrees in Singapore to do work in this field.
Research dissertations written on air hubs come mainly from students in Geography
and Economics with myriad focuses, including those like Lim (1989), Gonzales
(1995), Khoo (1997), Chew (1998) and Zou (2002).
2.3 Literature on the Geography of Air Hubs
The contribution of geographers to air hub literature is significant but often
overlooked when compared to those of economists and business researchers. This is
primarily due to the notion (and arguably fact) that airports are business entities with
economic functions and everything else is relegated to secondary importance.
Geographers working in this field tend to focus their attention on the spatial issues
relating to hub-and-spoke networks, often engaging a variety of both theoretical and
empirical methods to highlight the changing geographies of air hubs. A short synopsis
16 A Geographical Analysis of Air Hubs in Southeast Asia
of geographic work in air transport in general is provided in Vowles (2006) recent
article in The Professional Geographer.
Figure: 2.1: Themes of Geographic Analysis in Air Transport (source: Vowles, T.M. (2006))
Although a precise definition of what an “air hub” is or should comprise of is
lacking consensus at the moment, there have been attempts to provide empirical
classifications for air hubs. There are a number of contributions dedicated to this issue, including O’Kelly (1986, 1992), Chou (1990), Shaw (1993) and Button (2002,
2004).
One of the forerunners of the discipline, Morton O’Kelly has written
extensively on hub location theory and hub system analysis. Various articles written
by O’Kelly and his colleagues (O’Kelly & Miller, 1994; O’Kelly, 1998; O’Kelly and
Bryan, 1998; Bryan & O’Kelly, 1999; Horner & O’Kelly, 2001) concentrate on the
optimum location of hubs within a network, the differences between models and
reality, and the variation between passenger and freight air transport systems (cited in
17 A Geographical Analysis of Air Hubs in Southeast Asia
Vowles, 2006). In particular, O’Kelly & Miller (1994) devised a classification
scheme which places the hub-and-spoke network into different categories based on
various geographical criteria which was subsequently critiqued and reviewed in a later
paper (O’Kelly, 1998). With reference to Table 2.1, we can see that analytical
research based on modeling hub-and-spoke networks forms a significant proportion of
the literature.
Fleming & Hayuth’s (1994) article attempts to highlight the spatial
characteristics of transport hubs by adopting the concepts of centrality and intermediacy to determine the relationships between hub location and city development. Vowles (2006) has looked at the pricing determinants in hub-to-hub markets using econometric models. The focus on the terminal and its responses to hubbing and globalization is discussed in Rodrigue (1999) and Goetz & Rodrigue
(1999).
There are also a number of works which are essentially region-based, looking
at the empirical characteristics of air hubs in various parts of the world. Most notably,
these include Dennis’s (1994) and Burghouwt et al.’s (2003) works on Europe,
O’Conner’s (1995) and Bowen’s (2000) works on Southeast Asia, Park’s (2003)
article and Findlay et al.’s (1997) volume on the Asia Pacific region, Zhang’s (2003),
Feldhoff’s (2002) and Matsumoto’s (2005) works on the East Asian region, and
Vowles’s (2002) work on the United States.
18 A Geographical Analysis of Air Hubs in Southeast Asia
Table 2.1: Analytical Research on Hub-and-Spoke Networks (source: Bryan & O’Kelly, 1999)
Air transport literature has seen a shift away from compartmentalized studies towards a greater integrative focus judging from the newer works which are appearing. In a recent progress report, Keeling (2007: 220) noted that “significant effort has been applied to understanding and explaining how transport is critical to the globalization imperative.” However, he also lamented that “transport geographers have been reticent to tackle the bigger methodological and empirical challenges raised by an expanding world system and the world cities that act as command and control centres in the global economy” (Keeling, 2007: 220). To some extent, the role of air hubs in the global city network and associated discourses has been examined by
Derudder & Witlox (2005), and Derudder et al. (2005a, 2005b), where the “hubness” of cities and airports is one of the key measures of globalization. They used key
19 A Geographical Analysis of Air Hubs in Southeast Asia
empirical data like flight connections and passenger numbers to postulate the relative
standings of cities within the global economy, linking their findings to the various
discourses of “world citi-ness”. This has been one of the most recent emerging trends
of research in the geography of air transport.
2.4 Airports, Route Networks and the Global City Paradigm
The idea of a global city as being a command and control centre for
transnational businesses and a node for the proliferation of the arts and culture is well
documented in the field of urban studies (Amin & Thrift, 1994; Castells, 1996; Hall,
1966; Reed, 1981; Sassen, 1991, 1994; Knox, 1995). A key theme of the global city
literature is the focus on inter-city competition to attract capital and investment as
demonstrated by Sassen’s (1991) work on the global dynamics of the New York –
London – Tokyo triad of global cities. This competition based on the concept of
competitive advantage is the driving force of many modern city planners and urban
authorities today as they strive to ensure that their cities do not lag behind in the
perpetual race to out-do one another.
The role of airports in urban development often escapes attention. The airport is critical to the growth of any city or region, especially those aspiring to become global cities as “[the] airport is perhaps the most important single piece of infrastructure in the battle between cities and nations for influence in, and the benefits
of, growth and development” (O’Connor & Scott, 1992: 241). Airports are also often
presented as catalysts to both short- and long-term economic growth, encouraging
inward investment into regions from businesses that require direct contact with
customers (Graham, 1995: 244). The airport ostensibly is not by any means a small
20 A Geographical Analysis of Air Hubs in Southeast Asia project. Judging by the amount of capital normally invested by nation-states into airports and aviation related facilities, the term ‘mega-project’ is justified in the case of many hub airports. The link between the ‘global city vision’ and these mega- projects is drawn out in Yeoh’s paper where “the ‘global’ has become an ‘icon’ or a spatial metaphor” (2005: 946). Such aspirations are thus inscribed into buildings and monuments which are often imprinted with notions of connectedness, openness and are spaces where people of various nationalities congregate. Mega-projects are not only a tangible association between the city and the global economy, but also their symbolic importance is significant in this respect (Olds, 1995). They are aimed at a global audience and their huge scale serves to “reorient the international imagery of the city” (Olds, 1995: 1713).
Sriram et al. (2001) have also noted that air gateways represent the highest level of the global transport network. Thus, the strength of the airport’s gateway function reflects and supports a city’s overall economic and social central place function. By this we can infer that cities with higher order social and economic functions tend to have airports that serve a larger market population and area.
Although the authors make a clear differentiation between the concepts of a
“gateway” and a “hub”, with the former focusing on a city’s hinterland relationships and the latter focusing on the geometry of a network, I argue that more “globalised” cities also tend to have greater hinterlands for their goods and services, thus the prominence of their air gateways remains significant.
Another key theme towards global city formation is that of modernity and modernization. The airport is the epitome of modernity, and to some authors, the
21 A Geographical Analysis of Air Hubs in Southeast Asia
ultimate symbol of hyper- or supermodernity (Augé, 1995; Boswell, 1997; Wood,
2003; Pascoe, 2001) where technology knows no bounds. Modern airports have been
defined as “complex industrial enterprises”, where “disparate elements and activities are brought together to facilitate, for both passengers and freight, the interchange between air and surface transport” (Pascoe, 2001: 27). Architects revere peers who work on airport projects, for it is one of the ultimate expressions of modernity in its built form.
Empirically, one of the most distinguishing and significant measure of “global city-ness” lies in a city’s overall connectedness to the rest of the world. Rimmer
(1998) postulated that “air passenger travel contribute to economic globalization by bringing people together to acquire complex knowledge relatively unburdened by geographical constraints and national borders (p. 454). Keeling (1995) justifies the use of air network and air traffic data in global city research in that:
“Airline linkages offer the best illustration of transport’s role in the world system for five reasons: (i) global airline flows are one of the few indices available of transactional flows of inter-urban connectivity; (ii) air networks and their associated infrastructure are the most visible manifestations of world city interactions; (iii) great demand still exists for face-to-face relationships, despite the global telecommunications revolution (Heldman, 1992; Noam, 1992); (iv) air transport is the preferred mode of inter-city movement for the transnational capitalist class, migrants, tourists, and high-value, low-bulk goods; and (v) airline links are important components of a city’s aspirations to world city status.” (Keeling, 1995: 119)
Network analysis also shows hierarchical relationships between cities in the
global city nexus. The simple fact that certain cities pairs are linked and others are not is telling of not only the inter-city relationships on the global scale, but also how each
22 A Geographical Analysis of Air Hubs in Southeast Asia fares on the global arena. Geopolitical factors also affect the air networks of various countries, as with the case of the very select air networks of the Republic of China
(Taiwan) and the Democratic People’s Republic of North Korea (DPRK).
Relationships between cities and regions manifested through air networks not only vary over space, but more often than not, also over time periods. O’Connor & Scott
(1992) raised the case of Tokyo which in the 1970s had just regional and local connections on a non-stop, daily basis, yet today it is an important international hub and world city.
Examining networks not only allows us to identify important nodes and linkages on a global scale, but also allow us to make regional comparisons between airports. Certain important regional nodes serve as primary inter-continental gateways to entire regions, feeding traffic into many other secondary regional airports. Others may serve as important crossover and stopover points on transcontinental routes with a high composition of transiting passengers compared to traditional O&D (origin and destination) traffic.
2.5 The Network Focus in Air Transport
Generally speaking, research in transport geography have been characterized by different analytical approaches which include the modeling of spatial interaction, using behavioral analysis to understand the choice making decisions by the consumers of transport, and the study of networks in transport systems to establish patterns and trends. Although the emergence of air hubs in contemporary aviation development has prompted an assimilation of these strands of research into a more integrated approach to understand the complex phenomenon of hubbing, the central point of this thesis
23 A Geographical Analysis of Air Hubs in Southeast Asia
deals predominantly with the lattermost approach and the present section highlights
the significance of network analysis in air transport research.
As early as 1963, Kansky espoused the importance of network analysis in
transport geography where he suggests that the term “transportation network” infers
“a set of geographical locations interconnected in a system by a number of routes”
(Kansky, 1963: 1). In this there are three fundamental building blocks, namely
origins, routes and destinations. Thus, the locational pattern formed by the building
blocks is, by definition, the spatial structure of a transportation system (Kansky, 1963:
1). This is clearly in line with the discipline’s focus on spatial phenomena, and by
understanding the networks of transport systems, we can derive not only cartographic
and empirical meanings, but also and more importantly, symbolic and embedded
patterns and processes influencing the structure of the network in question.
Akin to fishing nets or a spider webs, networks are best represented
cartographically on a planar surface and subsequently this was taken one step further
by the use of graph theory (a branch of mathematics) which represented the network
as a series of nodes (or vertices) and the links (or edges) between them, with each node or vertex having an equal weighting of unity. Mathematically, such relationships can be expressed on a binary matrix and certain characteristics like density, connectedness and orientation can be empirically measured. The main proponents of this method of analysis have been Kansky (1963) and Chorley & Haggett (1974).
Most pertinent to this thesis is the concept of “network economies” where the connectivity and spatial structure of various transport networks help differentiate one
24 A Geographical Analysis of Air Hubs in Southeast Asia from another in terms of efficiency and comprehensiveness. The commonly cited example to illustrate the concept of “network economies” and “network effect” is the hypothetical case that if there are only two fax machines in the whole world linking up two individuals at two locations, the network would be a purely linear one with just one possible route/connection. Such a network would therefore have little practical value if one wishes to communicate with more people. However, if every household were to own a fax machine, then the network effect would be of a much higher magnitude and would allow many more connections, making such a network intrinsically more valuable. To link this back to air transport and air hubs, one of the main criteria of a “good” hub lies in its connectivity and its network, i.e. the more places you can reach from a certain hub, the higher the value of the hub. Economists generally term this phenomenon as achieving “positive network externalities”.
2.6 Hubbing and Hub Airports
The term “hub” or “air hub” has been used more than generously in this paper, but I have not provided an adequate definition as yet. This is perhaps symptomatic of the fact that scholars and researchers do not have a consensus on what the term actually entails due to the complexities and differing uses of the term. The term has to some extent been so widely used and adapted that it has become almost a meta- narrative, lacking precise definition and empirical justification, or as aptly put by
Button, “there is certainly no hard nor fast economic or legal definition of a hub airport” (2002: 179). This is compounded by the fact that there is often inadequate statistical data on air hubs (c.f. Veldhuis, 1997). In this section, I will summarize the various definitions and methodological approaches for measuring air hubs to illustrate the concept of hubbing.
25 A Geographical Analysis of Air Hubs in Southeast Asia
From an air traffic management perspective, it is the geographical and
temporal concentration of traffic through an airport that is important and not which
airline carries it. Conversely, from a general economic policy analysis perspective,
hubs are normally treated as airports that have a large preponderance of flights
operated as part of an essentially radial network by one carrier. Functionally,
Fotheringham & O’Kelly (1989: 171) state that a hub is a type of facility located in a network in such a manner so as to provide a switching point for flows between other interacting nodes.
Figure: 2.2: Hub and Spoke Networks (source: Rodrigue, J. (2005))
The USA Federal Aviation Administration (FAA) defines air hubs as
“geographic areas that serve as transaction centres for air traffic” (FAA, 2000; cited in
Derudder et al., 2005a: 6). This definition is based on communities of airports rather than on individual airports which in turn implies that a hub may entail several airports. This is predominantly the case in many North American cities where two or three large airports may co-exist within a single metropolitan area (e.g. New York,
Los Angeles etc). The FAA uses a classification scheme to distinguish hubs based on
26 A Geographical Analysis of Air Hubs in Southeast Asia
the ratio between (i) number of passengers making an onward connection from the
node and (ii) the number of passengers that use the node as origin or as final destination. Based on this classification, a large hub will have a ratio > 1.00, a medium hub a ratio between 0.25 and 1.00, and a small hub a ratio < 0.25. Although a crude measurement, the FAA definition does give us a rough idea on the “hubness” of various airports and has been adopted by many researchers. Rodrigue (2005) proposed a similar classification scheme also based on the ratios of connecting passengers (see
Figure 2.3 below).
Figure: 2.3: Airport Hubbing Level (source: Rodrigue, J. (2005))
Going a step further, Derudder et al. (2005a) attempt a “spatialized” measure
of air hubs by looking at the number of city-pairs connected by a network node. This
is premised on the fact that an important hub acts as a major switching point in terms
of the quantity of connected nodes. He argues that ratio comparisons are “de-
spatialized” measures because they simply focus on the number of passengers that use
a node as a switching point (Derudder et al., 2005a: 7). Thus his is a measure of
connectivity rather than volume per se.
27 A Geographical Analysis of Air Hubs in Southeast Asia
Other authors like Button & Stough (2000) contend that many academic studies have defined a hub to entail carriers feeding three or more banks of traffic daily through an airport from some 40 or more cities (p. 232). This definition highlights the temporal specificity of air hubs. More specific to the USA, the US
General Accounting Office assumed a concentrated hub to be an airport which was one of the 75 busiest in the nation in terms of enplanements and which where one carrier accounted for at least 60% of enplanements or two carriers combined accounted for at least 85%. Airports falling into either category but were not in the 48 contiguous states were excluded, as were those in cities with more than one airport
(Button & Stough, 2000: 233).
In his paper, Dennis (1994) has identified three main factors which are essential for a good hub airport. They are namely, (i) a central geographical position to minimize flying time and costs; (ii) good airport facilities with ample runway and terminal capacity to process passengers rapidly, handle a large number of flights simultaneously and provide some margin for absorbing delays; and (iii) the coordination of schedules to minimize the time aircraft spend on the ground. Thus, today’s hub airports often have flights arriving and departing in waves or banks, allowing passengers from different flights to connect and their luggage to be redistributed. This results in the occurrence of many peaks and lulls in airport activity within a 24 hour cycle.
28 A Geographical Analysis of Air Hubs in Southeast Asia
2.6.1 Towards a Typology of Air Hubs
As I have shown there exist many different definitions and measurements of
air hubs, depending on the focal point and interest of the author(s). What this has
revealed is the enormously complex nature of air hubs. Button (2002) has rightly
pointed out that not all hubs are created equal. Also, a large part of the literature available is North American-centric in nature and this is not surprising as the whole hub-and-spoke concept originated as a result of the deregulation experience in the
USA. However, what I have found lacking in the literature is a classification system for air hubs which again is expected for the reasons listed above. The following paragraphs are an attempt to typologize air hubs by certain key attributes.
i. “Sixth Freedom” Hubs
o These hubs are usually the result of the network coverage and business
model of the dominant hub carrier. Using the unofficial Sixth Freedom
right to get around regulatory hurdles, the hub carrier brings traffic from
one country back to its home hub and then onwards to another destination
in a third country (refer to Plate 2.2). The hub airport may or may not lie in
a geographically convenient position between the two destinations. Trips
going through such hubs often involve a change of aircraft. Singapore is a
good example of a Sixth Freedom hub as SIA brings traffic from Australia
into Singapore and then onwards to Europe.
ii. Interlining or Alliance Hubs
o Interlining or Alliance hubs are the result of agreements or treaties
between airlines. These hubs may also be home to certain airline alliances
29 A Geographical Analysis of Air Hubs in Southeast Asia
that use the hub as a connecting point for their passengers to destinations
served by their member airlines. A good example of this is Frankfurt
Airport which is dominated by the Star Alliance group of airlines. Many
Star Alliance members from different parts of the world operate services
into Frankfurt where their passengers connect to Lufthansa flights to
regional destinations within Europe.
iii. “Trunk – Feeder” Hubs
o These hubs are usually reflective of the urban hierarchies of the region and
are often the dominant or primary economic centre of a region. Traffic
from smaller secondary destinations is channeled into the main hub airport
in the region where there is a variety of international trunk services
available. Smaller planes serve the feeder destinations whilst consolidated
traffic is put into long-haul high-capacity aircraft for the intercontinental
routes. Such hubs are very prevalent and can be found in almost any region
in the world. Good examples of such hubs are Addis Abba, Jakarta and
Sao Paulo.
iv. Geographically Convenient Hubs
o Such hubs arise purely because of their geographical location and aircraft
technology restrictions. Owing to range limitations, many long-haul air
routes do require a refueling stop along the way. Some airlines make use
of the Fifth Freedom right to take on and disembark passengers at the
intermediary stop provided there is a market which is often not the case.
Such hubs are also seldom dominated by any particular airline and one will
30 A Geographical Analysis of Air Hubs in Southeast Asia
find many carriers operating their long haul services through such hubs.
Classic examples of such hubs include Guam, Anchorage, and Honolulu
for the trans-Pacific route. Increasingly as aircraft range improves, many
of these hubs have shifted to become cargo hubs or ceased to exist as a
dominant airport at all.
v. Scale Economy Hubs
o Such hubs are often purely artificial in nature and are the result of airline
business decisions to enjoy the scale economies of consolidating their
services through a central hub. This is most prevalent in the USA where
many of the legacy carriers have developed such scale economy hubs at
airports where there is very limited traffic. These hubs may be totally
random in nature and do not conform to the usual hub characteristics of
having a large population base and catchment area, or a good geographical
location. An example of this would be Northwest Airline’s Memphis hub
which has very limited traffic growth.
It is important to note that all these types are hubs are not mutually exclusive.
In fact many of the hub airports in the world today can be classified into more than one of the above categories. The classification scheme which I have suggested above merely helps us understand the intrinsic reasons why some airports develop into major air hubs and provides a conceptual contribution to the literature. The real world scenario, as most researchers in the field would agree, is much more complicated and cannot be adequately represented in a simple typology. Nonetheless, it is my hope that future research will be geared towards such conceptual understanding of air hubs.
31 A Geographical Analysis of Air Hubs in Southeast Asia
2.7 Hubbing – Benefits and Pitfalls
Although hubbing has become a common phenomenon in air transport, it is debatable whether it has achieved runaway success, and this is also dependant on from whose perspective we are looking at the benefits of hubbing. This section presents a summary of the observed and potential benefits and pitfalls of hubbing, adopting a sectoral framework used by Graham (1995), distinguishing between the effects felt by passengers and airlines. It should be mentioned here also that what was thought to be common knowledge about the pros and cons of hubbing have recently come under fire, most notably in Button’s (2002) article where he debunks some of the “myths” about airport hubs.
Although most would agree that hubbing maximizes the economic efficiency of airlines, it remains debatable whether or not the overall benefit to consumers outweighs the pitfalls of hubbing. Sometimes such issues become highly politicized, especially in the case of the USA where arguments have been made that smaller communities do not actually benefit from the hub-and-spoke system in terms of the loss of direct services to destinations other than the hubs and the potential for a monopoly situation when one carrier dominates certain geographical regions and becomes the sole player in the market. Other impacts not mentioned in Table 2.2 below include the notion that hubs are potentially detrimental to the environment in terms of air and noise pollution, but at the same time bring greater economic benefits to hub cities not only in terms of direct airport-related capital investments and job creation, but also through various indirect and multiplier effects. Perhaps more
32 A Geographical Analysis of Air Hubs in Southeast Asia research is needed before one can fully evaluate the hub-and-spoke model of airline operations.
Benefits to Airlines Benefits to Consumers • Increased economies of density Æ Higher • Increase in city-pair permutations load factors Æ Lower per passenger cost • Increase in flight frequency Æ better • Fewer aircraft used on the whole Æ Better connections, less waiting time for flights, utilization of aircraft, increased efficiencies, more choice of departure times increase in overall capacity • Less probability of having to switch from • Increased economies of scope one airline to another on a particular journey o Increase in city-pairs served Æ lower risk of missed connections o Better connectivity • Higher competition between hubs Æ lower o Better comprehensiveness fares, especially if passenger is willing to o Internal cross subsidization of routes bear the extra inconveniences of additional possible transfers o Greater use of shared facilities • Higher economies of information Æ better o Airline’s Frequent Flyer Programme choice making process for consumers more attractive • Better utilization of Frequent Flyer • Hubbing as a form of market protection Æ Programmes inhibits new entrants at particular airports o Dominance of airport facilities (gates, runways, concourse facilities) a strong barrier to entry Disadvantages to Airlines Disadvantages to Consumers • Problems with coordination • Loss of non-stop connections (or even all • Higher aircraft ground turnover times connections for small communities) • Cumulative knock-on effects if aircraft is • Increased trip timings due to transfers and delayed or grounded waiting • Round-about journeys due to hub location and connections Æ increased trip timings Æ higher fares • Hassle and inconvenience of transfers (higher probability of lost/late luggage etc) • Congestion at airports during peak hours, long waiting queues at baggage claim and immigration • Loss of choices if carriers dominate certain hubs/routes • Deterioration of service quality Table: 2.2: Benefits and Disadvantages of Hubbing (source: author)
2.8 Regulation and Liberalization in the Industry
Having looked at the basics of hubbing, it is now prudent to understand the context and history which enabled such a phenomenon to occur in the first place. This section therefore looks at the two arguably most significant trends to have impacted air transport today.
33 A Geographical Analysis of Air Hubs in Southeast Asia
A vast array of early works is available in the literature, predominantly in the
1960s and 1970s which deal with the regulation debate in air transport (Richmond,
1962; Caves, 1962; Wheatcroft, 1964; Levine, 1965; Kahn, 1970; Keeler, 1972;
Douglas & Miller, 1974; and White, 1979). After the deregulation of the US civil aviation industry in 1978, the second wave of literature dealing with the effects of deregulation gained prominence (Baily, Graham & Kaplan, 1985; Brenner, Leet and
Scholt, 1985; Levine, 1987; Kahn, 1988; Keeler, 1991; Dempsey & Goetz, 1992; and
Williams, 1993) and also in Canada and Australia (Button, 1991). Although not the focus of this thesis, the proceeding section outlines some of the main issues which revolve around the debate of whether to regulate or to liberalize the industry. Such issues have profound implications on airline-airport relationships which form the crux of this paper.
The Chicago conference in November 1944 was an important milestone in
civil aviation. It was at this conference that the International Civil Aviation
Organisation (ICAO) was formally established which marked the beginnings of a
regulatory framework towards civil aviation. The document was signed on December
7, 1944 in Chicago, Illinois, by 52 signatory states. It received the requisite 26th
ratification on March 5, 1947 and went into effect on April 4, 1947.
The inherent nature of international air transport involves the movement of
people and goods across national boundaries, and the Chicago conference sought to
provide a platform for nation-states to discuss issues relating to civil aviation. It was
at the conference that state sovereignty over airspace was formally and legally
recognized, providing a framework for bi- and multi-lateral negotiations and
34 A Geographical Analysis of Air Hubs in Southeast Asia
exchanges of air rights, otherwise known as “Freedoms of Air” which are privileges
granted by states for the exemption of territorial rights mentioned in Articles One &
Six4 of the convention. However, a multilateral agreement was only reached on the exchange of the first two freedoms of air (International Air Services Transit
Agreement) which allow carriers to fly over foreign airspace and to stop on foreign soil for technical reasons. All other freedoms had to be bilaterally negotiated between states. Such bilateral agreements were often made by states in favour of their respective national carriers, especially in the case of developing or newly developed countries where more often than not the national carrier was a state-owned enterprise.
In many instances, to ensure the survival and profitability of the national
carrier, these states adopted anti-competitive measures to protect their home carriers
from foreign competition. This traditional approach to international aviation policy
may not be the best way to go if one considers carefully the full impacts of air
transport on the national economy, regardless of the well-being of the national carrier.
States and their governments therefore play a central role in air transport, and
as Gonzales (1995: 10) argues, changing values of governments, internally within a
nation as well as in their external foreign relations impact air transport. For instance,
some governments have changed their views about public ownership of the national
flag carrier and have increasingly moved towards privatization. Others have encouraged more competition in the industry by granting international operating
licenses to new privately owned airlines in the country. More traffic rights are being
granted to an increasing number of airlines from other countries.
4 Articles 1 & 6 of the 1944 Chicago convention assert that every state has exclusive rights of airspace over its territory and that special permission is needed for operating air services into the territory of foreign states.
35 A Geographical Analysis of Air Hubs in Southeast Asia
While these trends contribute to the overall accessibility of nation-states, they
can also lead to congestion and overcapacity in the industry. Whilst the outcomes of the Chicago convention still resonate and bear significant influences in civil aviation today, we can observe a counteracting trend towards deregulation and liberalization in air transport, most notable in the USA and Europe. This was seen as a necessary move as territorial boundaries had to be de-emphasized in the light of globalization. The government’s role was thus restricted to regulating and overseeing air safety.
However, for pro-liberalists who often look towards the success of the USA experience, it must be emphasized although the US domestic airline deregulation quickly had international ramifications and led to liberal Air Services Agreements with countries like The Netherlands, it also meant that airlines that were not able to survive in the new competitive environment quickly perished (e.g. Pan American
Airways).
Some authors like Chew (1998: 2) regarded the highly regulated aviation
industry as the “last bastion of industrial nationalism” which is significantly different
from the nature of most industries where trade is comparatively unrestricted. This is
premised on the fact that government protection of flag carriers often produced
‘artificial’ markets, in which “the profitability of individual airlines was determined
more by the number of competitors allowed on particular routes than by the quality
and pricing of their services” (Hanlon, 1996: 2). The conflict arises when
governments are confronted with the dilemma of deciding to what extent should
national or state sovereignty be compromised or surrendered in favour of market
forces in the industry. Also, national pride is often a key reason for regulation as
36 A Geographical Analysis of Air Hubs in Southeast Asia countries see the rise and demise of their national carriers as being symbolic of the country as a whole. Thus, many of today’s airlines are artificially protected from competition.
Four Basic Principles of International Aviation Regulation
• Sovereignty: Article 1 of the Convention states that “Each State has complete and exclusive sovereignty over the air space above its territory”.
• Equal Opportunities: The preamble states that international aviation regulation must take due account of the equal rights of all states to participate in the traffic.
• Non-discrimination: International aviation regulation must be “without distinction as to nationality”
• Freedom to Designate: Each state has complete freedom in designating the national airlines which will operate air services.
Plate 2.1: Four Basic Principles of International Aviation Regulation (source: Wheatcroft, 1994)
37 A Geographical Analysis of Air Hubs in Southeast Asia
Home Country A Country B First Freedom Country
Home Country A Country B Second Freedom Country
Home Country A Third Freedom Country
Home Country A Fourth Freedom Country
Home Country A Country B Fifth Freedom Country
Home Country A Country B Sixth Freedom Country
Home Country A Country B Seventh Freedom Country
Home Country A Eighth Freedom Country
Cabotage Rights
Home Country A Ninth Freedom Country
Non-traffic rights Normal traffic rights Antecedent traffic rights
Figure 2.4: The Nine Freedoms of Air (source: author)
38 A Geographical Analysis of Air Hubs in Southeast Asia
FREEDOMS OF AIR
First Freedom of the Air - the right or privilege, in respect of scheduled international air services, granted by one State to another State or States to fly across its territory without landing (also known as a First Freedom Right).
Second Freedom of the Air - the right or privilege, in respect of scheduled international air services, granted by one State to another State or States to land in its territory for non-traffic purposes (also known as a Second Freedom Right).
Third Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted by one State to another State to put down, in the territory of the first State, traffic coming from the home State of the carrier (also known as a Third Freedom Right).
Fourth Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted by one State to another State to take on, in the territory of the first State, traffic destined for the home State of the carrier (also known as a Fourth Freedom Right).
Fifth Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted by one State to another State to put down and to take on, in the territory of the first State, traffic coming from or destined to a third State (also known as a Fifth Freedom Right).
ICAO characterizes all "freedoms" beyond the Fifth as "so-called" because only the first five "freedoms" have been officially recognized as such by international treaty.
Sixth Freedom of The Air - the right or privilege, in respect of scheduled international air services, of transporting, via the home State of the carrier, traffic moving between two other States (also known as a Sixth Freedom Right). The so-called Sixth Freedom of the Air, unlike the first five freedoms, is not incorporated as such into any widely recognized air service agreements.
Seventh Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted by one State to another State, of transporting traffic between the territory of the granting State and any third State with no requirement to include on such operation any point in the territory of the recipient State, i.e the service need not connect to or be an extension of any service to/from the home State of the carrier.
Eighth Freedom of The Air - the right or privilege, in respect of scheduled international air services, of transporting cabotage traffic between two points in the territory of the granting State on a service which originates or terminates in the home country of the foreign carrier or (in connection with the so-called Seventh Freedom of the Air) outside the territory of the granting State (also known as a Eighth Freedom Right or "consecutive cabotage").
Ninth Freedom of The Air - the right or privilege of transporting cabotage traffic of the granting State on a service performed entirely within the territory of the granting State (also known as a Ninth Freedom Right or "stand alone" cabotage).
Plate 2.2: Freedoms of Air (source: ICAO)
39 A Geographical Analysis of Air Hubs in Southeast Asia
The theoretical advantages of free competition and non-intervention by
governments in the market mechanism can be generalized to mean a freedom of
pricing of air services (possibly lower fares) and a freedom of routes (more choice).
Airlines are also given more flexibility to respond quickly to changes in the external economic environment under this model. The competitive aura of deregulation is an incentive for new airlines to form and compete with established carriers due to the lowering of barriers of entry. However, deregulation also has its fair share of potentially detrimental effects, which could lead to, amongst others, safety levels
being compromised as a result of cost cutting by airlines (although it should be stated
that overall safety levels have actually improved under liberalization); small
communities being neglected or deprived of air services; deterioration in overall
airline service quality; and the possibility of price wars between carriers – very much
congruent with some of the downsides of hubbing earlier mentioned.
Wheatcroft (1994: 27) observed that “the worldwide aviation system is being
transformed by irresistible pressure which will ensure that […] the regulatory regime
will be liberalized and the airline industry will become a transnational business
dominated by a small number of very large carriers with global networks and
communication systems”. Although Wheatcroft’s prediction has not been totally
realized today, we can observe a trend of increased consolidation in the industry with
many significant mergers and acquisitions, most notably the Air France - KLM
merger in 2003. The impetus towards liberalization in air transport can be attributed to
various factors, amongst others, the increased recognition of the importance of
tourism; global trends towards liberalization and deregulation in other global
industries; worldwide moves towards privatization of airlines; the marketing
40 A Geographical Analysis of Air Hubs in Southeast Asia advantages of very large airlines; mergers and alliances; computer reservation systems and communication systems; increased acceptance of foreign ownership; and a move towards a multilateral system where code sharing and interlining agreements take place between airlines (Wheatcroft, 1994: 27).
The classic and most widely cited case of deregulation in the airline industry is the case of the US civil aviation industry which was deregulated in 1978. It was arguably a politically sanctioned move, with both the liberal Democrats and the conservative Republicans wanting the US airline industry to become like any other private industry. Consumers were also generally in favour of increased competition and better choice between airlines. US-based airlines were divided over this move towards deregulation, with some like United Airlines in favour as it saw that it could benefit as it had resources and route network advantage and felt it could out-compete its rivals, whilst other airlines were generally more skeptical and cautious about losing their market share which was heavily protected and regulated.
United States Europe Pacific Asia
Regulated markets with government Deregulation started in 1978 Deregulation started in 1997 ownership Low population density and High population density and Dispersion of urban centers but high dispersed urban centers concentrated urban centers regional concentrations Relatively open air spaces and Congested gateway airports Congested air spaces and airports airports underutilized regional airports High speed rail is a direct Rail minor competitor; Cars compete competitor; Rail is a minor Except for Japan, less competition for short distances competitor; Cars compete for short from other transport modes distances Little loyalty to carriers (pricing and Some lingering loyalty to carriers Strong “imposed” loyalty to carriers frequent flyers) Price transparency (no hidden costs Price becoming transparent Price not transparent in advertised prices, e.g. taxes) Limited income growth and limited Limited income growth and more Growing income levels leisure leisure time Table: 2.3: Characteristics of Major Air Travel Markets (source: Baseler, R. (2003), cited in Rodrigue, J. (2005))
41 A Geographical Analysis of Air Hubs in Southeast Asia
As a result of deregulation, the US civil aviation industry enjoyed tremendous growth. Safety levels were not compromised as predicted and both accident and fatality rate decreased substantially. Service quality, on the other hand, was observed to have taken a turn for the worse, as desire to keep load factors as high as possible led to passenger discomfort as the number of passenger seats per aircraft had to be maximized. Service to small communities declined and prices for air travel for these people increased. Perhaps the most noteworthy impact of deregulation in the USA was a spatial reorganization of the air transport network of certain regions from the conventional point-to-point system to a hub-and-spoke network which allowed for greater frequency of services and the ability for airlines to penetrate new markets.
However, hubbing also meant that on-time records for flights were poor due to congestion of airports and airways, often accentuated by the “domino effect” of one particular flight being late. Queues to embark and disembark became much longer at hub airports, and there were now peak hours during the day when many flights simultaneously touched down at particular airports.
For the case of Southeast Asia, total airline deregulation for the region has not yet become a reality even though there has been partial deregulation in Malaysia (Air
Asia), Indonesia (LionAir, etc) and Singapore (Tiger Airways etc) with the entrance of LCCs. In 1994, Indonesia, Malaysia and Thailand signed a joint Memorandum of
Understanding under which regional flights would be encouraged within the 'Northern
Growth Triangle'. Each of the signatories was free to designate two airlines that would be permitted to operate whatever capacity they wished between secondary airports on a scheduled or charter basis, carrying passengers and/or cargo. In situations where this
42 A Geographical Analysis of Air Hubs in Southeast Asia
arrangement was at variance with air services agreements, the latter were to take
precedence. Since then, the Philippines and Brunei have joined and the bloc is known
as BIMP-EAGA (Brunei, Indonesia, Malaysia, Philippines - East Asia Growth Area)
and it covers a market with a potential of 250 million air travelers (Elek et al., 1999).
At the 9th Association of Southeast Asian Nations (ASEAN) Transport Ministers
Meeting in Yangon in October 2003, the leaders affirmed that an efficient and integrated transport system is key for ASEAN to integrate with the global economy.
Thus, a regional action plan for staged and progressive implementation of Open Skies
(unrestricted capacities, frequencies, routes and landing rights) arrangement in
ASEAN as part of the “ASEAN Transport Action Plan 2005-2010” was developed.
More recently, in a series of high level meetings between ASEAN leaders, a framework was set for the progressive deregulation of the ASEAN market beginning in 2008. This would grant unlimited access to ASEAN carriers to all markets in the region, including the much sought after secondary cities of Indonesia and Malaysia which have had relatively high barriers of entry to foreign carriers. Even on the domestic front, deregulation is sought after by many secondary airlines as they seek to break the monopoly of national carriers on domestic routes (e.g. Air Asia vs Malaysia
Airlines). In reality however, the failure to take action and indulgence in rhetoric is characteristic of the ASEAN Way and many more hurdles lie ahead in the road for complete deregulation.
2.9 Chapter Summary
To fully understand the phenomenon known as “hubbing”, some background
and contextual knowledge of key developments and trends in aviation and air
transport is required. This chapter is an attempt at providing some of this basic
43 A Geographical Analysis of Air Hubs in Southeast Asia
knowledge. Apart from providing a review of the research and literature available on
the hubbing phenomemon, I have also explained the special significance of geography as an academic discipline and how it is well positioned to studying hubbing. A brief conceptual examination of the notion of a “hub” has also been provided, identifying some of the key benefits and pitfalls of the phenomenon to its respective stakeholders
– the airports, the airlines, the passengers and the general community at large. Finally, the discussion is situated in the context of two of the most noteworthy developments in aviation history – that of regulation and liberalization of the industry which have shaped the world of aviation as we know it today.
44
CHAPTER THREE AIR HUB COMPETITION AND DEVELOPMENT IN SOUTHEAST ASIA
A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER THREE: AIR HUB COMPETITION AND DEVELOPMENT IN SOUTHEAST ASIA
3.1 Introduction
This chapter seeks first to provide a brief overview of the developmental process of air hubs in Southeast Asia and, second, to illustrate how they compete with each other on various fronts and scales. Although the title of this chapter (and this whole thesis for that matter) uses the context of Southeast Asia as a region, I will focus on the three main hub airports in this region – Singapore (SIN), Kuala Lumpur
(KUL) and Bangkok (BKK).
The reasons for selecting these three airports are somewhat intuitive. The volume of passenger traffic passing through these three airports far exceeds any other airport in the region and the geographical proximity of these three airports position them as fierce competitors, especially on the inter-continental market where hubbing is dominant. Furthermore, all the three airports serve as important gateways to the
Southeast Asia region and have high levels of intra- and international connectivity.
Finally, all of these three airports have a strong and dominant hub carrier (the national or flag carrier) operating out of them, contributing to a large proportion of transiting traffic. All the three hubs exhibit characteristics of “trunk-feeder” hubs and “Sixth
Freedom” hubs. Some of them also serve as “mini-hubs” for other airlines as a stopover-point; making them “convenient hubs” because of their geographical location (see Chapter 2 for a full typology of air hubs). Even within the three hubs, there remains some differentiation as KUL has some ground to make up before catching up with SIN and BKK. Based on year 2000 data, “Singapore and Bangkok are the busiest fifth freedom hubs in the region. Singapore hosts the most intra-Asia
45 A Geographical Analysis of Air Hubs in Southeast Asia
fifth freedom sectors, while Bangkok has the most overall […] Kuala Lumpur, by contrast, hosts fewer fifth freedoms than most Asian capitals largely because of its proximity to Singapore” (Oum & Yu, 2000: 25). SIN and BKK’s prominence as “fifth freedom hubs” can largely be attributed to the large number of foreign carriers that operate long-haul intercontinental services through them.
Of the remaining airports in Southeast Asia, most of those in Indochina are
poorly developed and have few international links. These include the airports of Laos,
Cambodia, Vietnam and Myanmar where the majority of air links lie within the region
and within the domestic market, with few intercontinental flights since BKK serves as
the primary hub for the sub-region. The volume of transiting traffic through these
airports is minimal. Although Vietnam has plans for a new airport terminal to market itself as an Indochina hub, the project is only scheduled to start in 2007 and it is too
early to assess any potential impacts.
As for the airports in the archipelagic section of the region, most are quite
developed with a sizable amount of international traffic. These include the airports of
Brunei, Philippines and Indonesia. In the case of Brunei, due to its limited population
and market, there exists very little O&D traffic. Some hubbing takes place as
passengers may fly into Brunei from regional destinations and then transit onto one of
the few trans-continental routes operated by Royal Brunei Airlines to destinations in
Europe and Australia. For the Philippines, there is a strong domestic network
converging in Manila owing to the archipelagic nature of the country. On the
international front, Manila has a network focus on the Asia Pacific region with the
dominant carrier Philippine Airlines operating flights to many points in East Asia and
46 A Geographical Analysis of Air Hubs in Southeast Asia
North America. Thus, Manila serves as a secondary hub on the trans-pacific market
but the relative weakness of Philippine Airlines means that that the full potential of
Manila as an international hub is not realized due to lack of equipment (aircraft) and
poor frequencies and connectivity.
Finally, the case of Indonesia is extremely interesting and warrants some
discussion. It would not be erroneous to say that Indonesia has two hub airports in the
form of Jakarta (Soekarno-Hatta International Airport) and Denpasar International
Airport (Bali). This somewhat extraordinary arrangement is due to the fact that a
sizable proportion of inbound traffic is tourist-led with a focus on the tourist island of
Bali. Thus, many international direct links are available through Denpasar, especially
in the East Asia and Australian markets where the flag carrier Garuda Indonesia
operates direct flights from many destinations to Denpasar but not Jakarta. In some
instances, passengers flying on Garuda may encounter a peculiar situation of having
to transit in two hubs to reach their final destination. Comparatively, Jakarta seems to have fewer international links, especially since Garuda does not currently fly to any destinations in Europe, North America or Africa, making trans-continental hubbing much less likely. However, Jakarta being the capital city of Indonesia has its demand for international routes as well, although the market is derived mainly from business travelers. As a matter of fact, a lot of outbound traffic from Indonesia is channeled through SIN, KUL or BKK due to their vastly superior connectivity and frequencies, and perhaps better products offered by the hub carriers of these airports. The large
archipelagic nature of the country warrants that a strong domestic network is
provided, with the capital city of Jakarta as the hub.
47 A Geographical Analysis of Air Hubs in Southeast Asia
Thus, although many other international and secondary airports within the
region do serve the hub function, the total volume of direct and connecting traffic
languishes far behind the “Big Three” due to a variety of factors mentioned above.
Owing to practical constraints and empirical concerns, the remainder of this thesis will centre on the “Big Three” due to their relative importance and dominance of air
traffic within the region, but that is not to say that no other airport serves the hub
function as I have explained above.
INTERNATIONAL PASSENGERS Airport Total % Change 1 London (LHR) 61 269 041 0.4 2 Paris (CDG) 52 230 713 5.9 3 Frankfurt (FRA) 46 282 363 4.9 4 Amsterdam (AMS) 45 987 504 2.5 5 Hong Kong (HKG) 43 780 000 8.1 6 Singapore (SIN) 33 677 680 7.8 7 Tokyo (NRT) 33 432 117 23.9 8 London (LGW) 30 168 343 4.5 9 Bangkok (BKK) 29 835 006 7.4 10 Dubai (DXB) 28 456 681 16.3 11 Seoul (ICN) 28 268 885 9.3 12 Madrid (MAD) 25 371 111 11.9 13 Munich (MUC) 21 770 493 10.2 14 London (STN) 21 097 978 8.0 15 Dublin (DUB) 20 590 815 14.4 16 Taipei (TPE) 20 373 233 4.7 17 New York (JFK) 19 863 435 6.0 18 Milan (MXP) 19 014 217 14.0 19 Copenhagen (CPH) 18 970 214 3.3 20 Zurich (ZRH) 18 749 565 9.5 21 Manchester (MAN) 18 619 980 (0.3) 22 Rome (FCO) 17 347 211 7.1 23 Toronto (YYZ) 17 257 058 1.2 24 Los Angeles (LAX) 16 837 171 (3.7) 25 Brussels (BRU) 16 634 336 3.1 26 Shanghai (PVG) 16 372 907 11.8 27 Vienna (VIE) 16 370 536 6.1 28 Barcelona (BCN) 16 086 139 13.7 29 Palma De Mallorca (PMI) 16 023 290 5.5 30 Kuala Lumpur (KUL) 15 283 461 5.6 Table 3.1: International Passenger Traffic for 12 months ending February 2007 (source: ACI, 2007)
48 A Geographical Analysis of Air Hubs in Southeast Asia
3.2 The Nature of Air Hub Competition in Southeast Asia
As explained earlier in Chapter Two, air hubs originated from the USA and
the hub-and-spoke model later gained prominence in Europe. The Asian airlines
began organizing their own schedules around the classic hub-and-spoke much later
and most schedules were still geared towards “local” rather than “flow” markets as
these markets have historically been more lucrative (PATA, 2000). Thus, airlines in
their earlier days concentrated on origin-and-destination (O&D) predominantly from
or to their home countries rather than focusing on the market for international long- haul transit passengers. The 1990s saw the introduction of airline alliances, and subsequently, the close synchronization of the alliance partners’ schedules at international hub complexes.
Hub airports gained prominence in Southeast Asia due to two main reasons – that of geographical location and technological impossibilities. The first factor is intuitive. SIN, KUL and BKK all lie within two hours of flying time from each other
and together as a cluster, the three airports are located conveniently at the
geographical centre of Southeast Asia and very significantly, at the intermediate point between Europe and Australia; to a lesser extent between Europe and East Asia, and between the Indian subcontinent and the west coast of the USA. Owing to the massive importance of Southeast Asia as an aviation hub-stopover point, the significance of sixth freedom traffic carried through SIN, BKK and KUL en route to many regional and international destinations is disproportionately large as compared to other airports of the world. In particular, the airports’ geographical position makes them an essential and ideal stopover point on long-haul Europe-Oceana routes. Thus, they not only serve as intraregional hubs connecting distant regions on the globe, but also as nodes
49 A Geographical Analysis of Air Hubs in Southeast Asia for interregional networks as well, providing feeder access to many secondary
Southeast Asian cities (Bowen, 2000).
Because of aircraft range restrictions, a refueling stopover is often necessary on these long haul routes. In instances where such routes are possible via a non-stop flight, the high per unit cost of such flights due to escalating fuel prices and the long flying time may deter airlines from offering such products and passengers from buying them. One such example is the London-Perth route which has for many years been technologically impossible to achieve with a direct flight, but in recent years, advances in aircraft technology now render such a route possible but maybe not economically viable. This is why carriers like Qantas maintain a “mini-hub” in
Singapore, consolidating all Europe-bound traffic from Australian cities before putting them on a long-haul flight. Perhaps one possibility for Qantas would be to consolidate all Australia-London traffic in a future Australian hub (e.g. Perth) instead.
If this were to happen, Southeast Asia’s hubs could tenably lose out on a lucrative route. An illustration of how a foreign airline like Qantas uses Singapore as a hub is provided in Chapter Five.
The impact of super capacity aircraft like the A380 favours the development of hubs as they will link high-traffic hubs which are in turn fed by secondary traffic from smaller regional destinations. This is why the first commercial route to be flown on the A380 will be SIN-SYD by SIA5 as it can make full use of its hubbing
5 It is arguable that “One-upmanship” among the airlines and countries concerned also matters in deciding the launch customers of new aircraft. (One-upmanship refers to the systematic and conscious practice of making one's associates feel inferior and thereby gaining the status of being "one-up" on them.)
50 A Geographical Analysis of Air Hubs in Southeast Asia capabilities to fill up the large aircraft. It is also little wonder why some of the first customers of this new aircraft are SIA, THAI and MAS respectively.
The key trend we can observe is that of keen competition between the various hub airports. PATA (2000) has identified a number of factors which make a good hub airport (see Table 3.2) whilst many of the factors are inherent and cannot be changed easily (e.g. geographic location), others are variable and can be altered as the airports seek to attract more airlines to land at their airports as well as passengers to use their airports. I further categorize such competition into two categories – the functional and experiential. Hub airports compete to offer the best connectivity and frequency for passengers. Where possible, passengers generally prefer shorter layover times at their transit airports. This is achieved by working closely with airlines to offer synchronized flights schedules through “banking” flights into different clusters throughout the day. This is only possible if the airport has the operating capacity to process high volumes of passengers and cargo/luggage in the shortest possible time.
All three airports in this study have world-class facilities and should find this a breeze
(at least based on their hardware and infrastructure). The airport can also seek to attract more airlines to land by lowering landing fees and parking charges. However, slot capacity due to space and terminal constraints are common problems experienced by many hub airports, and the solution would be either to expand existing airside capacity or to reschedule flights to ease congestion periods, the latter being seldom used due to hubbing and passenger considerations.
Apart from competing on the functional front, increasingly hub airports have shifted towards the experiential component of enticing more passengers to choose to
51 A Geographical Analysis of Air Hubs in Southeast Asia
fly via their airport. This is done by maximizing their experience during transit by
providing a variety of amenities and shopping, recreational and food establishments.
By definition hub airports should have a large proportion of transiting passengers who
have time to spare whilst waiting for their next flight, and by providing commercial
and retailing opportunities within the transit area, the passenger experience is not only
enhanced, but the airport revenue through non-aeronautical rent collection increases –
very much a win-win situation. Other amenities catering to passenger comfort (e.g.
toilets, lounge seats, transit hotel, showers etc) as well as those improving the general
“feel” of the airport (landscaping, architecture etc) should not be forgotten too as airports seek to carve a niche and differentiate themselves from the competition.
Air hubs nowadays do not just refer to individual airlines, but these airports
compete aggressively to attract the lucrative business of various airline alliances to
use them as their stopover airport. For example, both BKK and SIN are bases for the
Star Alliance with specialized ticketing counters, information desks and even entry
into the respective national carriers’ lounges for alliance members. It is still uncertain
if the alliance will eventually consolidate all its operations at one Southeast Asian
airport, or continue to operate a dual-hub model for the future.
SIN BKK KUL Large domestic market & &&& &&& Large international market &&& &&& && Large “regional catchment area” &&& &&&& &&& Suitable geographic location &&&& &&&& && Strong and vibrant economy &&&&& &&& &&&& Liberalization attitudes and trends &&&&& &&& &&& Good passenger facilities &&&& &&&& &&&& Adequate terminal and slot capacity &&& && &&&& Low aircraft handling fees && &&& &&&& Efficient screening procedures &&&& && &&& Integration with public transport &&& & && Table 3.2: Comparison of SIN, BKK & KUL (adapted from PATA, 2000)
52 A Geographical Analysis of Air Hubs in Southeast Asia
3.3 The Developmental History and Overview of Selected Airports
The following section outlines some of the developmental histories, existing
facilities and capacities and well as future plans for the airports in question. Also,
some of the intricacies and problems faced by each airport are highlighted within the
context of the competitive environment for commercial aviation in Southeast Asia.
3.3.1 Singapore Changi Airport
Without doubt, Singapore’s Changi Airport has grown to be one of the most successful and arguably ‘world-class’ airports in the world. In aviation as in many other areas, Singapore’s greatest handicap is its size. There is absolutely no domestic market for air transport within the island-state. There is also a limit to the number of outbound international passengers that can be generated from Singapore’s four million (approx.) inhabitants. However, it must be added that Singapore’s inhabitants are also amongst the most well-traveled in the world. In 2004, there were almost three million outbound air trips made by Singaporeans (Singapore Tourism Board, 2007), a hefty proportion of them made by frequent business travelers, but the share of leisure trips has also increased over the years. Much of Changi’s success is linked to the success of Singapore Airlines (SIA). An abbreviated history of the development of
SIA which happens to be the flag carrier and main user of Changi Airport can be found in Raguraman’s (1997) article. The relationship between Changi and SIA could be best described as ‘symbiotic’.
Changi is also one of the Southeast Asian hubs for the Star Alliance group of
airlines (the other being BKK). This has a considerable impact on its traffic numbers
53 A Geographical Analysis of Air Hubs in Southeast Asia
and well as its air network. Changi Airport’s developmental strategy can be succinctly summarized by achieving distinctiveness and comparative advantage in three dimensions – its capacity, its efficiency, and its appeal to the traveling public (Bowen,
2000: 31).
Civil aviation started in Singapore in 1911 although Singapore’s first airport
was constructed at Seletar by the British in 1929. The city’s first commercial airport
at Kallang was officially opened on 12th June 1937. In its first year of operation,
Kallang airport handled 2,735 passenger movements and 32 tonnes of airmail in the whole of British-governed Malaya. It was arguably the finest airport in the British
Empire, serving the regular flights which linked Singapore with towns on the Malay
Peninsula.
With advent of the Second World War, civil aviation in Singapore came to a
complete halt. The post war resurgence of demand for air travel meant that Kallang
quickly reached its capacity and a decision was taken to build a new airport in Paya
Lebar. Subsequently, the new Paya Lebar Airport was officially opened on the 20th of
August 1955. Singapore Airlines was formally formed in 1972 as part of a restructuring process of the defunct Malaysia-Singapore Airlines (MSA) whose model was no longer workable with the independence of Singapore as a sovereign state from
Malaysia in 1965. By 1960, the airport was handling more than 300,000 passengers and 30,000 aircraft movements which subsequently increased to 1.7 million passengers and 51,000 aircraft movements in 1970. In 1979, passenger movements grew to over 6.4 million. The increase in air traffic led to numerous extensions of passenger terminals, runways, parking aprons etc in Paya Lebar Airport, but it was
54 A Geographical Analysis of Air Hubs in Southeast Asia
evident that the airport was not able to cope with the demand due to space limitations
which inhibited its further expansion. The introduction of newer and larger aircraft
like the DC-8 and the Boeing 707 put a further strain on the airport’s resources. The
decision to build a new airport at its present site in Changi was made in 1975. Located at the eastern tip of Singapore some 20 km from the city centre, Changi was an ideal location as it had adequate space of future expansion, and noise pollution would not pose a problem as it was a relatively uninhabited part of Singapore. Its location also enables planes to approach via the sea and parts of uninhabited Malaysia, greatly reducing the risks and impacts of the approaching aircraft, enabling the airport to function 24 hours.
More than half of Changi Airport 's total land was reclaimed from the sea. To
make way for the construction of Changi Airport in 1975, almost 200 hectares of
swamp land area were cleared. In addition, 12 million cubic metres of earth from
nearby hills were removed to fill the swampy ground. Reclamation from the seabed
was done using seven cutter-suction dredges round the clock. The sand mixed with
water was pumped direct from the dredging sites to the reclamation area. The job was
completed within 29 months and more than 40 million cubic metres of sand were used from the seabed. In preparing the site, some 558 buildings were demolished, and over
4000 graves exhumed (Kishnani, 2002: 29). The social impact of relocating the original inhabitants of the site had to be carefully and sensitively managed.
Singapore Changi Airport was opened for operation on the 1st of July 1981
and its official opening ceremony took place on the 29th of December of the same year. In its first year of service, Changi Airport handled 8.1 million passenger
55 A Geographical Analysis of Air Hubs in Southeast Asia
movements, more than 200,000 tonnes of cargo and approximately 63,100 aircraft
movements (Singapore Changi Airport Website, www.changiairport.com.sg).
Phase 1 development of Changi Airport included the completion of the
passenger terminal building 1, a runway, 45 aircraft parking bays, a huge maintenance
hangar, a fire station, workshops and administrative offices, an airfreight complex,
cargo agents buildings, in-flight catering kitchens and a 80-metre high control tower.
With Phase 1 completed in 1981, Phase II development started, comprising a second
runway, taxiways, 23 aircraft parking bays, a second fire station and a third cargo
agent building. The construction of Terminal 2 followed in 1986, which included the
associated roadways, two multi-storey carparks, a people mover system (Changi
Skytrain) and a baggage transfer system between the two terminals. A 24-hr Changi
Airfreight Centre (CAC) was also established to facilitate the movement of freight through the airport, attracting many shippers and freight forwarders due to the customs-exempt Free Trade Zone (FTZ) available within the centre and numerous distriparks around the island. The island’s Mass Rapid Transit (MRT) line was also extended to Changi Airport in 2002, giving visitors and airport users an inexpensive yet efficient mode of transport to and from the airport. The construction of a third terminal to bring the airport’s capacity to 64 million upon its completion and operation in 2008 is well underway since work started in 2000. A new low-cost terminal has also been constructed to cater to the needs of low-cost-carriers in the region. On the other hand, a VIP terminal offering exclusive premium services was
also established in 2006 to cater to the high-end market. In short, Changi Airport had
a “masterplan that embodied a strategy for growth, terminals that incorporated
systems for passenger and baggage movement and optimized the number of links for
56 A Geographical Analysis of Air Hubs in Southeast Asia
docking aircraft” (Kishnani, 2002: 24). Phang’s (2003) article elucidates and
summarizes the various policy debates which have led to Singapore’s policy of
“infrastructure overprovision” as shown in the case of Changi Airport in anticipation
of future demand.
According to the International Air Transport Association (IATA) statistics for
2003, Changi Airport ranks 33rd in the world for total number of passengers handled,
with over 23 million international passengers as there is no domestic market (IATA,
2004). In 2004, Changi was ranked 26th in the world for total passenger traffic (ACI,
2005). Although still nowhere near the biggest American airports in terms of passenger numbers due to the non-existent domestic market, Airports Council
International (ACI) puts Changi 6th in the world in terms of international passenger
traffic, and 5th in terms of international freight as of April 2005 (ACI, 2005). As of
September 2005, Changi Airport is a stop for 81 scheduled airlines with 3,912 flights
weekly to 181 cities in 56 countries. In 2004, the airport handled over 30 million
passenger movements, 1.75 million tonnes of cargo and over 184,000 aircraft
movements (Singapore Changi Airport Website, www.changiairport.com.sg).
3.3.2 Kuala Lumpur International Airport (KLIA)
The first recorded flight in Malaya (then known) took place in June 1911
when an Antoinette Monoplane landed at the Race Course in Ampang Road, Kuala
Lumpur. The first commercial flight landed in 1924 when a Fokker FVII of
Koninkujke Luchvaat Maaeschapaj (KLM) landed in Alor Setar. This heralded the
start of commercial aviation in Malaysia and subsequently Alor Setar became the
centre of aviation activity in Malaysia when KLM started fortnightly services in 1929.
57 A Geographical Analysis of Air Hubs in Southeast Asia
Airstrips were built all over the country by the British with one of the first aerodromes
located at Sungai Besi in Kuala Lumpur. By the late 1930s, Sungai Besi Aerodrome
was commissioned as an all-purpose landing ground and had become the focal point
of early Malaysian aviation. In 1937, Malayan Airways Limited, the early predecessor
of Malaysian Airlines was inaugurated. The Sungai Besi airport was further expanded
in 1948 from its early origin as an “attap shed” (Malaysia Airports, 1993). In 1956, it
was further upgraded and given the status of an international airport with the first
flight to Europe taking off that same year.
The declaration of independence for the Federation of Malaya in 1957 gave
impetus for further developments in civil aviation as the Federation became a contracting state of the International Civil Aviation Organisation (ICAO) upon independence. The current airport at Sungei Besi had outgrown itself and a proposal
to construct a new international airport at Subang, some 22.5 kilometres outside the
federal capital of Kuala Lumpur, was mooted in late 1959. After almost 5 years of
construction, the new RM52 million KLIA was officially opened on the 30th of
August, 1965. Whilst the new airport served its purpose well throughout the 1970s
and 1980s, a series of extensive renovation works was carried out in the 1980s to
allow the airport to accommodate bigger aircraft like the Boeing 747 series. An air
cargo terminal was built and a second terminal, Terminal 2, was constructed in 1982
whilst Terminal 1 was also being enlarged and renovated. A decision was made to
convert Terminal 2 of Subang KLIA for domestic flights in 1989 whilst allocating
Terminal 1 for international flights to allow for greater handling efficiencies.
However, rapid economic growth in the 1980s rendered the Subang facility
inadequate and a decision was taken in July 1991 to construct a new KLIA. The
decision was highly controversial on multiple grounds. The location, over 70 km from
58 A Geographical Analysis of Air Hubs in Southeast Asia
Kuala Lumpur was viewed as inconvenient; the price tag, and its ballooning from
original estimates, was steep; and critics alleged that, contrary to the government's
assertions, Subang could still be expanded. Indeed, work on Subang continued
simultaneously with KLIA's construction. Subang's new Terminal 3 was opened in
December 1993 and Terminal 2 was refurbished in 1995, only three years before
KLIA's opening.
The new KLIA was to be built at a forested area named Sepang south of Kuala
Lumpur. This was “the largest civil engineering project ever undertaken in Malaysia”
(K.L. International Airport Berhard, 1998: 18) costing almost RM9 billion. 100
square kilometres of land were gazetted for the three-phase construction process with
the first phase scheduled for completion in 1997. Currently, KLIA has two full service
4000-metre long runways with a plan to add two more in time to come. Other
facilities include a fully automated high-speed belt conveyor system, an aerotrain
shuttle linking the Main Terminal Building and the Satellite Terminal, a VIP complex,
full-scale mosque and most recently a dedicated terminal for low-cost carriers. The
airport is linked to Kuala Lumpur city by a series of expressways and an express rail
link, both cutting through the administrative capital of Putrajaya. Aesthetically, the
concept of “forest in airport, airport in forest” was employed as a general design guide
to showcase the tropicality of the airport with its sub-urban location and the intelligent
use of indoor vegetation and lighting. The new KLIA was an integral part of
Mahathir’s “Wawasan 2020” plan to turn Malaysia into a developed economic
country by year 2020.
The inauguration of the airport on June 27, 1998 — one week before the new
Hong Kong International Airport — was marked with significant problems.
59 A Geographical Analysis of Air Hubs in Southeast Asia
Aerobridge and bay allocation systems broke down, queues formed throughout the
airport, and baggage handling broke down badly, with lost bags and waits of over five
hours. Most of these issues were sorted out eventually, but the baggage handling system continued to be plagued with problems and was finally put up for a new complete replacement tender in 2006. The airport also had to contend with the East
Asian financial crisis that had started in 1997, which decimated passenger traffic in
Malaysia and the region. Passenger growth was initially negative and airlines that had started flights to KLIA, including All Nippon Airways, British Airways, Lufthansa and Northwest Airlines, soon terminated their services due to unprofitability. The first phase of the airport was designed with a capacity of 25 million passengers per year, but 1999, the first full year of operations, saw only 13.2 million (Asian Economic
News, 2001). However, traffic did eventually increase with 21.1 million passengers recorded in 2004 and 23.2 million in 2005 — although this, too, fell short of the original estimate of 25 million by the year 2003.
Like its Changi counterpart, KLIA has also won numerous awards and
accolades, providing a testament to its excellence and operating efficiencies. The
latest among others in 2006 were, "Best Airport in the 15-25 million passengers per
annum category in the AETRA6 2005 results" and "Third place for both Best Airport
Worldwide and Best Airport in Asia/Pacific categories in the AETRA 2005 results".
The airport also handled over 653,000 tonnes of cargo and 182,000 aircraft
movements in 2005 (ACI, 2006).
6 AETRA is a bipartisan ACI/ IATA Customer Satisfaction Measurement and Benchmarking Program which was established at the beginning of 2004. AETRA is taken from the latin word "aethra" meaning the upper air, clear sky and is not an acronym.
60 A Geographical Analysis of Air Hubs in Southeast Asia
3.3.3 Bangkok Suvarnabhumi International Airport
The first airport in Thailand was Sa Pathum Airfield which was part of the Sa
Pathum Horse Racing Course. The first flights to the airfield were on March 8, 1914
and consisted of the first aircraft of the Royal Thai Air Force. Don Muang airport was
subsequently established and the first commerical service began in 1924 with a KLM
flight. During World War II, the airfield was used extensively by the Japanese and
was attacked by Allied aircraft on several occasions. Soon after, the Royal Thai Air
Force established a base at Don Muang, being the home of the RTAF the 1st Air
Division, consisting primarily of non-combat aircraft.
Don Muang International Airport had three terminals with two international
and one domestic terminal. International Terminals 1 and 2 are both located in the
same physical building, with the domestic terminal connected to the international
terminals through a tunnel. Managed by the Airports of Thailand (AOT) company,
Don Muang has two runways of lengths 3,700m and 3,500m. It was one of the busiest
airports in the region throughout the 1980s and 1990s, and was home to Thailand’s
flag carrier Thai Airways. As of 2005, more than 80 airlines served the airport and
over 38,000,000 passengers, 160,000 flights and 700,000 tonnes of cargo were
handled at this airport per year. In 2005 it was the 18th busiest airport in the world
and second in Asia by passenger volume (ACI, 2006). A golf course was also built in
between the two runways, the only one of its kind in the world.
As with all other airports, Don Muang soon outgrew itself and the Thai
authorities knew that a new airport was needed to meet future needs. Although the
decision to construct a new airport for Bangkok was taken in 1996, the financial crisis
of 1997 forced the idea to be shelved and construction began six years later in January
61 A Geographical Analysis of Air Hubs in Southeast Asia
2002. The new airport occupied a land area of about 324 square kilometres and is
located in a low lying marsh formally known as Nong Ngu Hao which means “Cobra
Swamp”. Land reclamation of the site took place over five years from 1997 to 2001
before actual construction could commence. The airport was named “Suvarnabhumi”
meaning Land of Gold. The airport is located in Racha Thewa in Bang Phli district,
Samut Prakan Province, about 25 km east of Bangkok.
Costing an estimated 155 billion baht (USD 5.1 billion), the airport has two
parallel runways (60m wide, 4000m and 3700m long) and two parallel taxiways to
accommodate simultaneous departures and arrivals. It has a total of 120 parking bays
(51 with contact gates and 69 remote gates), with five of these capable of
accommodating the Airbus A380. The main passenger terminal building, with a
capacity of handling 76 flight operations per hour, co-locates the international and
domestic terminals, though assigning them to different parts of the concourse. In the
initial phase of construction, it will be capable of handling 45 million passengers and
3 million tonnes of cargo per year. Long-term plans for four runways flanking two
main terminals and two satellite buildings with a combined capacity capable of
handling up to 100 million passengers and 6.4 million tonnes of cargo a year are on
the drawing board. The second phase of airport expansion involving the construction
of a satellite building south of the main terminal is expected to begin three to five
years after the completion of the first main terminal. AOT, the owner of
Suvarnabhumi Airport, announced on 21 July 2006 that a separate terminal for low- cost airlines will be built at the airport at a cost of 600 million baht (USD 20 million).
The budget terminal will be located near Concourse A of the main terminal. It will be capable of handling 15 million passengers per year. Its operating concept will be
62 A Geographical Analysis of Air Hubs in Southeast Asia
modeled after the LCC terminals of Kuala Lumpur International Airport and
Singapore Changi Airport.
The airport was due to open in late 2005, but a series of budget overruns,
construction flaws, political interference and allegations of corruption continues to
plague the project. After much speculation, former Prime Minister Thaksin
Shinawatra announced that the airport would be open by September 2006 at the latest.
Symbolic first test flights involving two Thai Airways aircraft were held on 29th
September, 2005, a previously announced deadline for opening. Full tests of the airport, with seats sold to the public, took place on July 3rd and July 29th 2006. Six airlines – Thai Airways International, Nok Air, Thai Air Asia, Bangkok Airways,
PBAir and One-Two-GO – used the airport as a base for 20 domestic flights. The first international test flights were conducted on September 1st 2006. Two THAI aircraft, a
B747-400 and an A300-600, simultaneously departed the airport on 9.19am to
Singapore and Hong Kong. On 3.50pm the same aircraft flew back and made concurrent touchdowns on runways 19L and 19R. These test flights demonstrated the
readiness of the airport to handle heavy traffic.
On 15th September 2006, the airport started limited operations with Jetstar
Asia Airways operating three flights daily to Singapore and Thai Airways
International operating some domestic flights to Phitsanulok, Chiang Mai and Ubon
Ratchathani. Bangkok Airways moved in on 21st September, AirAsia and Thai
AirAsia followed suit on 25th September and on 26th September Nok Air moved to
Suvarnabhumi Airport. During this initial phase, as well as in the previous tests, the
airport used the temporary IATA code NBK. Suvarnabhumi officially opened at
3:00am on September 28, 2006, taking over all flights from Don Muang.
63 A Geographical Analysis of Air Hubs in Southeast Asia
Many difficulties were recorded the first few days. On the first day alone,
sluggish luggage claims were rampant (the very first passenger arrival by Aerosvit
took an hour for the luggage to start coming out, and some flight did not have their
luggage coming out after four hours), many flights were delayed (Thai Airlines
claimed that 17 of 19 flights were delayed that day), and there were also failures of
the check-in system. Subsequent problems included the failure of the cargo computer
system, and the departure boards displaying the wrong information, resulting in
confused passengers (especially as unlike Don Muang, there were no "final calls"
issued). Currently, the new airport is only accessible by road as the 29km rail link to
downtown Bangkok has not been completed.
Seemingly, the airport is already operating at full capacity and there has been
renewed calls and rumours for the old Don Muang airport to reopen to cater to low
cost carriers. These calls were heeded by the temporary post-Thaksin military
government and Don Muang was reopened to serve key domestic routes in 2007.
3.4 Looking to the Future
Air hub competition and development are continual processes. As facilities
become old and outdated, new ones need to be constructed to replace the aging ones, so much so that the airport is in a constant state of evolution and renewal. Similarly, we can expect competition between the three hubs to become more intense, although we are starting to see some fallouts from the competition - “KLIA has failed to make any real headway in its attempt to close the status gap between it and rivals Singapore
Changi, Hong Kong and Bangkok […] the concourses at KLIA’s massive terminal complex are comparatively quiet” (Bates, 2002: 37). It is perhaps still too early to tell who will be the eventual winners or losers of this race, and whether all three can
64 A Geographical Analysis of Air Hubs in Southeast Asia
coexist as some sceptics feel that the geographical proximity of the three hubs means
that it will be highly unlikely that there will be sufficient traffic to make all three into
megahubs (Chin, 2001: 127). An IATA spokesman has this to say when asked about
the competition between the three hubs in the region:
“Bangkok is well-place geographically; Singapore has an efficient, world-class facility. […] KLIA meanwhile continues its quest to be yet another South-east Asian hub, but finds itself at a disadvantage as it is between the two established hubs. The financial woes of Malaysia Airlines (MAS) and its absence of membership in an alliance make this an uphill task even though KLIA is a world-class facility”
(Travel Trade Gazette Asia, 24th March 2006).
However, what the IATA spokesman failed to note was the recent rise of Malaysia’s
AirAsia which has made a huge impact on the region since its inception as an LCC in
2001 and its success has subsequently led to KUL’s increasing importance as the
region’s LCC hub. Thus, even though there is a general acknowledgement and
consensus for the importance of regional growth, especially within the ASEAN
framework, diplomacy cannot disguise the rivalry that goes on between the hubs.
Although Changi was considered to be the benchmark setter for airport service
standards (both within the region and globally) for the past two decades, a recent
airport service quality ranking released by the Airports Council International (ACI)
served as a “wake-up call” (Today, 14th March 2007) for the air hub as KLIA pipped
Changi in the annual rankings. Of the top global airports in terms of service excellence fo 2006, Seoul Incheon came in first, Hong Kong International Airport
second, KLIA third and Changi fourth. This was a drop in the ranks from 2005 where
Changi came in second behind Incheon and KLIA took third place. The fact that
KLIA overtook Changi is symptomatic of the fact that constant innovation and
improvement is needed as the competiton between air hubs have increasingly shifted
65 A Geographical Analysis of Air Hubs in Southeast Asia towards the experiential and service perspective from the traditional functional aspects. One commentator even went to the extent to say that airports now must learn to “excite” as “customers expectations are rising and they will benchmark airports against what they have achieved and not what others have failed to provide” (Today,
20th March 2007). This is especially pertinent as some kind of tailor-made customization of services is required as on one hand frequent flyers look for swift and hassle-free airport experiences with minimum contact with staff whilst conversely leisure flyers place considerable emphasis on friendly and courteous staff. In another key quality survey, the Skytrax airport rankings categorized Changi as a five-star airport, together with Incheon and HKIA. KLIA was deemed a four-star airport whilst
Bangkok Suvarnabhumi was categorised as a three-star airport (Skytrax website,
2007). Overall, the high rankings of these Asian airport hubs attest to the strong competition amongst Asian airports even on the global front.
Already, the hubs have in place extensive plans for the future, with
Suvarnabhumi leading the fray, expecting to achieve full capacity of 45 million by the end of 2007, and the planned new low cost terminal will add another 17 million to its eventual but not impossible target of 100 million (Today, 2/10/2006). Changi
Airport’s Terminal 3 will bring its own capacity to 64 million by 2008, housing the dominant carrier SIA in the new ultra-modern complex. Not to be left out, KLIA plans to create Gateway Park – a huge commercial and recreational area devoted to non-aeronautical activities that will incorporate the existing Formula One racing circuit and boast a new business park, housing, retail and leisure activities. This is in line with Kasarda’s idea of an “Aerotropolis” (cited in Lindsay, 2006) where he puts forth the point that future cities will be airport-oriented and built around existing airport infrastructure.
66 A Geographical Analysis of Air Hubs in Southeast Asia
Apart from infrastructural investment, another key trend taking place globally is the privisation of airports into commercial entities. Currently, of the three airports included in this study, only Singapore’s Changi Airport remains wholely government- run through the Civil Aviation Authority of Singapore (although it may be fair to say that CAAS have been increasingly “marketized” with its own investment branch and control autonomy). Both Subvarnabhumi and KLIA are run as semi-private entities.
An article published in The Straits Times cogently summarised the key issues involved with the privatisation of airports with the central debate being the fear that corporatisation and privatisation may result in lower service standards. However, a commercially driven entity would do well in maximising profits and efficiencies although others have argued that in the instance of Changi, it is by many yardsticks comparable if not better off than the many privately-run airports in the world today.
Champions of privatisation note that it would allow staff to be better compensated and
reduce the risk of losing talented officers to other airports (The Straits Times, 20th
February 2007). There has been no official word about plans to privatise Changi, but with intense competition from KUL and BKK and even from airports outside the region like HKIA and Dubai, the Singapore government may be hard pressed in the future to maintain state control over the airport, especially in the light of increasing operating costs and customer/airline expectations.
3.5 Chapter Summary
In this chapter I have provided a synopsis of the air travel scene in the
Southeast Asian region as well as how the various airports are performing in relation to each other. Specifically, I have also explained the nature of the competition between air hubs in the region and a historical account of the development of the three key airports, SIN, KUL and BKK are provided. More pertinently, I have also looked
67 A Geographical Analysis of Air Hubs in Southeast Asia at the future challenges facing the air hubs in the region and showed some of the possible coping strategies adopted by the airports to ensure their survivalbility in the race to the the region’s premier hub.
68
CHAPTER FOUR METHODOLOGY FOR HUB ANALYSIS
A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER FOUR: METHODOLOGY FOR HUB ANALYSIS
4.1 Introduction
Research in networks and hubs in transport geography has traditionally been
confined to the realms of modeling, spatial analysis and other empiricist/positivist
forms of analysis, with a strong emphasis on “the location and geographic pattern of
transport systems and the magnitude of the movement or spatial interaction over the
elements of such systems” (Black, 2003: 3). These methods have been criticized to
have “lost [their] disciplinary centrality, largely because [they have] remained within
the analytical framework of the 1960s” (Hanson, 2003: 469; cited in Goetz, 2006: 1).
While such methods remain pertinent and important in offering a broad overview of
the trends and processes shaping the modern day transport networks, they do not suffice in providing the “insider” and in-depth perspective into some of the micro
issues that are relevant, and such methods are often criticized with not keeping up
with the “paradigmatic and epistemological evolution associated with human
geography” (Goetz, 2006: 1).
The focus of this research thesis on air hubs centres on airports and their users.
Data collection and analysis can take many forms, looking at “big picture” issues like
connectivity and networks, to the individual scale of traveler choice and behaviour, all
of which impact the rise and demise of hub airports. Whilst it is important to
understand the patterns and processes which define hub airports over space and time,
we cannot ignore the very people and customers who dictate the success of airports
through their patronage and choice of hubs. Such is the importance of behavioural and
humanistic methods employed in transport geography to supplement the positivist
69 A Geographical Analysis of Air Hubs in Southeast Asia
school of thought as championed by notable scholars like Howard Gauthier and
Donald Meinig.
In another commentary piece, eminent transport scholars Taaffe and Gauthier
called for transport researchers to employ methods such that the linkages between
“theory and context” could be stressed, especially on region-based studies (1994:
166). At the same time, we should note that the quantitative and qualitative research
methodologies are not entirely distinct and instead form a continuum. Indeed, it is
quite possible to employ a multi-method approach, including quantitative methods to
elucidate broad trends, and qualitative methods to help understand the reasons behind the trends identified from quantitative research. This thesis recognizes the prevalent trends in geographical research, and will use a triangulated approach, incorporating both qualitative and quantitative methods of research. This chapter therefore provides an understanding of the methods applied for this research.
4.2 Data Source
As noted in the earlier chapters, while there are varied dimensions by which
one can approach transport studies, Geography is defined by its distinctive spatial
focus through which the study of networks and linkages comes to the forefront. I
employ a variety of such network analysis techniques as can be seen from the
proceeding sub-sections. Data on flight routes was obtained through a variety of
sources, primarily through the Official Airlines Guide (OAG) website
(www.oag.com) which had a comprehensive searchable online database detailing all
possible connections from most airports in the world on a day-to-day basis.
Information available for free from this database includes (amongst others): i) flight
70 A Geographical Analysis of Air Hubs in Southeast Asia
durations between city-pairs, ii) airlines that fly on specific routes, iii) all routes flown
by an airline, and iv) direct destinations available from airports. This was verified and
supplemented with route information from the websites of the various airports and
airlines. To ensure consistency, a one week sample period (1/4/2007 – 7/4/2007) was
used to obtain information on weekly frequencies and to include flights that were not
scheduled on a daily basis. Other data sources included conference proceedings, air
industry studies and forecasts, airline and airport references, newspaper articles,
books, journals and periodicals.
4.3 Mapping Airport Networks
The use of spatial mapping to depict patterns is a useful but often neglected
tool in Geography due to its simplistic nature. Geographers allude to maps as being
essential in their work for the very document contains within it the fundamental crux
of geography – that is to study differences and patterns spatially. This fundamentality has been championed by numerous prominent geographers, including Richard
Hartshone when he wrote that ‘so important, indeed, is the use of maps in geographic work, that, […] if [the] problem cannot be studied fundamentally by maps – then it is questionable whether or not it is within the field of geography’ (Hartshone, 1939: 249, cited in Wood & Keller, 1996: 20). Ullman emphasized this point by relating his personal conversation with an economist who said that the map was ‘a theory which geographers had accepted’ (1953: 57). Whilst almost all of geographic work is textual in nature, there is no better method to depict spatiality then to use the map which essentially is a depiction of spatial reality on a small, manageable scale.
71 A Geographical Analysis of Air Hubs in Southeast Asia
I therefore contend that mapping direct connections from the three airports in study allows us to see specific spatial patterns associated with each airport as an individual entity and the three combined as a region. Thus, all “direct”7 connections
from the three airports were compiled over the sample one-week period and depicted
on maps. I further subdivide the maps into region-based ones, encompassing member
nations of Southeast Asia and a global one. This was done primarily to avoid
excessive cluttering on the map, and also to allow for regional and global patterns to
be clearly shown. The three individual airport’s route networks were then
superimposed onto one map to show distinctive spatial alignments and biases with
regards to the geographies of their direct route networks.
As with all forms of cartographic representations, there exist limitations with
this method. Firstly, the linkages show only connections between city-pairs, but do not depict volume nor frequency. Secondly, the linkages are purely imaginary lines
Figure: 4.1: Sample Intraregional Network Map
7 In this study, “direct” connections refer to those that operate from one aircraft and do not involve the change of aircraft. However, this is not to be confused with “non-stop” flights as some of the “direct” connections may involve refueling and 5th freedom stops, albeit on the same aircraft.
72 A Geographical Analysis of Air Hubs in Southeast Asia depicting routes. As such, the imaginary lines may mislead readers into believing that the actual flight paths are being depicted by the straight lines when in actual fact, if plotted on a planar surface, the actual shortest flight paths will be curved due to the
“Greater Circle Effect” of the earth’s spherical surface. Additionally, airlines operate along designated flight corridors that may be substantially different than great circle routes. The base maps are based on the Mercator Projection, which may visually mislead readers when estimating distances between city-pairs. Finally, as the objective of the maps is to show general patterns, details like stopovers are omitted. In some instances, cities may have more than one major airport (e.g. New York – JFK and Newark) which are connected to the Southeast Asian hubs, and this is not represented on the map due to cartographic difficulties.
4.4 Network Matrix Analysis
A binary network matrix was constructed to show how well connected the three hub airports were on the global scale. The sample list was derived from
Loughborough University’s Globalization and World Cities (GaWC) dataset of the
315 most important cities in the world based on global service firms. The same one week sample period was used. Destinations with a direct connection (1 flight number) to the hub airports were given a numerical value of “1”, and those without were given
“0”. The summation of the binaries allows us to measure how “accessible” the three
Southeast Asian airports are in the world city network. London was included as a control and to give a sense of perspective as it is widely acknowledged as the world’s most connected city.
73 A Geographical Analysis of Air Hubs in Southeast Asia
SIN KUL BKK LHR 1 ABERDEEN 0 0 0 1 2 ABIJAN 0 0 0 0 3 ABU DHABI 1 0 1 1 4 ACCRA 0 0 0 1 5 ADDIS ABABA 0 0 1 1 6 ADELAIDE 1 1 0 0 7 AHMADABAD 1 0 0 1 8 ALEXANDRIA 0 0 0 1 9 ALGIERS 0 0 0 1 10 ALMATY 0 0 1 1 ...... TOTAL W X Y X Table: 4.1: Sample Network Centrality Matrix
A similar set of methodological constraints as with the mapping method apply here as well. i) volume and frequency of services was not shown, ii) the matrix is constructed with the city as the unit of analysis and not the airport, thus, multi-airport cities are not properly represented in the analysis, iii) some of the 315 cities from the dataset did not have any international air linkages, and in the case of some, not even an airport. Thus there may exist “void” cities which do not have any air connections whatsoever.
4.5 Shimbel Index Analysis
A more refined version of the binary matrix is the Shimbel Index which is focused on the number of linkages rather than just whether or not the city-pairs were connected. The concept of the “shortest path” is elucidated using this form of analysis which looks at the total of the number of links or edges that form the shortest path between each node (junctions or places) and all other nodes in the network. I refer to
Bowen’s (2000) work where he makes a distinction between intra- and interregional
74 A Geographical Analysis of Air Hubs in Southeast Asia
indices to compare both regional and international trends. The intraregional Shimbel
Index is constructed by first selecting all cities within Southeast Asia with at least one
SIN KUL BKK 1 BALIKPAPAN 1 1 2 2 BANDAR ACEH 2 2 2 3 BANDUNG 1 1 2 4 BANGKOK 1 1 - 5 BANJARMASIN 3 2 2 6 BRUNEI 1 1 1 7 CEBU 1 1 2 . . . . . TOTAL X Y Z Table: 4.2: Sample Intraregional Shimbel Matrix
international air link and then comparing the minimum number of linkages necessary
to each of the three hub airports. Similarly, the interregional Index is constructed by
selecting all cities (outside of Southeast Asia) from the GaWC database with an
international airport and then comparing the minimum number of linkages necessary
to each of the three hub airports. Once again, the OAG database forms the primary
data source and the same sample week period is used.
Although not a method employed in this research, worthy of mention because
of its methodological innovativeness is a more elaborate measurement method of
connectivity and proximity presented by Siriam et al. (2001) where “hub connectivity
is defined as the proportion of viable 2-link paths from source cities to destination
cities that are routed through the hub when there is no direct path from the source city
(and country) to the destination. The ideal maximum value of the connectivity index is 1.0 and the minimum is 0” (p. 60). Connectivity however, did not necessarily mean convenience, and thus another way of evaluating hub status was through proximity:
“the actual length of the 2-edge path for a hub [divided] by the minimum path length from the source city to the destination that also uses one of the hubs. Clearly the ideal,
75 A Geographical Analysis of Air Hubs in Southeast Asia
minimum value is 1.0 with larger values indicating greater path length” (Sriram et al.,
2001:63).
4.6 Flight Frequency/Volume/Schedule Comparison
In absolute terms, the number of aircraft movements and passenger volumes is
telling of a major hub. The number of scheduled weekly flights (and seats) to other key international hubs is also an important consideration in the global airline network to assess the relative connectedness and hierarchical relationships between the hub airports. The dominant carrier in each hub can also be identified through similar means. Such statistics therefore were obtained where available and used as one of the many comparison yardsticks between the three competing hub airports.
As one of the primary functions of an airport hub is to connect passengers, a
close analysis of flight schedules at each of the three airports enables us to gain an
insight into the extent to which hubbing occurs at the various airports. Burghouwt et
al. (2003: 310) notes that the hub-and-spoke network requires a concentration of air
traffic not only in space, but also in time. Generally, what that can be observed at hub
airport is that flights are often scheduled in “banks” which means that a wave of
flights will arrive within a very short period of time, and subsequently another wave
will depart from the same airport an hour or two later to allow passengers to connect.
This results in peak and lull periods in the 24-hr timeframe of an airport. Further
analysis of flight scheduling highlights how airlines make use of Southeast Asian
hubs on lucrative long-haul routes, most notable on the Australia – Europe
“Kangaroo” Route. By observing flight timings between the different legs of the
76 A Geographical Analysis of Air Hubs in Southeast Asia
whole journey, we are able to derive the total flight duration and the transiting
duration at respective hub airports.
4.7 Connecting Passenger Numbers
Perhaps the best indicator of the success of a hub airport lies with the number
of passengers who use the airport as a transiting point en-route to another destination.
However, such numbers are hard to come by but we can make a relatively
rudimentary but still useful estimation by using the difference between the total
inbound/outbound passenger numbers at the various airports and the number of
tourism visitor arrivals and returning residents of the country. From this, we can
gauge the levels of “hubness” of the respective airports (see Chapter 2).
4.8 Large-scale Quantitative survey
A large scale quantitative survey is an instrument of data construction
“comprising a carefully structured and ordered set of questions designed to obtain the
needed information without ambiguity or bias” (Johnston, 2000: 668). A survey is useful when the data required are based on the responses of a large number of people in order for certain patterns or trends to be deciphered (Cloke et al, 2004). In this case, a large scale quantitative survey is useful for allow me to sample travelers on their choice of hub airports, the factors which impact their decisions most, their perceptions of the hub airports in this study, as well as real life experiences they have
had whilst traveling through these airports.
I have chosen the case of the Australia-Europe “Kangaroo Route” as the focus
of the survey. A map showing the respective locations of the hub airports along the
77 A Geographical Analysis of Air Hubs in Southeast Asia
route was provided to allow geographically-challenged respondents a spatial overview
on the respective positions of the airports.
Plate: 4.1: Map Showing Selected Transit Airports for Online Questionnaire Survey
Respondents were given a scenario in which they had to make a trip from
Sydney to London via a commercial flight in economy class. It was explained that
current aircraft technology does not allow for a single non-stop flight, so transit stop
along the way was necessary. Respondents were surveyed on the factors affecting
their choices of airline and transiting airport and a list of transit airport were generated
in which they had to rank their top three choices. A four-point Likert Scale (Likert,
1932) was used for these questions to “force” a response from the respondents as
there is a tendency in questionnaire surveys for “neutral” responses.
Respondents were also asked if they had preferred a non-stop service if it was possible and the reasons for their choice. A choice of flight itineraries based on real-
world flight timings was presented to respondents, in which they had to choose one
itinerary, taking all factors into consideration (flight duration, airline, transit airport,
cost etc.). Finally, respondents were asked if they had real-life experiences transiting
at the various airports and their experiences were garnered. The online survey allowed
78 A Geographical Analysis of Air Hubs in Southeast Asia
the use of different surveying methods, from choice-based decisions to ranking
options and also open-ended responses.
Plate: 4.2: Sample Itineraries for Questionnaire Survey
The survey was hosted on an online surveying website
(www.surveymonkey.com) in order to allow for greater reach through the internet, especially since I was interested in understanding Australian and non-Australian perceptions. The survey was forwarded to my friends and contacts, and subsequently forwarded on by them using a snowballing method. As I wanted a sample consisting both Australian and non-Australian respondents, the survey was sent to my Australian contacts and also to Australia-based transport geographers teaching in universities in the hope that they would forward the survey to their students to complete. Although one might argue that this is a form of self-selection bias, I would point out that the profile of the respondents did not matter much in this instance as the topic was a general one concerning travel behaviour. Full anonymity was guaranteed as the
79 A Geographical Analysis of Air Hubs in Southeast Asia survey was conducted through the internet and respondents did not have any face to face contact with the researcher. The online survey was administered for two weeks.
In all, a total of 296 respondents completed the survey. The findings of the questionnaire survey are discussed in detail in Chapter Six.
4.9 In-depth Interviews
In depth interviews with aviation officials from Singapore, Malaysia and
Thailand were planned to allow me an insight into the policy arena of air hub competition in the region. Furthermore, data collected from these interviews would supplement the existing empirical and questionnaire data. However, in requests for interviews with the aviation authorities from the three countries, the emails to
Malaysia and Thailand officials went unanswered. A semi-formal in-depth interview was conducted with Mr Gerald Ng from the Air Transport Division of the Civil
Aviation Authority of Singapore (CAAS) on the 7th of March 2007. I questioned him on Singapore’s aviation policy and the role of the CAAS and the state in securing
Singapore’s premier air hub status in the region. Qualitative data collected from the interview is used to support the quantitative data gathered earlier.
4.10 Chapter Summary
This short chapter presents some of the methodological tools and methods used in this research on air hubs. I have chosen to use both quantitative and qualitative methods for the purpose of methodological triangulation so as to garner different kinds of data to paint the big picture. This also ensures the reliability and validity of the data collected and arguments made as the benefit of employing different methods is such that each provides a countercheck to another. The perceived and realized
80 A Geographical Analysis of Air Hubs in Southeast Asia benefits and shortfalls of the different methods have also been alluded to and I have illustrated how some of the methodological difficulties were overcome.
81
CHAPTER FIVE FINDINGS AND ANALYSIS
A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER FIVE: FINDINGS AND ANALYSIS
5.1 Introduction
This chapter explores and assesses the current state of air hubs in Southeast
Asia using an array of empirical tools. An analytical discussion on the spatialities of
the air hubs is first undertaken through a study of their route networks and
supplementary data on flight schedules and passenger numbers. The role of the
national carrier in ensuing hub formation and operations is highlighted to provide a
more holistic picture. Finally, any empirical discussion on networks and hubs cannot
be divorced from actual ground realities and the socio-political environment. In this
respect, two key trends in aviation in the region are given some discussion at the end
of the chapter – the impact of Low Cost Carriers, and an impending regional Open
Skies agreement. These two trends undoubtedly will impact the development and
competition between air hubs in myriad ways, and thus it is apt that a discussion based on these trends forms the conclusion of this chapter.
5.2 Network Analysis of Air Hubs in Southeast Asia
5.2.1 Spatial Networks of Air Hubs
The most direct and obvious way to understand air hubs is through the
destinations and linkages that they provide. By definition, a good hub should be well
connected to many destinations, although each may carve out niche areas depending
on the focal point of their markets and hinterlands. As mentioned in the preceding
chapter, a one week sample from 1st April to 7th April 2007 was used and all direct destinations viable from the three hub airports were noted and plotted on a map. This was made possible through an online searchable database of flights from Official
Airways Guide (OAG). For cartographic reasons mentioned in the previous chapter, I
82 A Geographical Analysis of Air Hubs in Southeast Asia
have grouped those destinations within Southeast Asia into one map, and the “rest of the world” into another. An overlay comprising the destinations of all three airports is
also provided for comparative purposes. Only direct (1 flight number) flights were used for this analysis.
5.2.2 The Regional Networks
Figure: 5.1: Singapore Changi Airport (SIN) Intraregional Network Map
83 A Geographical Analysis of Air Hubs in Southeast Asia
Figure: 5.2: Kuala Lumpur KLIA (KUL) Intraregional Network Map
Figure: 5.3: Bangkok (BKK) Intraregional Network Map
By observing the maps, we can derive distinctive spatial patterns towards the interregional route networks of the three airports. Most of the capital and primary cities in the region are represented in each of the airports’ networks, with the
84 A Geographical Analysis of Air Hubs in Southeast Asia exception of Vientiane which is only accessible via BKK. However, in terms of secondary-city coverage, each of the three airports has different focal markets. BKK has an extremely strong and comprehensive Indochinese network. Only a handful of
Thai cities apart from the few major ones have direct connections to other cities in the region. Those which are connected (apart from the capital Bangkok) are key tourist destinations like Chiang Mai, Phuket and Krabi. In stark contrast, SIN’s network has a distinctive archipelagic focus, with direct connections to many Indonesian cities as well as to four airports in the Philippines. SIN only serves the primary gateways in
Indochina but many secondary destinations farther down south. KUL’s regional network is distinctively Malaysia-centric, with direct connections to many destinations in the Peninsula and also to the East Malaysian states of Sabah and
Sarawak. Outside of Malaysia, KUL is connected to 9 Indonesian cities compared to the 13 through SIN. Figure 5.4 below shows the contrasts among the three networks.
Red: BKK Blue: KUL Purple: SIN
Figure: 5.4: Intraregional Network Map of all Three Hub Airports
85 A Geographical Analysis of Air Hubs in Southeast Asia
Interestingly, Dili the capital city of East Timor, Southeast Asia’s newest
nation, is not connected to any of our three hub airports. Many Filipino destinations as well as those in Laos and Myanmar also lack connectivity to any international hub,
save for their own capital cities. Also, many destinations in East Malaysia remain
solely connected to KUL. When considering the region as a whole, the network
coverage provided by the three key hub airports is not as extensive as that of Europe or the USA. In fact many secondary cities are either only connected to the country’s main airport or even not at all connected. This is especially true in the case of the
Philippines and Indonesia where only the key cities with strong commerce and tourism links are connected to international destinations. Many cities in eastern
Indonesia remain unconnected to the region’s hub airports. If we were to consider geographic centrality as a key factor towards hub formation, the geographic centre of
Southeast Asia would probably lie somewhere on the island of Borneo. However, we
know that there is an absence of major aviation activity due to the economic
underdevelopment of the island.
The region remains one of the fastest growing ones in the world in terms of
the aviation industry, but yet there is still an under-provision of services due to high
market entry barriers and government policies as many potential routes are either
underserved or not served at all as can be clearly seen from the maps. Once again
drawing comparison with Europe, a multi-hub model with a few key hubs (e.g.
London, Paris, Frankfurt, and Amsterdam) can and should exist in the region to allow
for greater competition and network coverage. However for such an effort to be
realized, a necessary pre-requisite would be a liberal operating environment which our
region currently lacks.
86 A Geographical Analysis of Air Hubs in Southeast Asia
5.2.3 The Global Networks
p ional Network Ma g Interre ) SIN ( ort p r i Ai g ore Chan p a g n i S : ure: 5.5 g Fi
87 A Geographical Analysis of Air Hubs in Southeast Asia
p ional Network Ma g Interre ) L KU ( ur KLIA p Kuala Lum ure: 5.6: g Fi
88 A Geographical Analysis of Air Hubs in Southeast Asia
p ional Network Ma g Interre ) BKK ( kok g Ban
: ure: 5.7 g Fi
89 A Geographical Analysis of Air Hubs in Southeast Asia
On the international front, all major global gateways (London, Frankfurt,
Paris, Dubai, Tokyo, Los Angeles, New York) are directly accessible from the three
air hubs. SIN has a strong coverage on the Oceanic countries of Australia and New
Zealand. In total, nine Oceanic cities can be reached directly from SIN, compared to
six from KUL and five from BKK. SIN also has a comparative advantage over KUL
and BKK in the Indian and Chinese markets in terms of direct connections: Indian
cities – SIN (12), KUL (5), BKK (8); Chinese cities – SIN (11), KUL (7), BKK (10).
BKK serves as the Southeast Asian gateway to Africa with direct connections
to many cities on the east coast of the African continent (Addis Ababa, Johannesburg,
Antananarivo, Nairobi), whilst KUL is the only airport of the three to have a direct connection to a South American destination (Buenos Aires) via a stop at
Johannesburg. All three airports are well linked to destinations in East Asia and the
Middle East, although SIN and BKK fare slightly better in Europe when compared to
KUL. Also, SIN and BKK have much better connectivity to North American destinations, and SIN is the only airport to have a direct connection to Canada. Figure
5.8 shows the interregional network map of the three airports and from the map we can see clearly the different regional orientations of the individual airports.
90 A Geographical Analysis of Air Hubs in Southeast Asia
orts p of all Three Hub Air p Ma ional Network g terre n I : ure: 5.8 g Fi le: SIN BKK : KUL : e rp Red Blu Pu
91 A Geographical Analysis of Air Hubs in Southeast Asia
A regional review of the airports’ network connections to international
gateways, as well as destinations exclusive to one hub airport are provided in the
tables below, summarizing some of the earlier discussion. We can see the distinctive
regional focuses of the various hub airports clearly from the table (SIN - Australasia,
North America, South Asia; KUL - Middle East; BKK - Africa, East Asia, Europe). It is important to note that for this kind of regional analysis, Southeast Asian destinations may be misleading owning to the dominance of domestic routes from the individual airports. Also, and more pertinently, we can also derive that both SIN and
BKK have sole exclusivity on certain international route segments (26 and 31 routes respectively) whilst KUL seems a much less popular transit destination with only 17 exclusive routes of which 14 are domestic ones. This observation is premised on the fact that travelers in general try to minimize transfers in planning their journeys. For common destinations accessible from all the hubs, other factors like journey time, cost of air ticket, choice of airline, etc. come into play. However, when hubs have exclusivity to certain destinations, it makes the choice of the hub as a stopover airport much easier.
Destinations by region SIN KUL BKK Southeast Asia 37 42 42 East Asia 20 15 24 South Asia*** 19 11 18 Europe* 14 11 26 Middle East 6 10 10 Africa** 5 3 6 North America 8 2 4 South America 0 1 0 Australasia 10 6 5 Total 119 101 135 *Includes Eastern European and Russian cities **Includes Mauritius, Reunion Islands and Seychelles ***Includes The Maldives Table: 5.1: Regional Foci of the Three Hub Airports
92 A Geographical Analysis of Air Hubs in Southeast Asia
Hub Airport No. of Exclusive Exclusive Destinations Destinations Adelaide, Ahmedabad, Amritsar, Balikpapan, Barcelona, Cairns, Chicago, Chongqing, Christchurch, Cochin, Darwin, SIN 26 Davao, Haikou, Harare, Kochi, Mahe Island, Manado, Manchester, Nanjing, Palembang, Port Moresby, Portland, Pune, Semarang, Thiruvananthapuram, Vancouver Alor Setar, Beirut, Bintulu, Buenos Aires, Ipoh, Johor Bahru, KUL 17 (14) Kota Bahru, Kuala Terengganu, Kuantan, Labuan, Miri, Pangkor, Redang, Sanaa, Sandakan, Sibu, Tawau, Addis Ababa, Almaty, Amman, Antananarivo, Ashgabat, Budapest, Buri Ram, Busan, Chiang Rai, Chittagong, Daegu, Dusseldorf, Gaya, Guilin, Guwahati, Hiroshima, Hua Hin, Jinghong, Khon Kaen, Kiev, Lampang, Loei, Luang Prabang, Madrid, Mae Sot, Munich, Nagpur, Nairobi, Nakhon BKK 51 (20) Phanom, Nakhon Si Thammarat, Nan, Narathiwat, Novosibirsk, Paro, Phitsanulok, Pyongyang, Ranong, Roi Et, Sakon Nakhon, Shantou, St Denis de la Reunion, St Petersburg, Sukhothai, Surat Thani, Tel Aviv, Trang, Trat, Ubon Ratchathani, Vientiene, Vladivostok, Xi An Domestic destinations in italics Table: 5.2: Exclusive Destination Cities for the Three Hub Airports
5.2.4 Network Matrix Analysis
To obtain quantitative data on the levels of connectivity of the three airports, a centrality matrix using 315 GaWC world cities was constructed. (Directly connected
= 1, not directly connected = 0)
SIN KUL BKK 1 ABERDEEN 0 0 0 2 ABIJAN 0 0 0 3 ABU DHABI 1 1 1 4 ACCRA 0 0 0 5 ADDIS ABABA 0 0 1 6 ADELAIDE 1 1 0 7 AHMADABAD 1 0 0 8 ALEXANDRIA 0 0 0 9 ALGIERS 0 0 0 10 ALMATY 0 0 1 . . . . . 315 ZURICH 1 1 1 TOTAL 74 63 77 Table: 5.3: Network Centrality Matrix
93 A Geographical Analysis of Air Hubs in Southeast Asia
The findings from the centrality matrix supplement the earlier conclusions made by
observing the spatial networks. SIN and BKK are almost on par in terms of
connectivity to “important” cities in the world, whilst KUL is lagging behind the front
two by a considerable distance.
5.2.5 Shimbel Index Analysis
Whilst the network matrix gives us a good idea of overall connectivity, it does
not, however, show anything else other than the fact that whether the city pairs were connected or not. A more complex method (see Bowen, 2000; Taaffe et al., 1996)
known as the Shimbel Index Analysis was employed to tell us the shortest path
between the various city-pairings. Each non-stop flight was counted as one network segment, and the total number of segments required to connect each hub to every international gateway was compared to the minimum possible (i.e. if all the cities were connected by nonstop flights). The results were indexed so that a value of 1
represents a perfectly connected network with nonstop links to every other point in the network. Once again, adopting Bowen’s (2000) framework, two separate indices were constructed, one showing intraregional (Southeast Asian) linkages, another depicting interregional connectivity. Only cities with airports with international linkages were selected for the analysis, and certain city pairings were omitted because of geographical proximity (e.g. SIN – Johor Bahru). For the intraregional index, all airports in Southeast Asia with at least one international link were used following data from OAG (Johor Bahru and Subang airports were omitted due to their proximity to
SIN and KUL).
94 A Geographical Analysis of Air Hubs in Southeast Asia
SIN KUL BKK 1 BALIKPAPAN 1 2 2 2 BANDAR SERI BEGAWAN 1 1 1 3 BANDUNG 1 1 2 4 BANGKOK 1 1 - 5 CEBU 1 1 2 6 CHIANG MAI 1 1 1 7 DANANG 1 2 1 . . . . . 48 YANGON 1 1 1 TOTAL 57 63 72 SHIMBEL INDEX (46/TOTAL) 0.87 0.74 0.67 Table: 5.4: Intraregional Shimbel Matrix
The findings from the intraregional matrix are in tandem with the earlier
conclusions. SIN remains the dominant gateway within Southeast Asia, primarily
because of its geographical position within the region, as well as the availability of direct connections to many primary and secondary Southeast Asian cities, especially
in Indonesia. These direct connections are attributed to the growth of Singapore
regional carrier Silkair and more recently the Low Cost Carrier (LCC) boom in the region. These findings are consistent with Bowen’s (2000: 34) earlier findings,
especially in the case of BKK where he relates that “Bangkok […] is poorly
integrated with the many secondary gateway cities which have opened up in
Indonesia, Malaysia, and The Philippines. Bangkok has sought to position itself as a
gateway to a “growth square” incorporating Thailand, Vietnam, Laos, Myanmar, and
China’s Yunnan province, but slower development in most of these markets has meant weak regional traffic.”
95 A Geographical Analysis of Air Hubs in Southeast Asia
SIN KUL BKK LONDON 1 ABERDEEN 2 2 2 1 2 ABIJAN 2 2 2 2 3 ABU DHABI 1 1 1 1 4 ACCRA 2 2 2 1 5 ADDIS ABABA 2 2 1 1 6 ADELAIDE 1 1 2 2 7 AHMADABAD 1 2 2 1 ...... 273 ZURICH 1 1 1 1 TOTAL 491 498 488 358 SHIMBEL INDEX (273/TOTAL) 0.56 0.54 0.56 0.74 Table: 5.5: Interregional Shimbel Matrix
In the case of the interregional index, the GaWC list of 315 world cities was
used, although not all made it onto the list due to the lack of international flights from
the respective airports, and cities already included in the intraregional index were
omitted. London (one of, if not the world’s most connected city) was included to add
perspective as a counterpoint to SIN, KUL and BKK. In London’s case, all of the
city’s five international airports were included for the analysis.
From Table 5.5, we can observe that the interregional Shimbel Indices for the three airports do not vary much, and are relatively low when compared to London.
The is due to a number of factors: i) Many of the globalised cities are located in
Europe and North America, and pure geographical distance or economics make direct flights infeasible; ii) The global organization of air transport is based on regional hubs, thus Southeast Asian hubs will tend to focus their networks in their own region and the immediate hinterland, and even in times when direct connections are possible, because of the way airlines operate out of hub airports, a stopover at the airline’s hub is inevitable. Although there is no data available from this research to verify this, but
96 A Geographical Analysis of Air Hubs in Southeast Asia
we can postulate that on the global front, the most central and well connected cities
will ostensibly be based in Europe, and maybe the Middle East and Tokyo. The
London example shows how well connected it is being perhaps the most important
financial centre in the world vis-à-vis the three Southeast Asian hubs which have not
reached that scale of global importance. As a matter of fact, Smith and Timberlake
(2001) found the five most influential world cities to be London, Frankfurt, Paris,
New York and Amsterdam whilst Derudder and Witlox’s (2005) findings based on
airline data showed the top five to be New York, London, Los Angeles, Paris and
Chicago.
5.3 Flight Frequencies, Volumes and Schedules
By definition a hub airport is one which has a large volume of flights,
passengers and cargo passing through it. Whilst the earlier sections discuss to some
detail the idea of connectedness (whether or not two city-pairs are linked), there is still an additional element involved in connectivity – that is the frequency and volume of flights. Thus, an airport may be well connected to many cities, but overall connectivity will still be low if flight frequencies are low (e.g. once or twice weekly).
Similarly, passenger and cargo volumes are determined by aircraft type that is used on different routes. A hub airport typically has many high-volume routes, determined either by high flight frequency, large aircraft size, or a combination of both.
For practical reasons, it is not possible to examine all flights and volumes from
the three airports. Instead, I have compiled data pertaining to the overall “big picture”
performance of the airports. Also I have selected several key routes to important
destinations and will be looking at them in greater detail. As shown in Table 5.6,
97 A Geographical Analysis of Air Hubs in Southeast Asia
operational capacity and actual usage-wise, SIN and BKK are in close quarters, with
SIN having a slight edge. KUL, although a massive airport in its own right, has a lesser capacity than its two peers. All three airports however have plans for future expansion and development of airport facilities, including new terminals and runways to meet with the growing demand for air travel in the region.
Table 5.6: A Comparison of Key Statistics for the Three Airports SIN KUL BKK** Total annual handling capacity (passengers) 46,700,000 35,000,000 45,000,000 No. of terminals in operation (incl. Low Cost 3 3 2 Terminals) Passenger throughput (2005) 32,430,856 23,213,926 38,985,043 International passenger traffic (year ending Nov 33,037,562 14,998,738 29,260,212 2006) Cargo handles (tonnes) (2005) 1,854,610 653,654 1,140,836 Aircraft movements (2005) 204,138 181,341 Data not available Number of runways 2 2 2 Longest runway length (m) 4000 4000 4000 No. of scheduled passenger airlines served 60 49 90 No. of check in desks 310 216 360 No. of baggage claim belts 16 12 22 No. of airport hotels 2 2 1 Hours of operation 24hr 24hr 24hr Primary Hub Airline Singapore Malaysia Thai Airways Airlines Airlines Secondary Hub Airline(s) Qantas Cathay Pacific Garuda Emirates Emirates Sri Lankan *Date derived from various sources (incl. ACI, and respective airport websites) **Some data for BKK refers to the old BKK Don Muang airport, especially figures for 2005
All three airports are home to their respective national carriers and SIN
operates as a mini-hub for Qantas, Garuda and Emirates, whilst BKK does so for
Emirates and Sri Lankan Airlines. An example of how foreign airlines use fifth freedom rights to operate out of the respective airports is provided below. This effect is well illustrated in the way Qantas currently operates out of Singapore. Qantas operates a hub and spoke system out of Singapore, providing services from all major
Australian destinations to Singapore so that passengers can be aggregated on non-stop
B747 flights to Europe. The departures coincide with the arrival of inbound passengers destined for European cities (O’Connor, 1995: 274).
98 A Geographical Analysis of Air Hubs in Southeast Asia
Table: 5.7 Example of Hubbing by Foreign Airlines Secondary Arrival Departure Airline Inbound flights Outbound flights Hub time time QF51 (Brisbane) 1935 QF3931 (Helsinki) 2230 QF355 (Cairns) 1940 QF5 (Frankfurt) 2305 QF71 (Perth) 2045 QF3955 (New Delhi) 2310 QF9 (Melbourne) 2130 QF9 (London) 2325 Qantas SIN QF5 (Sydney) 2140 QF3977 (Paris) 2330 QF31 (Sydney) 2230 QF31 (London) 2359 CX701 (Hong Kong) 1750 CX701 (Karachi) 1855 CX703 (Hong Kong) 2015 CX703 (Colombo) 2125
Table 5.8a: Route Intensity of Selected Destinations SIN KUL BKK Flights Aircraft Seats Flights Aircraft Seats Flights Aircraft Seats 42 x B744 27 x B744 London 49 19607 16 16 x B744 6656 33 13422 7 x B772 6 x 773ER 7 x A332 7 x A332 10 x B743 2 x B743 14 x B744 7 x B763 Tokyo 62 20352 21 5740 57 14 x B744 19493 1 x B762 14 x B772 27 x B772 14 x B763 7 x B773 16 x B772 3 x A333 4 x A342 7 x B744 28 x B744 Sydney 49 18632 20 6877 35 14203 35 x B744 13 x B772 7 x B773ER 7 x B772 4 x B744 21 x B744 Frankfurt 28 28 x B744 11648 9 3189 26 9786 5 x B772 5 x B763 7 x A310 18 x A332 7 x A333 14 x A320 7 x A343 14 x A332 19 x A333 7 x B742 7 x A333 Hong 1 x A343 7 x B743 101 33769 42 7 x B738 11620 121 36921 29 x B744 7 x B744 Kong 7 x B772 17 x B772 6 x B763 7 x B773 21 x B773 21 x B772 28 x B773 3 x B773ER 3 x MD11 7 x A306 7 x A320 7 x A332 5 x A332 7 x A343 16 x A333 7 x A333 42 7 x 744 13258 25 7133 79 10 x A342 26661 Taipei 6 x B734 14 x B772 25 x B744 7 x B744 7 x B773 7 x B773 7 x B773ER *No. of flights are calculated based on a 7-day week **No. of seats are derived through the standard configuration of the various aircraft types (A306: 266 pax, A310: 212 pax, A319: 124 pax, A320: 179 pax, A332: 256 pax, A333: 295 pax, A342: 263 pax, A343: 303 pax, B734: 146 pax, B738: 162 pax, B742: 397 pax, B743: 470 pax, B744: 416 pax, B762: 216 pax, B763: 210 pax, B772: 305 pax, B773: 386 pax, B773ER: 365 pax, MD11: 298 pax) ***Only direct, non-stop connections are taken into account. Codeshares are omitted to avoid duplication
For the purpose of analyzing the volumes and frequencies of flights from the various hub airports, I have selected the following key destinations for analysis –
99 A Geographical Analysis of Air Hubs in Southeast Asia
London (Heathrow), Tokyo (Narita), Sydney, Frankfurt, Hong Kong and Taipei. By
observing the total number of weekly one-way flights between the hub cities and the
key destinations, we can observe the intensity of services to these destinations. From
Table 5.8a, we again see that KUL is lagging behind SIN and BKK in terms of flight frequencies and seat capacity on these popular routes. By virtue of the fact that SIN offers a higher volume on the Singapore-London route, passengers may find it much easier to connect to other international gateways from London through Singapore.
This is unlikely to change as landing slots at London’s airports are extremely limited
(even more so with the recent EU-US air services agreement) and will be a challenge for carriers to increase their frequencies and capacities on this route. Also, worthy of mention is that BKK has a distinctive focus on East Asian destinations, most notably
Hong Kong and Taipei with extremely high volumes on these two destinations, in the
case of Taipei, twice the capacity of SIN and more than three times that of KUL.
To provide even greater insights into how the three hub airports have grown, I
have compared my findings with those of Bowen’s (2000: 38) in Table 5.8b. The ten
year difference between the data sets is adequate to reflect trends in aviation
development for the region as a whole, as well as on how the individual airports are
faring. Although the figures that I have come up with for 2007 (refer to Table 5.8a)
are based on estimates (some quite generous) of aircraft capacity, they suffice for this
purpose of depicting general trends.
100 A Geographical Analysis of Air Hubs in Southeast Asia
Table 5.8b: Change in Route Intensity of Selected Destinations (1997 – 2007) SIN % Flights (1997) Flights (2007) % Change Seats (1997) Seats (2007) Change London 33 49 48% 13530 19607 45% Tokyo 41 62 51% 15580 20352 31% Sydney 29 49 69% 10130 18632 84% Frankfurt 21 28 33% 8455 11648 38% Hong Kong 78 101 29% 28125 33769 20% Taipei 41 42 2% 12600 13258 5% KUL % Flights (1997) Flights (2007) % Change Seats (1997) Seats (2007) Change London 17 16 (-)6% 6970 6656 (-)5% Tokyo 11 21 90% 3710 5740 55% Sydney 6 20 230% 1790 6877 284% Frankfurt 7 9 29% 2690 3189 19% Hong Kong 33 42 27% 10210 11620 14% Taipei 17 25 47% 5130 7133 39% BKK % Flights (1997) Flights (2007) % Change Seats (1997) Seats (2007) Change London 24 33 38% 9480 13422 42% Tokyo 43 57 33% 15360 19493 27% Sydney 22 35 59% 8940 14203 59% Frankfurt 27 26 (-)3% 9895 9786 (-)1% Hong Kong 97 121 25% 31915 36921 16% Taipei 55 79 44% 17705 26661 51% *1997 data derived from Bowen (2000)
There are a few interesting and salient observations that can be made from the
temporal comparison in route intensity: i) Strong growth was experienced by all three
airports on the selected routes over the ten year period; ii) For all three airports, the
destination with the greatest growth was Sydney, with its growth at KUL being the most spectacular. This was due to the various Southeast Asian flag carriers strengthening their Australian networks as well as Middle Eastern carriers like
Emirates and Qatar Airways running Fifth Freedom routes out of Southeast Asia to
Australia; iii) For SIN, the percentage change in seat capacity often exceeded that of the percentage change in flight frequency, meaning that bigger aircraft were being utilized on those routes; iv) The trend is reversed in KUL’s case where the change in number of flights was disproportionately higher than that of seats in all but one destination, meaning that smaller aircraft were being used but frequencies were
101 A Geographical Analysis of Air Hubs in Southeast Asia higher; v) As for BKK’s cases, the difference in the percentage changes were very slight with no noticeable trend; vi) In absolute terms, SIN had the most number of flights and the highest capacity to all destinations (except Hong Kong and Taipei where BKK had the advantage) when compared with the other two airports.
5.4 Incentives and Policies to Encourage Hub Development
Apart from increasing connectivity and traffic through consolidating existing routes, airport authorities also actively seek out new markets and carriers through various means. In Singapore’s case, a S$300 million Air Hub Development Fund
(AHDF), renewed every three years, rewards airlines for coming to Changi (Lim,
2007). Airlines are offered generous landing rebates and office rental rebates if they situate their office in the airport. According to Air Transport Manager Gerald Ng of the CAAS, new entrant airlines pay practically zero landing fees as 100% landing fees rebates are often offered (personal communication, Ng, 6th March 2007). In line with such pro-business policies, Changi also offers a Growth Incentive Scheme (GIS) where airlines are rewarded with monetary incentives for any incremental growth in the number of passengers they handle into and out of Changi.
5.5 Air Hubs and National Carriers
One key factor pertaining to the strength of hub airports is the strength of its main user airline, in this case, the respective local carriers. It has been argued that the national airline is important in promoting “the centrality of their home hubs” (Fleming and Hayuth, 1994, cited in Raguraman, 1997: 248). Being based at the hub airport, these carriers carry in and bring out the greatest number of passengers to any airport.
As Chin (1997: 128) notes “hubbing in Asia involves a principal airline such as SIA
102 A Geographical Analysis of Air Hubs in Southeast Asia
or Cathay Pacific using their principal operating base (Singapore and Hong Kong
respectively) as connecting points for long-haul and short-haul flights.”
Table: 5.9a A Comparison of the Main Hub Carriers SIN KUL BKK Main Hub Carrier Singapore Airlines Malaysia Airlines Thai Airways Int. Passenger Fleet Size (Widebody) 94 50 79 Passenger Fleet Size (Narrowbody) 0 39 12 Fleet Expansion (Orders + 109 6 17 Options) Alliance Star Alliance NIL Star Alliance Destination Cities 64 76 74 Passengers carried FY05/06 16,995,000 13,852,000** 18,574,000 Revenue passenger km (million) 82,741.7 42,226** 53,989 FY05/06 Passenger load factor 75% 71.5%** 75.4 % of total destinations of airport 54% 75% 55% operated by main hub carrier*** Skytrax Rating 5 Star 5 Star 4 Star *Data from various sources, including airline websites **Information for FY04/05 ***Does not exclude other carriers from operating the same route
We can observe that all three hub carriers are experiencing high growth with
very healthy load factors. Fleet-wise, SIA has the highest capacity as it operates an
all-widebody fleet, with very aggressive fleet expansion plans (109 firm orders for
aircraft). Both SIA and THAI are part of the Star Alliance which can partially account
for their higher loads and better performance as their ticketing systems are
streamlined with many other airlines in the same alliance. Conversely, one could look
at it the other way too in that their stronger performance makes them very appealing
alliance partners. Performance-wise, THAI carries the greatest number of passengers,
followed by SIA and MAS. However I would add that a significant proportion of
THAI’s passengers are domestic. All three carriers top the list of quality carriers based on the Skytrax airline quality ranking system, with SIA and MAS being two of the only four airlines in the world awarded the five star statii, the other two being
Cathay Pacific and Qatar Airways.
103 A Geographical Analysis of Air Hubs in Southeast Asia
In terms of the proportion of direct destinations from their base airport that the flag carrier operates, both SIA and THAI operate slightly over half of the total routes from SIN and BKK. MAS, in contrast, operates three quarters of all routes from KUL.
It is tenable that a large proportion of flights from any hub airport should be operated by the dominant carrier, but in KUL’s case, the overwhelming proportion of flights operated by MAS seems to either imply that MAS is taking a leadership role in developing KLIA, or that other carriers are not as well represented at KUL.
Table: 5.9b A Comparison of the Secondary Carriers at the Three Hubs SIN Secondary Hub Silkair Jetstar Asia ValueAir Tiger Airways Carrier Relationship to Independent Independent Independent Main Hub Subsidiary (partly owned (partly owned (partly owned Carrier by Qantas) by Qantas) by SIA) Operating Regional & Regional & Regional & Regional Domain International International International Operating Model Full Service Low Cost Low Cost Low Cost Passenger Fleet Size 13 5 2 12 (Narrowbody) Destination 29 10 3 16 Cities KUL Secondary Hub AirAsia Carrier Relationship to Main Hub Independent Carrier Operating Domestic & Domain Regional Operating Model Low Cost Passenger Fleet Size 64 (Narrowbody) Destination 35 Cities BKK Secondary Hub Bangkok Nok Air Thai Air Asia One-Two-Go Orient Thai PBAir Carrier Airways Semi- Relationship to Independent Subsidiary of Main Hub Subsidiary Independent Independent Independent (subsidiary of Orient Thai Carrier AirAsia Operating Domestic & Domestic & Domestic & International & Domestic & Domestic Domain Regional Regional Regional Regional Regional Charter & Full Operating Model Low Cost Low Cost Full Service Low Cost Full Service Service Passenger Fleet Size 8 16 16 24 6 Widebody 2 (Narrowbody) Destination 12 21 24 10 9 11 Cities *Data from various sources, including airline websites **Jetstar and Valuair have since merged and currently operate under one company. However the fleet livery is unchanged and both airline names are still in use.
104 A Geographical Analysis of Air Hubs in Southeast Asia
Apart from considering the dominant carrier, Table 5.9b above also lists the other carriers which have made the respective hub airports their main operating bases.
Of the secondary carriers, AirAsia has the most extensive network spanning 35 cities, followed by Silkair (29) and Bangkok Airways (24). As Silkair and Nok Air are direct subsidiaries of their parent carriers SIA and Thai respectively, there is little duplication in routes between them and their parent carriers. A number of smaller low cost carriers have also based themselves at the airports, with BKK having the lion’s share and SIN being home to three LCCs. KUL, in contrast, is only home to one LCC, but it should be noted that it is also the dominant LCC in the region. Most of these secondary carriers are region based, operating mostly domestic flights and
international flights within the Southeast Asian region.
5.6 The Impact of Low Cost Carriers
One recent trend which has not escaped attention, both in academic and
popular media, is the rise of Low Cost Carriers (LCCs). LCCs traditionally operate
one model of narrow-bodied aircraft (most popular models are the B737 and the
A320) with destinations within a 5 hour flying radius from their base airports. In line
with many of the European budget airline models, a majority of Asian budget airlines
choose a point-to-point business model servicing short-haul markets, in order to
achieve high frequencies and attain a more efficient use of their aircraft and to lower
associated costs (Gillen & Lall, 2003). However, many of these airlines do ‘hub’ to a certain degree, as shown in the case of interlining taking place between Jetstar Asia and its Australian counterpart Jetstar International in terms of ticketing and baggage
transfer, and the offer of multi-sector tickets on Tiger Airways.
105 A Geographical Analysis of Air Hubs in Southeast Asia
In contrast, most Asian full-service carriers work on a network system which
“is a complex, but effective set of relationships among the carrier’s internal networks, as well as other air carriers and travel agencies, to facilitate seamless travel amongst all parts of the world” (Tretheway, 2004). Complementing this point, these full- service airline carriers also operate on a hub-and-spoke method, to support their abilities to connect to as many places in the world as possible, unlike budget airlines
(Gillen & Lall, 2003).
In Southeast Asia, LCCs have become increasingly pervasive and popular in recent years and are poised to revolutionize the regional aviation landscape in the years ahead. The sheer pace of economic development in Southeast Asia has increased the propensity to travel, expanding rapidly the pool of air travelers. Owing to their no-frills model, LCCs are able to offer fares substantially lower than those of
Full Service Carriers (FSCs), enticing primarily leisure travelers who are not time- sensitive to purchase their tickets. This has the effect of feeding traffic into the main hub airports. Also, LCCs tend to serve secondary airports which are either not served or poorly linked to major cities. Adding to this is Southeast Asia’s unique geographical characteristics where cities are dispersed, often over large bodies of water, and there is a lack of alternative modes of regional transport. In Europe and the
US, LCCs started off having to compete with other established transport means such as rail, buses and car. In contrast, given the generally underdeveloped rail and road infrastructure in this region, LCCs have entered the market amidst less competition.
Adding to this is the fact that compared to Europe and North America, the air transport industry is arguably still in its infancy as “the traditional wisdom that air
106 A Geographical Analysis of Air Hubs in Southeast Asia
transport is a ‘luxury’ transport mode is still common in much of Asia” (Li, 1998:
140).
The phenomenal success of LCCs in the region is perhaps best encapsulated
by the story of AirAsia which current owner Tony Fernandes bought over for a token
1 Malaysian Ringgit in 2001. Adopting the European no-frills model, he started
services to secondary destinations first within Malaysia and subsequently to the rest of
the region, targeting the mass market with its slogan of “now everyone can fly”.
AirAsia also ended many monopolies on routes held by traditional flag carriers and
became one of the most profitable airlines in the region due to its heavy utilization of
aircraft, cutting of overheads and quick turnaround times. Its success has also sprung
offshoots of the AirAsia brand in many countries, notably in Thailand and Indonesia
and the company has since ventured into long-haul low cost flights with the
inauguration of AirAsia X.
Although a sizable amount of LCC traffic is Origin-Destination in nature, we
should not discount the fact that LCCs serve as cheap and convenient feeder services
to the major air hubs. A traveler from Australia, or say Indonesia may take an LCC to
SIN, KUL or BKK to transfer to an international flight to Europe or America. Data
and research is sorely lacking in this aspect of LCC impact on air travel, but an
additional reason why airports seek to attract more LCC-transfer passengers is that
they tend to spend a day or two at the transiting city due to flight timings or simply
the fact that the low cost of the air ticket incentivizes them visit the stopover city since
they are already there, thereby contributing to the local tourist economy.
107 A Geographical Analysis of Air Hubs in Southeast Asia
Airport development-wise, the rise of LCCs has seen substantial infrastructural investment by airports in the region. Both Singapore and Malaysia have developed dedicated terminals for their LCCs, provided the basic terminal
necessities at the lowest possible cost. Frills like aerobridges and travellators are not
found in these budget terminals in order to keep operating overheads low. Bangkok is
in the midst of experimenting with its own LCC terminal. The growth of LCCs in the
region has been nothing short of spectacular. Singapore’s budget terminal, for
instance, is handling almost 130,000 passengers a month, utilizing close to 60% of its
2.7 million passengers per annum capacity (Lim, 2007). In fact, both Singapore and
Malaysia have recently announced plans for future expansions for their LCC
terminals. Planning ahead of capacity is especially important for LCCs as
underutilized capacity is required for quick turnaround times - a pertinent operating
feature of LCCs.
More recently, there has been talk of long-haul LCCs, reviving Freddy Laker’s
Skytrain Airlines original concept where he pioneered no-frills trans-Atlantic flights
in the 1970s. An offshoot of Malaysia’s Air Asia, Air Asia X recently announced
plans for a long haul, low-cost service to London although such plans have yet to take
off. Such services can only be to the benefit of the airports in the region as even more
traffic would be channeled through the region. The long haul low-cost market is
relatively unexplored, and the potential for growth is enormous as previously high
ticket prices have traditionally inhibited international travel. Although many Full
Service Carriers (FSCs) do offer a proportion of their seats at low cost, these are
normally a last ditch attempt to sell off seats nearer the flight date. The case of the
108 A Geographical Analysis of Air Hubs in Southeast Asia
LCCs is reversed where the cheapest tickets are normally sold on the onset, and prices increase nearer the date of the flight.
The rise of the LCC market is not without its threat to airports. As Francis et al. (2006: 91) point out, LCCs offer both opportunities and threats as “the apparent panacea of increased passenger numbers need to be viewed in light of the commercial reality of low aeronautical charges and not all airports being able to generate sufficient non aeronautical revenues from passengers”. This view was similar to that of Changi’s as more than 60% of the airport’s revenue is commercial in nature
(Today, 2nd October 2006), implying less reliance on aeronautical charges. In fact,
Changi is the holder of the unique accolade of selling the most number of chocolates in Singapore (personal communication, Ng, 6th March 2007). Implicit in this is that hub airports which want to attract LCCs must find ways to lower the usage charges for these airlines, but yet maintain overall airport profitability through largely non- aeronautical means. Also, because of the operating nature of LCCs, and their limited operating range, only in a liberal aviation environment can they thrive. This key tenet will be discussed in the next section.
5.7 ASEAN and Open Skies
A liberal aviation policy is critical to the growth of airports and airlines in the region. Hub carriers carry a large proportion of Sixth Freedom traffic through their respective airport hubs. This requires the agreement of both the countries of origination and destination for 3rd and 4th Freedom rights, as depicted in the respective air services agreements. However, the more liberal 5th Freedom right is still rare in the context of the region as governments are reluctant to grant foreign carriers such rights
109 A Geographical Analysis of Air Hubs in Southeast Asia to compete directly with their national carriers. ASEAN has a roadmap for a regional
Open Skies Agreement by the end of 2008. However, some countries remain reluctant as they feel their carriers and airports will lose out, especially if their carriers are comparatively weaker than others in the region. Such protectionist behaviour is understandable given the context of the USA deregulation process which saw the demise of many “legendary” carriers like Pan Am. Li (1998: 140) notes however that the sophistication and maturity level of the air transport industry in ASEAN is very different and that “deregulation is probably the only mechanism available to achieve a quantum leap in the development of the air transport industry”.
Without a liberal aviation environment, the tremendous growth achieved by the three airports over the years may taper off as there exists limits to growth within a regulated environment. Already we can see this happening in the case of Indonesia where foreign LCCs are strictly controlled and regulated. Many of the region’s LCCs have targeted Indonesia’s secondary cities but are unable to do so because of government intervention. E.g. The sole reason for Valuair’s continued existence even after its merger with Jetstar Asia was because Indonesia was not willing to grant new licenses to other Singaporean LCCs and thus only existing licenses like the one earlier granted to Valuair were honoured. The operating model of most hub carriers is based on connecting high density routes in high growth markets. Other foreign carriers and
LCCs are required to fill the gap, especially to the secondary destinations that the main carrier does not operate to. However, without the freedom to enter new routes and to charge what fares an operator wishes, the low cost model is impeded in its development (Francis et al., 2006).
110 A Geographical Analysis of Air Hubs in Southeast Asia
Some of the highest growth markets in the region belong to such secondary
destinations like Cebu and Davao in the Philippines, Chiang Mai in Thailand and
Bandung in Indonesia; and Vietnam is the highest growing commercial aviation
market in the whole of Southeast Asia. The Singapore – Ho Chi Minh sector alone
grew by 20% in 2006 despite capacity injection of less than 20%. Load factors on this
sector have been consistently high at 80% – 90% (personal communication, Ng, 6th
March 2007). Being a convenient gateway to many parts of IndoChina, having a liberal aviation policy would grant entry to foreign carriers to operate Fifth Freedom routes out of Vietnam, and this is critical especially since the Vietnamese market is booming but air seat supply by local carriers remains limited, constrained by issues of finance and mismanagement.
Within the region, Singapore already has multilateral Open Skies agreements with Thailand and Brunei. Cambodia, Laos, Myanmar and Vietnam have developed the CLMV Agreement to liberalize air transport among the four countries. Malaysia and Hong Kong also have an agreement which enables airlines of both sides to decide for themselves how many passenger and cargo flights to offer between the two territories, at the same time expanding the scope for fifth freedom rights. A number of non-Southeast Asian carriers also operate numerous fifth freedom flights out of
Southeast Asian destinations, e.g. Cathay Pacific, Emirates, Sri Lankan, Qantas to name a few.
Some markets, however, remain closely guarded even though steps are currently being taken to free them up further. One example would be the lucrative
KUL-SIN route which has been the bane of liberalists for many years. Currently,
111 A Geographical Analysis of Air Hubs in Southeast Asia
MAS and SIA operate the bulk of the shuttle flights between the two capitals in a profit-sharing agreement, with a few fifth freedom carriers competing as well.
However, there has been recent pressure on both sides by the respective LCCs, Air
Asia and Tiger to open the route to competition, in a bid to lower the artificially inflated fares (in excess of S$300 for the shuttle flight) for the benefit of the consumers. The main arguments from the Malaysian side for gradual liberalization reside in the potential loss of jobs should MAS lose out on the competition on the route where it earns almost 10% of its revenue (Today, 9th February 2007). With such
uncertainty in the context of a full-fledged liberal operating environment, it is still a
key consideration “whether the political forces of consumerism and industry needs for greater commercial freedom will combine as they have done before in other places to present irreversible and rapid transitions to highly liberalized civil aviation policies”
(Hooper, 2005: 346). On a positive note, Singaporean and Malaysian authorities have
recently struck an agreement to allow for the gradual liberalization of the route
starting in February 2008 with rights to allow Tiger Airways and Jetstar Asia a daily
flight each whilst AirAsia is expected to be given similar rights by the Malaysian
authorities.
5.8 Chapter Summary
This chapter presented some of the key empirical findings from my research.
In essence, a comparison of the current statues of the air hubs is undertaken using a
variety of indicators including spatial ones and numerical indices. I have also
provided, using real world data, a comparison of flight frequencies, volumes and
schedules to paint the “big picture” of the airports in this study. A ten-year temporal
analysis of key routes was also presented, showing how the airports have fared since
112 A Geographical Analysis of Air Hubs in Southeast Asia
Bowen’s (2000) study in 1997. Finally, I have situated the findings into the wider socio-political environment, assessing the role of the state and the national carrier in air hub development, as well as to review the impacts of the low-cost revolution and impending liberalization in the region to the air hubs in this study.
113
CHAPTER SIX CASE STUDY – THE KANGAROO ROUTE
A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER SIX: CASE STUDY – THE KANGAROO ROUTE
6.1 Introduction
This thesis so far has focused on some of the key issues pertaining to air hubs
in Southeast Asia, from discussing the theoretical basis of hub formation and methods
of measuring “hubness” to the history and developmental plans of the three major
airport hubs in this region – SIN, KUL and BKK. The previous chapter provided
some empirical data to allow us to understand how the three hubs function, as well as
to provide some kind of comparative analysis on the respective state of affairs of the
airports in this study. This penultimate chapter, however, shifts the lens of discussion away from hubs to instead use a contemporary case study of an important air route
(The Kangaroo Route) to illustrate some of the earlier points made about air hub
competition in the region.
A brief background on the Kangaroo Route will first be provided and the
current status of the competing airlines and airport hubs will be examined. A closer
analysis of current airline schedules and capacities on the route will also show some
of the key players in this lucrative market, and how they each operate. The findings of
a questionnaire survey targeted at sourcing passenger preferences and opinions with
respect to the Kangaroo Route will also be presented to elucidate some of the key
issues and to provide us an understanding (from the passenger point of view) what the major factors which influence their choice of flight arrangements on long-haul routes
like this one are.
114 A Geographical Analysis of Air Hubs in Southeast Asia
6.2 Background
The Kangaroo Route refers to the air route between Europe and Oceania
(Australia, New Zealand). This has traditionally been an important air route linking the commonwealth countries of the British Empire to Europe, facilitating early trade and exchange of services between the two geographically separated regions. The closely knitted economies and ancestries of the two regions, especially between
Britain and Australia/New Zealand make the route a particularly high-demand one, particularly on key city pairs like Sydney and London. One explanation for the adoption of the term “Kangaroo Route” lies in the fact that Qantas Airways (also fondly known as the Flying Kangaroo) is a key player on this route. The inherent
“Australian-ness” of this route warrants the term “Kangaroo” to be used. Another more intuitive explanation for the choice of terminology resides in the fact that the route is extremely long, and thus necessitates stopovers along the way for refueling; sometimes even several stops were needed depending on aircraft technology at the time. Such “hops” were associated with a Kangaroo’s locomotive skills and the name subsequently derived.
Figure: 6.1: Early Intercontinental Air Routes (source: Rodrigue, J. (2005))
115 A Geographical Analysis of Air Hubs in Southeast Asia
Maximum Range Long-Haul Aircraft From London Heathrow Airport (LHR) Distance in Today in Typical Configuration to Nautical Miles (Nautical Miles) B772LR A345 Sydney (SYD) 9188 Melbourne (MEL) 9127 Brisbane (BNE) 8930 9420 9000 Perth (PER) 7829 Auckland (AKL) 9910 Christchurch (CHC) 10256 Table 6.1: Distances on Key Kangaroo Route City-Pairs (Data source: Great Circle Mapper)
Even today, the longest-range airliner commercially available, the Boeing
772LR, is unable to complete certain key permutations of the Kangaroo Route (e.g.
London-Christchurch, London-Auckland) without a refueling stop. Table 6.1 above shows the great circle8 city-pair distances on key destinations on the Kangaroo Route.
With current available technology, all the London-Australia routes can be completed with a single non-stop flight, although no airline has embarked on such a task. We can see that even when technology enables such non-stop flights to be possible, economic considerations like the high price of fuel and the reduced payload due to weight restrictions may make the route not viable. Also, operating ultra long haul flights mean that the aircraft spends more time in the air, and the frequency of trips made possible within a single day is greatly reduced. Currently, the world’s longest non- stop flight is Singapore Airlines’ SIN-EWR (Singapore – Newark, New Jersey) service which is about 9535mi in distance (Great Circle Mapper, 2007) using the quad-engine A345 aircraft on a flight lasting over 18 hours. This service was only made possible with a drastically reduced payload, additional fuel tanks and by charging premium fares. Even using similar configurations on the B772LR on the
Kangaroo Route, Auckland and Christchurch remain distant impossibilities.
8 Because the earth is a globe, straight-line distances between any two points on a two dimensional flat map will not be the shortest distance. Thus, the Great Circle distance measurement is the shortest possible between any two points on a spherical surface.
116 A Geographical Analysis of Air Hubs in Southeast Asia
1957 LHR 1970
1989
2002
SYD
Figure 6.2a: Aircraft Range on LHR-SYD route (Data source: Great Circle Mapper http://gc.kls2.com/ )
1989
2002 1970 LHR
1957
SYD
Figure 6.2b: Aircraft Range on SYD-LHR route (Data source: Great Circle Mapper http://gc.kls2.com/ )
Figures 6.2a and 6.2b above chart out the impact of aircraft range
improvements on the Kangaroo Route (LHR-SYD and SYD-LHR). The earliest long-
haul aircraft available was the Boeing 707 series, first commercially flown in 1958
which had a maximum payload range of 3680nm. It was succeeded by two variants of
the Boeing 747 series, the 747-100 and the 747-400 which made their debuts in 1970
and 1989 respectively. These jumbo jets had a maximum payload range of 5300nm and 7260nm, and the latter version enabled direct flights from London to Southeast
Asia and from Sydney to the Middle East. Even the ultra-long range Airbus A345
117 A Geographical Analysis of Air Hubs in Southeast Asia
series introduced in 2002 with a maximum range of 9000nm falls just short of
connecting these two cities as shown in the maps above.9 One tenable idea given
current range considerations would be for Australian cities like Perth to act at the
stopover hub, allowing Australian carriers to bypass Middle Eastern or Asian airports.
It still remains to be seen whether airlines will take up this idea, although factors like
airport infrastructure and connectivity may act against Perth as a potential hub. If such
an arrangement were ever to be made, Australian airlines and airports would benefit from having a hub within Australia itself, although it is doubtful whether or not there is enough traffic within Australia to sustain such a route.
Given current technological and economic considerations, stopover flights on
the Kangaroo Route are still prevalent and will remain prevalent in the foreseeable
future. The use of a hub to consolidate traffic onto bigger planes en-route to the final
destinations (see Chapter Four) is a common and effective strategy employed by
airlines. Traditionally, Southeast Asia has been the main stopover destination on the
Kangaroo Route with key airport hubs like Singapore, Kuala Lumpur and Bangkok
vying for the lucrative market. It is estimated that SIA alone earns 15 – 20 per cent of
its annual revenue from the Kangaroo Route (The Business Times, 9th November
2006). More recently, airports and airlines in East Asia and the Middle East are also
beginning to enter this market to bring traffic on the Kangaroo Route through their
respective hubs (The Straits Times, 20th March 2007). In particular, Middle Eastern
airports like Dubai, Qatar and Abu Dhabi are aggressively penetrating this market,
with the advantage of their close proximity to Europe and hence enhanced
9 Only when the Boeing 777-200LR was introduced in 2006 were such routes made technically possible.
118 A Geographical Analysis of Air Hubs in Southeast Asia
connectivity to numerous European destinations from their hubs. A recent newspaper
article made this observation:
“Emirates was able to enter the contest when it acquired longer-range aircraft, capable of bringing the east coast of Australia within reach of Dubai […] The geography involved means that there is no time penalty for passengers travelling the kangaroo route via Dubai as opposed to the traditional mainstay routing over Singapore and Bangkok.” (The Business Times, 9th November 2006)
Apart from Middle Eastern competitors, East Asian airports like Hong Kong
have also declared that they wanted a share of the Kangaroo Route pie. Currently,
Hong Kong and Australian authorities have existing agreements that allow Australian
carriers to use Hong Kong as a stopover to Europe, providing for code-share
agreements between airlines from the two sides (South China Morning Post, 16th
April 2004). Having said this, the rise of the Middle Eastern and East Asian hubs in competition to their Southeast Asian counterparts is still a developing trend, and any long term impacts remain to be seen. The “traditional” Kangaroo Route operators like
Qantas and British Airways have also not rested on their laurels. Realizing the potential for future growth on this route, both the UK and Australian governments have signed agreements to lift flight restrictions between the two countries (The
Australian, 7th July 2006; New Zealand Herald, 8th July 2006) to allow carriers from
both sides greater market access.
Currently, carriers operating on the Kangaroo Route either need Fifth Freedom
rights out of hub airports (for the case of European and Oceania Carriers), or Sixth
Freedom rights to bring passengers from either continents through their hubs and
onwards (Middle Eastern and Asian carriers). Existing bilateral regulatory agreements
dictate the frequency and volumes of services provided on the route, although limits
119 A Geographical Analysis of Air Hubs in Southeast Asia
to growth exist, most notably in the form of congestion and slot restrictions at key
airports like London’s Heathrow. Qantas, for example, paid almost $50 million
Australian dollars for “premium slots” at Heathrow in 2004 (The Australian, 7th July
2006). The only airlines now offering Kangaroo Route flights with the same flight number and same aircraft are Air New Zealand, Austrian Airlines, British Airways,
Qantas and Virgin Atlantic, making use of Fifth Freedom rights out of various hubs.
To get around regulatory hurdles, many Asian carriers offer Kangaroo Flights using separate aircraft and flight numbers, making the Sixth Freedom right informal with the actual use of Fourth and Third Freedom rights in reality. This approach was not without controversy. In 1978, Australia retaliated against the Sixth Freedom carriers by adopting their International Civil Aviation Policy (ICAP) in which Sixth Freedom carriers are restricted by providing ‘point-to-point’ fares between Australia and
London, allowing only Third and Fourth Freedom carriers to operate (Raguraman,
1986: 65). The ICAP was designed to give direct advantages to Australian carriers by regulating quotas on passenger traffic carried by non-Australian carriers and setting regulations which affected stopover traffic in intermediate travel points. This adversely affected ASEAN airlines, especially Singapore Airlines, which had the largest exposure to the air traffic from London to Sydney. There was strong opposition to this policy, most notably from ASEAN and Australia eventually withdrew this policy and in fact its national carrier Qantas has increasingly used
Singapore as a hub for its European routes as explained earlier.
To provide a visual representation of the current Kangaroo Route scene, the following maps depict some of the major current permutations of routes and stopover points on the Kangaroo route.
120 A Geographical Analysis of Air Hubs in Southeast Asia
Figure 6.3a: Current Routes – Sydney to the UK (source: www.flightmapping.com/maps)
Figure 6.3b: Current Routes – Melbourne to the UK (source: www.flightmapping.com/maps)
121 A Geographical Analysis of Air Hubs in Southeast Asia
Figure 6.3c: Current Routes – Perth to the UK (source: www.flightmapping.com/maps)
Figure 6.3d: Current Routes – Brisbane to the UK (source: www.flightmapping.com/maps)
122 A Geographical Analysis of Air Hubs in Southeast Asia
Figure 6.3e: Current Routes – Auckland to the UK (source: www.flightmapping.com/maps)
Figure 6.3f: Current Routes – Christchurch to the UK (source: www.flightmapping.com/maps)
6.3 Intermediacy Analysis
Having seen some of the current permutations of the Kangaroo Route, the question of which is the best hub naturally begs. Popularized by Fleming & Hayuth
(1994), the intermediacy of an air hub essentially refers to the extent to which it deviates from the shortest distance between the origin and destination.
123 A Geographical Analysis of Air Hubs in Southeast Asia
SIN KUL BKK HKG DXB BAH PEK SYD 3395 3552 4051 3980 6500 6755 4824 LHR 5879 5729 5177 5209 2972 2754 4414 9188 Total 9274 9281 9228 9189 9472 9509 9238 Difference 86 93 40 1 284 321 50 BWN MRU ICN NRT TPE MNL DEL SYD 3104 4902 4488 4211 3920 3371 5628 LHR 6096 5273 4797 5191 5293 5821 3641 9188 Total 9200 10175 9284 9402 9213 9192 9269 Difference 2 987 96 214 25 4 81 Table 6.2: Intermediacy Measures on the Kangaroo Route (in nautical miles) (Data source: Great Circle Mapper)
Table 6.2 shows the relative intermediacies of selected stopover airports on the
Sydney-London route. The great circle distance between SYD and LHR would be
approximately 9188nm if a direct flight were operated. However, since we know that
is currently not the case, any stopovers at airports along the way will mean added time
and distance incurred to the whole trip (in this case I use the great circle distances as a measure). Therefore the trip is broken down into two segments, for example SYD-
SIN, SIN-LHR and the great circle distances of each segment is calculated and then added up to form the total trip distance. (Thus SYD-SIN-LHR will be 3395nm +
5879nm = 9274nm) The difference in the total trip distance is then compared to the theoretical shortest great circle distance between SYD and LHR. Thus, the smaller the difference, the more geographically suitable the hub is in terms of time savings.
From the table, we can infer that the best hubs for the route, geographically
speaking, are Hong Kong (1nm difference), Manila (4nm difference) and Bandar Seri
Begawan (2nm difference). The worst hub is Mauritius (987nm difference). However,
in reality many other factors play a role, including airline schedules, airport efficiency
and passenger preference. Political, physical (e.g. Himalaya Mountains), and technical
124 A Geographical Analysis of Air Hubs in Southeast Asia
features also sometime make Great Circle routes impractical. Thus, a geographically suitable hub may not always be the eventual hub for such routes as we shall find out.
6.4 The Current Situation
Country International Passengers (Year ended 2006) New Zealand 4,873,461 Singapore 3,574,900 Hong Kong 1,723,271 Japan 1,634,377 USA 1,624,028 Malaysia 1,112,840 Thailand 912,719 United Arab Emirates 842,876 UK 763,775 Indonesia 557,127 Table 6.3: International Passengers by Uplift/Discharge Country From/To Australia (Source: BTRE, 2006)
Based on 2005/2006 figures, five out of the top ten international destinations
from Australia based on non-stop flights are stopover airports on the Kangaroo Route
(BTRE, 2006: x). These include the following city-pairs and the respective volume of passengers carried: SIN-SYD (1.2 million); HKG-SYD (957,000); SIN-MEL
(825,000); SIN-PER (802,000); and SIN-BNE (677,000) (BTRE, 2006: x).
Table 6.3 above shows the top 10 international destinations from Australian
airports by volume based on uplift/discharge countries. Note that passenger traffic to
Kangaroo Route hub destinations (Singapore, Hong Kong, Malaysia, Thailand, UAE
etc) dominate the rankings. In fact, of the top ten destinations, only USA and New
Zealand are not intermediate points on the Kangaroo Route. Total passenger traffic
out of/to the top ten international destinations, less New Zealand and USA, make up
52.7% of Australia’s total international traffic (BTRE, 2006: xi). Due to the nature of
the data, only flights using one flight number were included, (i.e. figures for UK will
only account for passengers on flights with a single flight number) hence traffic to the
125 A Geographical Analysis of Air Hubs in Southeast Asia
UK via stopovers and change of flights should be significantly higher. Also, a large
proportion of traffic to the hub destinations mentioned above are not origin-
destination in nature, but rather, these involve a change of flight onwards to other destinations, with European ones forming the majority. For example, the figures for
Singapore would include traffic whose origin/destination is Europe.
Not to be confused with the uplift/discharge data presented earlier, Table 6.4 below shows the passenger movements between selected city-pairs on the Kangaroo
Route for 2005/2006. The primary difference (apart from one being country-based
and one being city-based) lies in the fact that this table includes transit passengers on
“same flight number services” and only takes into account non-stop flights. Hence,
cities such as London are not represented and the traffic bound for London is
dispersed into the hub cities, depending on the airline of choice. Similar to the earlier
table, Table 6.3 does not mean all passengers are O&D in nature; some may be en-
route to other destinations. Once again, we see the prominence of SIN, KUL and
BKK on the top city-pairing lists, with traffic to/from SIN dominating the rest of the
hub airports.
Country Passenger Movements (Year ended 2006) Singapore 4,587,120 Hong Kong 1,829,025 Kuala Lumpur 1,210,906 Bangkok 1,171,968 Tokyo 1,080,298 Dubai 433,947 Seoul 382,800 Osaka 354,981 Shanghai 344,462 Taipei 223,211 Ho Chi Minh City 162,058 Guangzhou 144,538 Bandar Seri Begawan 134,482 Mauritius 46,746 Beijing 29,133 Table 6.4: Traffic on board passenger movements between Australia and international cities [selected cities on Kangaroo Route] (Source: BTRE, 2006)
126 A Geographical Analysis of Air Hubs in Southeast Asia
In terms of airline dominance, Qantas accounted for 27.5% of all international
passengers into and out of Australia, with SIA coming in second at 11%, Air New
Zealand third with 8.9%, Emirates – 6.5%, Malaysia Airlines – 5.1%, Cathay Pacific
4.6%, Thai Airways 3.1% and British Airways 2.6% (BTRE, 2006: xii). In absolute terms, Qantas carried 5.8 million passengers in and out of Australia, SIA (2.3 million), Air New Zealand (1.8 million), Emirates (1.3 million), MAS (1 million),
Cathay Pacific (978,000), JAL (701,000) and Thai (638,000).
International Passengers by Major Airlines
QF Others, 24.60% QF, 27.50% SQ NZ EK MH CX BA, 2.60% JL AO, 2.80% TG TG, 3.10% SQ, 11.00% AO JL, 3.30% BA
CX, 4.60% NZ, 8.90% Others EK, 6.50% MH, 5.10%
Figure 6.4: International Passengers by Major Airlines (Source: BTRE, 2006)
127 A Geographical Analysis of Air Hubs in Southeast Asia
Table 6.5: Major Kangaroo Route Permutations (Source: OAG and airline websites) Stopover City Airline Oceania Gateway(s) European Gateway(s) Paris, Frankfurt, Athens, Dublin, Bahrain Gulf Air Sydney* London British Airways Sydney London Qantas Sydney London Bangkok Athens, Copenhagen, Frankfurt, Auckland, Brisbane, London, Madrid, Munich, Milan, Thai Airways Melbourne, Perth, Sydney Moscow, Paris, Rome, Stockholm, Zurich Frankfurt, London, Madrid, Milan, Beijing Air China Melbourne, Sydney Moscow, Munich, Paris, Rome, Stockholm Auckland*, Brisbane, Brunei Royal Brunei Airlines Frankfurt*, London* Darwin, Perth, Sydney Athens, Birmingham, Dusseldorf, Frankfurt, Glasgow, Hamburg, Auckland*, Brisbane, Larnaca*, London, Malta, Dubai Emirates Christchurch*, Melbourne, Manchester, Milan, Moscow, Perth, Sydney Munich, Paris, Rome, Nice, Vienna, Zurich Guangzhou China Southern Airlines Melbourne, Sydney Amsterdam, Paris Hanoi Vietnam Airlines Sydney Frankfurt, Moscow, Paris Ho Chi Minh City Vietnam Airlines Melbourne, Sydney Frankfurt, Moscow, Paris Air New Zealand Auckland London British Airways Auckland** London Adelaide, Auckland, Amsterdam, Frankfurt, London, Cathay Pacific Brisbane, Cairns, Melbourne, Hong Kong Paris, Rome Perth, Sydney Brisbane, Melbourne, Perth, Qantas London, Rome** Sydney Virgin Atlantic Sydney London Adelaide, Auckland, Amsterdam, Frankfurt, London, Kuala Lumpur Malaysia Airlines Brisbane, Melbourne, Perth, Paris, Rome, Stockholm, Zurich Sydney Mauritius Air Mauritius Perth, Melbourne, Sydney Paris, Frankfurt, London, Zurich Asian Airlines Sydney Frankfurt, London Amsterdam, Frankfurt, London, Seoul Korean Air Auckland, Brisbane, Sydney Moscow, Paris, Prague, Rome, Zurich Shanghai China Eastern Airlines Melbourne, Sydney Frankfurt, London, Moscow, Paris British Airways Sydney London Adelaide, Brisbane, Cairns, Qantas Darwin, Melbourne, Perth, Frankfurt, London Sydney Singapore Amsterdam, Athens, Barcelona*, Adelaide, Auckland, Copenhagen, Frankfurt, London, Singapore Airlines Brisbane, Christchurch, Manchester, Milan, Moscow*, Paris, Melbourne, Perth, Sydney Rome, Zurich Amsterdam, Frankfurt, London, Tokyo Japan Airlines Brisbane, Sydney Milan, Moscow, Paris, Rome, Zurich *Indicates additional stopover(s) en-route to/from airline’s hub airport **Indicates codeshares
Table 6.5 summarizes the key route permutations on the Kangaroo Route. In
terms of direct connections with Australian/New Zealand cities, Singapore leads the
pack with 9 direct connections. Other hub airports had 7 (HKG), 6 (KUL), 5 (BKK)
128 A Geographical Analysis of Air Hubs in Southeast Asia
and 4(DXB) respectively. When considering direct connections to European
destinations Dubai has distinctly superior connectivity with 18 direct connections to
European cities, both SIN and BKK have 12, KUL has 7 and HKG has 5. Taking the
aggregate of connections from Oceania onwards to Europe, this is how the hub airports fare – DXB (22), SIN (21), BKK (17), KUL (13) and HKG (12). Thus, this analysis shows that in pure connectivity terms Dubai and Singapore are the best hubs on the Kangaroo Route to allow the maximum array of city-pairings on the Route.
6.5 Supply-Side Analysis – Airline Schedules
In order to understand the hubbing phenomenon better and to show the
significance of the Kangaroo Route, a comparison of how airlines schedule their
flights through the hub airports is provided below. The supply-side of the Kangaroo
Route is thus represented by the flights and seats offered by the various airlines
through different hubs. This approach differs from the earlier spatial approaches in
that it takes into consideration the temporal dimension of hubbing and airline
networks. The temporal configuration of an airline network is defined as “a certain
organization of the airline flight schedule at an airline station resulting in a certain
number and quality of indirect connections offered through that airline station”
(Burghouwt, 2007: 65). Thus, the number and quality of indirect connections through
an airline station can be enhanced by concentrating the flight schedule in time; or, in
other words, by adopting a wave (or bank) system structure. Incoming and outgoing
flights are structured in such a way that there is maximum connectivity such that all
incoming flights connect to all outgoing flights. This section therefore explores how
airlines make use of the temporal scheduling of their flights on the Kangaroo Route to
ensure maximum connectivity through their respective hubs.
129 A Geographical Analysis of Air Hubs in Southeast Asia
Table 6.6a: Qantas Flight Schedules on Kangaroo Route (Source: Qantas website) Inbound from Outbound Inbound Outbound to Hub Time Time Time Time Oceania to Europe from Europe Oceania QF77 (Perth) 1645 QF32 (London) 0800 QF72 (Perth) 0905
QF32 (Sydney) 0930
QF6 (Darwin) 1800 QF9 (London) 2300 QF5 QF81 (Adelaide) 1830 2305 QF10 (London) 1755 QF78 (Perth) 1925 (Frankfurt) QF31 QF10 QF355 (Cairns) 1940 2359 QF6 (Frankfurt) 1800 1945 (London) (Melbourne) QF51 (Brisbane) 1950 QF6 (Sydney) 1950 SIN QF52 QF71 (Perth) 2050 2120 (Brisbane) QF356 QF9 (Melbourne) 2105 2215 (Cairns) QF356 QF5 (Sydney) 2145 2215 (Darwin) QF82 QF31 (Sydney) 2245 2230 (Adelaide) QF339 1940 QF1 (London) 0045 QF2 (London) 1535 QF2 (Sydney) 1810 (Melbourne) BKK QF340 QF1 (Sydney) 2315 2100 (Melbourne) QF29 QF30 QF29 (Melbourne) 0550 0735 QF30 (London) 0710 0910 (London) (Melbourne) QF188 0925 (Sydney) QF128 HKG QF67 (Perth) 1715 2110 (Sydney) QF98 QF127 (Sydney) 1745 2315 (Brisbane) QF97 (Brisbane) 1805 QF68 (Perth) 2335 QF187 (Sydney) 2115
Table 6.6a shows how Qantas, Australia’s flag carrier schedules its flights on
the Kangaroo Route using three key hubs, Singapore, Bangkok and Hong Kong. In
Singapore’s case, the bulk of the outbound flights to Europe are banked in the
evening, with Australia-Singapore connections in the early evening and the
Singapore-Europe flights late at night. Traffic from the major Australian gateways are channelled into Singapore and sometimes consolidated onto bigger planes onwards to
Europe (some of which are continuing from Australia). The converse applies for its flights from Europe back to Australia thru Singapore, concentrating in early morning with an incoming flight from London (QF32), but more so in the evening with more flights both ways. The hubbing phenomenon is less extensive at HKG and BKK. In
BKK, only Sydney and Melbourne are served by direct flights on Qantas, and in
HKG’s case although more Australian cities are connected to the hub, the flight
schedules make transfers to the London bound flight unpopular due to the long
130 A Geographical Analysis of Air Hubs in Southeast Asia
transiting durations. Qantas has Fifth Freedom rights out of all the three hub airports to London, and also the right to carry passengers onwards to Frankfurt from
Singapore. In addition, Qantas and British Airways also have extensive code-sharing agreements on the Kangaroo Route, so passengers on both carriers are free to choose flights from either carrier. Qantas also has interlining arrangements with its subsidiary airline Jetstar International, allowing the regional carrier to feed into the network as well. Qantas currently does not operate any services into KUL.
Plate 6.1: QF and BA Codesharing Options on the Kangaroo Route (Source: Qantas website)
131 A Geographical Analysis of Air Hubs in Southeast Asia
Table 6.6b: BA Flight Schedules on Kangaroo Route (Source: BA website) Inbound from Outbound to Inbound from Outbound to Hub Time Time Time Time Oceania Europe Europe Oceania BA12 BA16 (Sydney) 2145 2245 BA11 (London) 1750 BA15 (Sydney) 2000 (London) SIN BA16 2320 BA15 (London) 1830 (London) BA10 BKK BA10 (Sydney) 2245 0010 BA9 (London) 1540 BA9 (Sydney) 1705 (London)
Table 6.6c: NZ Flight Schedules on Kangaroo Route (Source: NZ website) Inbound from Outbound to Inbound from Outbound to Hub Time Time Time Time Oceania Europe Europe Oceania NZ39 NZ38 HKG NZ39 (Auckland) 0645 0845 NZ38 (London) 1550 1810 (London) (Auckland)
Apart from Qantas, British Airways and Air New Zealand are two other airlines that fly the Kangaroo Route with the same aircraft using the same flight number. In BA’s case, the London-Sydney route remains as the carrier’s only
Australian destination after it withdrew its services from Australian cities as a result of an extensive code-sharing agreement with Qantas. BA operates BA16 and BA10 from Sydney to London through SIN and BKK respectively. An additional London- based service, BA12 terminates in Singapore but offers the additional option for layover passengers in Singapore. To synchronize with Qantas’s schedules, BA’s flights are also concentrated in the evenings for its Singapore hub. Air New Zealand is another carrier which has a direct stake in the Kangaroo Route being the flag carrier of New Zealand. Currently it operates NZ39 from Auckland to London through HKG
(although it should be stated here that NZ also operates flights to London across the
Pacific and Atlantic Oceans through North American cities). The carrier has been embarking on a massive consolidation effort, cutting away unprofitable international routes and instead channelling its focus on East Asian and North American cities.
Direct services to many Southeast Asian destinations were terminated, or in the case of Singapore, replaced with code-sharing agreements with other carriers. (E.g. NZ currently codeshares with SQ on its services from New Zealand to Singapore).
132 A Geographical Analysis of Air Hubs in Southeast Asia
Table 6.6d: SIA Flight Schedules on Kangaroo Route (Source: SIA website) Inbound from Outbound to Inbound from Outbound to Hub Time Time Time Time Oceania Europe Europe Oceania SQ308 SQ351 SQ281 SQ246 (Brisbane) 0545 0900 0530 0845 (London) (Copenhagen) (Auckland) SQ320 SQ375 SQ219 SQ216 (Perth) 0625 1240 0545 0930 (London) (Moscow) (Sydney) SQ218 SQ326 0645 1350 SQ327 (Athens) 0555 SQ223 (Perth) 0935 (Melbourne) (Frankfurt) SQ217 SQ282 (Auckland) 0645 SQ365 (Rome) 0605 0955 (Melbourne) SQ327 SQ245 0620 0955 (Manchester) (Brisbane) SQ323 SQ224 (Perth) 1305 0630 (Amsterdam) SQ220 (Sydney) 1420 SQ25 (Frankfurt) 0630 SQ238 1605 SQ333 (Paris) 0700 (Melbourne) SQ298 1745 SQ345 (Zurich) 0705 (Christchurch) SQ232 (Sydney) 1745 SQ317 (London) 0745 SQ377 SQ268 (Adelaide) 1750 0755 (Barcelona) SQ377 (Milan) 0755 SQ376 SQ286 (Auckland) 2035 2200 (Moscow) SQ322 SIN SQ236 (Brisbane) 2045 2320 SQ319 (London) 1415 (London) SQ325 SQ226 (Perth) 2115 SQ334 (Paris) 2340 1620 (Frankfurt) SQ228 2140 SQ378 (Milan) 2345 (Melbourne) SQ324 SQ222 (Sydney) 2155 2345 SQ321 (London) 1800 SQ215 (Perth) 1850 (Amsterdam) SQ378 SQ297 2345 1950 (Barcelona) (Christchurch) SQ26 SQ221 2350 2030 (Frankfurt) (Sydney) SQ328 SQ227 2350 2100 (Manchester) (Melbourne) SQ348 SQ235 0100 2110 (Athens) (Brisbane) SQ352 SQ285 0100 2155 (Copenhagen) (Auckland) SQ237 SQ366 (Rome) 0100 2335 (Melbourne) SQ346 SQ269 0105 2345 (Zurich) (Adelaide) SQ321 0030 (Sydney) SQ225 (Perth) 0120
SIA maintains a strong presence on the Kangaroo Route with its direct flights to many oceanic cities. There are two major banks of flights through SIN with early morning flights coming in from Oceania connecting to SIA’s London and Frankfurt flights. The larger of the two banks of flights occur in the evening where Oceanic flights arrive in SIN in the early evening and passengers are then able to connect to all of SIA’s European flights which leave around midnight. The incoming European flights are also banked into the early morning and afternoon which allows for
133 A Geographical Analysis of Air Hubs in Southeast Asia maximum connections to SIA’s morning and evening’s banks of Australasian flights.
SIA does not have an extensive European network as compared to Emirates or Thai, but it does offer certain exclusive destinations like Manchester and Barcelona which currently no other carrier from the region operates to. The carrier has plans to extend and intensify its Australian and European networks, but this has been hindered by the delays in delivery of its A380 orders, resulting in a current shortage of airframes.
Malaysia Airlines has the advantage of being the only carrier on the Kangaroo
Route using its KUL hub as both Qantas and BA have since terminated their services on this route through the Malaysian capital city. Once more, there are two major banks of flights, one in the morning and another in the evening. However, the number of European connections available is significantly lower when compared to SIN and
BKK.
Table 6.6e: MAS Flight Schedules on Kangaroo Route (Source: MAS website) Inbound from Outbound Inbound from Outbound to Hub Time Time Time Time Oceania to Europe Europe Oceania MH90 MH17 MH140 (Brisbane) 0610 0850 0605 MH125 (Perth) 0940 (Stockholm) (Amsterdam) MH141 MH140 (Sydney) 0610 MH8 (London) 0900 MH9 (Zurich) 0605 1000 (Sydney) MH128 MH141 0625 MH5 (Frankfurt) 0625 1000 (Melbourne) (Brisbane)
MH129 MH21 (Paris) 0635 1005 (Melbourne) MH91 MH4 (London) 1200 0645 (Stockholm) KUL MH3 (London) 0725 MH130 (Auckland) 2005 MH20 (Paris) 2325 MH15 (Rome) 0745 MH122 (Sydney) 2045 MH2 (London) 2340 MH131 MH138 (Adelaide) 2100 MH14 (Rome) 2345 MH1 (London) 1725 2040 (Auckland) MH148 MH149 2110 MH10 (Zurich) 2345 2130 (Melbourne) (Melbourne) MH6 MH139 MH124 (Perth) 2210 2350 2150 (Frankfurt) (Adelaide) MH16 MH123 2355 2205 (Amsterdam) (Sydney)
134 A Geographical Analysis of Air Hubs in Southeast Asia
Table 6.6f: THAI Flight Schedules on Kangaroo Route (Source: THAI website) Inbound from Outbound to Inbound from Outbound to Hub Time Time Time Time Oceania Europe Europe Oceania TG980 TG974 0555 1035 TG971 (Zurich) 0555 TG997 (Perth) 0755 (Melbourne) (Moscow) TG922 TG999 1320 TG945 (Rome) 0600 0810 (Frankfurt) (Melbourne) TG916 TG961 TG991 1350 0600 0815 (London) (Stockholm) (Sydney) TG924 1415 TG941 (Milan) 0615 (Munich) TG911 (London) 0620 TG921 0620 (Frankfurt) TG992 (Sydney) 1630 TG931 (Paris) 0630 TG986 (Perth) 1640 TG947 (Athens) 0630 TG951 0650 (Copenhagen) TG920 TG975 BKK TG984 (Brisbane) 2130 2340 0705 (Frankfurt) (Moscow) TG990 (Auckland) 2130 TG944 (Rome) 0001 TG949 (Madrid) 0710 TG996 (Sydney) 2220 TG930 (Paris) 0005 TG982 TG948 TG923 TG989 2240 0010 1305 1950 (Melbourne) (Madrid) (Frankfurt) (Auckland) TG998 (Perth) 2245 TG940 (Milan) 0020 TG925 (Munich) 1350 TG946 0025 TG917 (London) 1555 (Athens) TG910 0035 (London) TG983 TG970 (Zurich) 0040 2340 (Brisbane)
TG960 0045 TG985 (Perth) 2340 (Stockholm) TG950 TG981 0050 0015 (Copenhagen) (Melbourne)
Thai Airways is another keen competitor on the Kangaroo Route. It has the
advantage of being the only Southeast Asian carrier that operates services to
secondary European cities such as Munich, Madrid and Stockholm. Most of the
activity takes place in the late evenings at BKK for the Europe-bound journeys on the
Kangaroo Route and similar to its keen rivals MAS and SIA, inbound European
flights arrive into BKK early in the morning to connect to Australian flights. THAI
also operates Australian and European bound flights out of its secondary cities like
Phuket and Chiang Mai using the same aircraft and flight number as there is strong
tourist demand from these cities. Examples include TG920: Phuket-Bangkok-
Frankfurt, TG 922: Chiang Mai-Bangkok-Frankfurt, TG986: Perth-Phuket-Bangkok.
135 A Geographical Analysis of Air Hubs in Southeast Asia
Table 6.6g: Cathay Pacific Flight Schedules on Kangaroo Route (Source: Cathay Pacific website) Inbound from Outbound to Inbound from Outbound to Hub Time Time Time Time Oceania Europe Europe Oceania CX257 CX139 CX138 (Sydney) 0500 0920 CX292 (Rome) 0650 0900 (London) (Sydney) CX252 (London) 0725 CX253 1435 CX260 (Paris) 0740 (London) CX270 0750 (Amsterdam) CX288 CX110 (Sydney) 1450 0755 (Frankfurt) CX134 1505 (Melbourne) CX282 CX117 CX118 (Auckland) 1520 1350 1535 (Frankfurt) (Auckland) CX250 (London) 1405 CX285 CX102 (Brisbane) 2030 2305 CX256 (London) 1550 (Frankfurt) HKG CX102 (Cairns) 2030 CX261 (Paris) 2345 CX289 CX111 CX170 (Perth) 2035 2355 CX254 (London) 1805 1905 (Frankfurt) (Sydney) CX251 CX135 CX108 (Auckland) 2040 2355 1920 (London) (Melbourne) CX107 CX104 (Adelaide) 2150 CX293 (Rome) 0015 2105 (Auckland) CX104 CX271 CX105 2150 0025 2340 (Melbourne) (Amsterdam) (Adelaide) CX255 CX105 CX100 (Sydney) 2215 0055 2340 (London) (Melbourne) CX103 2350 (Brisbane) CX103 (Cairns) 2350
CX171 (Perth) 2355 CX101 2355 (Sydney)
Outside of Southeast Asia, Cathay Pacific is another key player in the
Kangaroo Route market. Cathay maintains an extensive Australasian network
although the carrier only serves the key European gateways. Cathay also operates four
daily services to London from Hong Kong, one leaving in the morning, another in the
afternoon and the remaining two around midnight. Their four times daily service is
more than any of the other Southeast Asian carriers. Hong Kong is also a OneWorld
hub, and the alliance comprises key airlines on the Kangaroo Route like British
Airways, Qantas and Cathay Pacific. Cathay currently codeshares with BA its flights
to Auckland. The OneWorld alliance is a key part of maintaining HKG’s hub status
as passengers traveling on OneWorld alliance member airlines are often channeled
through HKG for intercontinental services from Europe, Asia, and Australia.
136 A Geographical Analysis of Air Hubs in Southeast Asia
The case of Emirates is particularly interesting and warrants some discussion
here as well. Although Emirates is a Middle Eastern carrier, it is increasing becoming
an important stakeholder on the Kangaroo Route. Its home base Dubai lies
strategically on key international routes, and both the airline and the airport have been
growing at phenomenal rates. In addition, Emirates is not part of any airline alliance,
ridding itself of complying with alliance rules and policies dealing with pricing and
ticketing as well as any extra costs incurred from being in alliances. Its aggressive
marketing strategies and operating model have seen it positioning itself as a “global
airline”, and Dubai is also vying to become a “global hub” in competition with
London, Paris and Frankfurt.
Table 6.6h: Emirates Flight Schedules on Kangaroo Route (Source: Emirates website) Inbound from Outbound to Inbound from Outbound to Hub Time Time Time Time Oceania Europe Europe Oceania EK405 (Melbourne) 0510 EK1 (London) 0745 EK8 (London) 1840 EK419 (Auckland) 0535 EK25 (Glasgow) 0750 EK12* (London) 2000 EK419 (Sydney) 0535 EK17 (Manchester) 0755 EK93/95/97 EK407 (Auckland) 0540 0755 EK128 (Vienna) 2255 (Rome) EK407 (Melbourne) 0540 EK95 (Nice) 0755 EK206 (Hamburg) 2325 EK93/97/98 EK413 (Christchurch) 0545 0755 EK46 (Frankfurt) 2325 (Milan) EK39 EK421 (Perth) 0545 0805 EK134 (Moscow) 2330 (Birmingham) EK413 (Sydney) 0545 EK15* (London) 0805 EK106 (Athens) 2330
EK433 (Auckland) 0600 EK73 (Paris) 0820 EK56 (Düsseldorf) 2340 EK433 (Brisbane) 0600 EK45 (Frankfurt) 0825 EK50 (Munich) 2345 EK107 (Malta) 0835 EK2 (London) 2355 EK49 (Munich) 0835 EK88 (Zurich) 2355 EK87 (Zurich) 0840 EK16* (London) 0005 EK55 (Dusseldorf) 0850 EK40 (Birmingham) 0015 EK205 (Hamburg) 0855 EK18 (Manchester) 0015
EK127 (Vienna) 0910 EK74 (Paris) 0015 DXB EK133 (Moscow) 0930 EK93/97/99 (Milan) 0025 EK105 (Athens) 0935 EK96 (Nice) 0025 EK29 (London) 0950 EK93/96/97 (Rome) 0025 EK26 (Glasgow) 0030 EK404 (Melbourne) 0205 EK425 (Perth) 1315 EK3 (London) 1415 EK108 (Malta) 0035 EK420 (Perth) 0235 EK47 (Frankfurt) 1430 EK19 (Manchester) 1435 EK30 (London) 0255 EK57 (Düsseldorf) 1445 EK75 (Paris) 1500 EK58 (Düsseldorf) 0535 EK432 (Auckland) 0845 EK9* (London) 1500 EK4 (London) 0625 EK432 (Brisbane) 0845 EK37 1510 EK86 (Zurich) 0625 EK418 (Auckland) 0850 (Birmingham) EK85 (Zurich) 1605 EK52 (Munich) 0630 EK418 (Sydney) 0850 EK5 (London) 1615 EK76 (Paris) 0630 EK424 (Perth) 1005 EK51 (Munich) 1630 EK48 (Frankfurt) 0640 EK406 (Auckland) 1010 EK20 (Manchester) 0700 EK406 (Melbourne) 1010 EK412 EK7 (London) 0230 EK38 (Birmingham) 0710 1015 (Christchurch) EK11* (London) 0245 EK10* (London) 0710 EK412 (Sydney) 1015 EK6 (London) 0810 *Indicates flights to/from London Gatwick Airport
137 A Geographical Analysis of Air Hubs in Southeast Asia
A cursory glance at Emirates’ schedules on the Kangaroo Route reveals many
key insights. Firstly, it has a very extensive coverage of Oceanic cities, comparable
with SIA and Qantas. Due to the location of its Dubai hub, Emirates also has
extremely extensive connections with both primary and secondary European
destinations. For example, Emirates operates 7 to 8 flights a day to London (both
Heathrow and Gatwick Airports) from Dubai. Because of the intensity of its flights
into and out of Dubai, travellers on the Kangaroo Route have many choices of flights
with almost all inbound flights from Australasia arriving within one hour of dawn and
passengers on these flights are able to connect to almost 20 flights bound for Europe
departing just an hour or two later. It is therefore little wonder why air hubs like
Singapore consider Dubai to be their single largest competitor (CAAS, personal interview). Infrastructure wise, Dubai’s new airport at Jebel Ali will have a capacity of 70 million when completed in 2017 (The Business Times, 26th March 2007).
Recently, Emirates has also placed orders for over 40 units of the A380 superjumbo
aircraft, a strong testament to the airline’s global ambitions and that of Dubai city as
well.
6.5.1 Frequencies and Volumes
Having examined how various airlines schedule their operations on the
Kangaroo Route, let us now take the case of the Sydney-London route to compare the
frequencies and volumes (available seats) of flights through the key hubs on the route.
All data is derived from the OAG website and the websites of the various airlines. As
there are limitless possible permutations on this route, I have only included airlines
offering interlining flights through the five key hub airports in this analysis (either
same flight number, or two different flights but bookable together in a single itinerary.
138 A Geographical Analysis of Air Hubs in Southeast Asia
Also, only “direct” connections through a stopover at the hubs are considered and all
codeshares are omitted to avoid duplication. A typical 3-class seating arrangement is
also used for this analysis based on standard seat plans.
Table 6.7: Route Intensity (Sydney-London) From SYD To London (all airports) Theoretical Hub Carrier Total Total Weekly Flights Aircraft Seats Flights Aircraft Seats Seats Seats Capacity* Singapore 21 21 x B744 8736 21 21 x B744 8736 8736 Airlines SIN Qantas 14 14 x B744 5824 16695 14 14 x B744 5824 19607 5824 16694 British 7 X B744 7 7 x B772 2135 14 5047 2135 Airways 7 x B772 Malaysia KUL 14 14 x B744 5824 5824 14 14 x B744 5824 5824 5824 Airlines Thai 14 14 x B744 5824 14 14 x B744 5824 5824 Airways BKK Qantas 7 7 x B744 2912 11648 7 7 x B744 2912 11648 2912 11648 British 7 7 x B744 2912 7 7 x B744 2912 2912 Airways Cathay 14 x A343 21 21 x A333 6195 28 10066 6195 Pacific 14 x B744 7 x B744 Qantas 14 4382 13181 7 7 x B744 2912 15582 2912 11711 HKG 7 x B763 Virgin 7 7 x A346 2604 7 7 x A346 2604 2604 Atlantic 14 x A332 7 x A345 4 x A345 DXB Emirates 14 7 x B773 4914 4914 53 18358 18358 4914 35 x B773 +No. of flights are calculated based on a 7-day week (one-way), only carriers offering interlining flights (Sydney to London) are included in this analysis ++No. of seats are derived through the standard configuration of the various aircraft types (A332: 256 pax, A333: 295 pax, A343: 303 pax, A345: 316 pax, A346: 372 pax, B744: 416 pax, B763: 210 pax, B772: 305 pax, B773: 386 pax) +++Only direct connections are taken into account. Codeshares are omitted to avoid duplication *Theoretical maximum capacity on the route is derived the maximum no. of passengers who can travel from Sydney to London on a particular carrier in a week.
Singapore British Cathay Thai Malaysia Virgin Qantas Emirates Airlines Airways Pacific Airways Airlines Atlantic Total Weekly 8736 11648 5047 6195 5824 5824 2604 4914 Capacity Table 6.8: Weekly Maximum Seat Capacity by Airline (Sydney – London)
The data from Tables 6.7 and 6.8 lead us to the following pertinent
observations on the Sydney-London route. i) From the airport perspective, our dataset
allows us to categorise the six airports into three categories – SIN has the highest
capacity on this route and occupies the top band. BKK and HKG are in the second
band, both with slightly over 11,000 seats weekly. KUL and DXB fall into the third
139 A Geographical Analysis of Air Hubs in Southeast Asia
band with almost five to six thousand seats weekly. ii) From the airline perspective,
Qantas offers the most number of seats on this route through the use of three hubs
(11,648). SIA comes in second with 8,736 seats followed by the other carriers
offering an average of five to six thousand seats a week. Virgin Atlantic is the
smallest player in this analysis with its daily LHR-HKG-SYD-HKG-LHR flights. iii)
An all wide-body fleet is used on this route by all the airlines (probably because of
range restrictions), but the high-capacity B744 is the most widely used aircraft on the
route. This points not only to the high demand on the route, but also the slot
restrictions at the airports on this route, especially at London Heathrow Airport. Some
of the airlines on this route have also announced plans to purchase the jumbo-capacity
A380 aircraft to be deployed on this route (e.g. SIA, Qantas) and as a matter of fact,
the first commercial route of the aircraft will be SIA’s SIN-SYD route – a further
testament to the importance of the route.
6.6 Demand Side Analysis – Passenger Survey Findings
As explained in Chapter Four, in order to elicit more primary data on traveller choice and behaviour, an online survey was conducted which drew in a total of 296
respondents, comprising both Australian and non-Australian residents. They were
asked a series of questions illuminating some of the key issues and trends on the
Kangaroo Route. The survey was conducted via an online surveying website and the
snowballing method was used to achieve the sample size. The survey sample gender
distribution was almost equal (50.4% male, 49.6% female) and over half had taken an
international flight within the past 12 months. The majority of those surveyed usually
travelled in economy class (92.9%) which is pretty representative of the current
market for air travel.
140 A Geographical Analysis of Air Hubs in Southeast Asia
6.6.1 Airline Choice Factors
As the choice of stopover hub was naturally determined by the choice of airline (by default of routing), it is natural that we first establish what kinds of preferences people have when deciding which airline to take. Respondents were surveyed firstly on their travel choice preferences – in this case they were asked about what were the most important factors which influenced their decision on which airline to fly with. It is not surprising that the cost of the air ticket was the biggest factor in determining their choice of airline (average score 3.64/4).
As the majority of leisure air travel demand is elastic in nature, the cost of the air ticket is naturally the most important factor in deciding the propensity to travel.
Other factors high on the priority list included safety record of airline (3.53), in-flight service quality and reputation of airline (3.38), total journey time (3.23), transit duration (3.20) and ease of ticket booking (3.10). The factor which mattered the least was the frequent flyer programme of the airline (2.34), possibly due to the fact that the respondents were most sensitive to price and quality and had little regard for airline loyalty unless the FFP allowed them substantial discounts when booking their tickets.
141 A Geographical Analysis of Air Hubs in Southeast Asia
y) source: surve ( Table 6.9a: Airline Choice Factors
142 A Geographical Analysis of Air Hubs in Southeast Asia
6.6.2 Airport Choice Factors
The next question focused on the factors which would affect the choice of airport the respondents would choose to transit in, if such a stop was necessary.
Respondents were given the condition that assumed that the air ticket price would be the same regardless of where they would transit it. The majority felt that the safety and security of the transiting airport was of paramount importance (3.52/4) and most preferred the shortest transit time possible regardless of airport (3.22). Airport facilities like lounges, showers, seating areas, free internet services etc. were also deemed to be of high importance (3.21). Both the variety (2.38) and price of duty free goods (2.31) did not seem to feature prominently on the respondents choices. (see table 6.9b).
When asked to make a choice between five airports for transit (KLIA, HKIA,
Changi, Suvarnabhumi and Dubai), Singapore Changi was the most frequently selected airport of choice (68% selected SIN as first choice) followed by HKG and
DXB (both 13%). BKK was the least popular transiting airport, and this could be attributed to the bad publicity in the media about the inadequacies of the airport and the Thai government’s plan to reopen Don Muang Airport when the survey was being conducted.
143 A Geographical Analysis of Air Hubs in Southeast Asia
y) source: surve ( Factors ort Choice p r i Table 6.9b: A
144 A Geographical Analysis of Air Hubs in Southeast Asia
6.6.3 Kangaroo Route Scenario
Respondents were presented with a realistic scenario based on the Kangaroo
Route and it was explained to them that they had to fly from Sydney to London and that current aircraft technologies did not allow a non-stop flight between these two cities. Thus, the respondents were first polled on whether they would have preferred a non-stop flight if it were possible and the reactions to this question were mixed.
Slightly over half (58.8%) surveyed said they preferred to fly non-stop and some of the common reasons given were: time savings and shorter journey times, avoiding the hassle of de- and re-boarding, avoiding confusion if plane changes were necessary at transit airports, worries over lost baggage and even “enhanced safety” due to one less landing and take-off cycle. The remaining 41.2% preferred a transit and the most common reasons given were: restlessness and inability to tolerate long flights, Deep
Vein Thrombosis Syndrome, enhanced travelling experience by transiting at stopover airports and shopping opportunities at the transit airport.
Respondents were then presented with the following choice of realistic airline
itineraries (see Plate 6.2 below) for the Sydney-London route and were asked to select
the itinerary they would choose if they were actually going to make the trip. The
most popular choice was Itinerary C which were the Singapore Airlines flights
(40.2%), followed by Itinerary E (Qantas – 36.2%), and Itinerary B (MAS – 8.9%).
Itineraries A (THAI) and D (Qantas) were the least popular choices, each garnering
only 7.4% of the votes. Those who chose the SIA itinerary listed factors like comfort,
service, transiting airport, airline safety and reputation, which were central to their
decision making process. This was despite the fact that the SIA itinerary was
marginally more expensive that the others.
145 A Geographical Analysis of Air Hubs in Southeast Asia
“Costs between airlines were marginal. Likewise time taken during the transit does not differ much. Might as well take the more reputable airline with the better in-flight service. Plus factor also to stop at Changi Airport – good amenities.” -Survey Respondent
“Since the prices are competitive, the safety record of the airline and the stopover airport are most important to me. In addition, between C and E, I opt for C as there’ll also be more time to enjoy the facilities at Changi Airport during the stopover.” -Survey Respondent
“SQ is famous because of its services and punctuality. The departure time is reasonable, and the transit airport is Changi which I like since [sic] can do a lot of shopping.” -Survey Respondent
Plate 6.2: Itinerary Choice for Questionnaire Survey (source: survey)
146 A Geographical Analysis of Air Hubs in Southeast Asia
The second most popular choice was Itinerary E and this was attributed to the
following key factors – total trip duration, airline reputation and stopover airport. Of
all the itineraries, this had the shortest journey time and also the shortest transiting
time.
“The departure time is well in the evening which means I only have to take a half day leave or I can use most of the day to pack for my trip. The transit time is shortest so there isn’t much time wasted on the journey. Since it is Singapore airport reputed for its efficiency I am not too worried that I’ll miss my connecting flight given the short transit time and that I have to change planes.” -Survey Respondent
“There are actually a combi of factors. Itin [sic] E gives the following – shortest travelling time – relatively good airline product –QF – priced only marginally more expensive than the cheapest and relatively inferior airline product (TG and MH) – Singapore is a [sic] efficient, pleasant, clean, reputable and safe transit stop. Wld [sic] have chosen SQ if not for the slightly longer travelling time.” -Survey Respondent
The remaining three itineraries were much less popular as compared to these two even
though they had certain saving graces like lowest price of air ticket (MAS itinerary)
and a slightly more amenable arrival time into London (THAI itinerary). Although
this is just a small scale survey, it does point out to us some of the most important
considerations of travellers when they are doing one-stop ultra long haul journeys.
A recent news article reported that in a survey, Qantas, the flag carrier of
Australia, was rated as the worst international airline (Channelnewsasia, 29th May
2007). It was reported that the survey of 4,000 Australians voted Singapore Airlines best while Emirates, Air New Zealand, Malaysia Airlines, Thai Airways and Cathay
Pacific all beat Qantas in terms of attributes like value for money, booking processes, convenience, check-in procedures, in-flight service, seat comfort, legroom and
147 A Geographical Analysis of Air Hubs in Southeast Asia
cleanliness. It was also reported that the Australian base of the survey and a tendency
for people to be particularly critical of their national airline may have skewed the results. Although such surveys should always be taken with a pinch of salt and viewed with some degree of skepticism and criticality, it does however support my earlier findings that Asian carriers tend to fare generally well in terms of customer satisfaction.
6.6.4 Real Life Experiences at Hub Airports
To bring in an added dimension of realism and personal experiences into the
survey, respondents where asked if they had personally transited at the five airports in
question and were questioned about their transiting experiences – both pleasant and
unpleasant. Most of the respondents had transited in SIN and HKG (48% & 40%
respectively), with DXB being the least transited airport (13%). KUL and BKK lay in
the middle of the spectrum with 33% of the respondents having transited in KUL
before and 34% for the case of BKK. Although the qualitative comments on personals
experiences gathered is highly subjective, contestable and inconclusive in nature, I
have chosen excerpts to show some of the “bests” and worsts” of each airport, even
though there were few good things my respondents had to say about BKK.
Kuala Lumpur International Airport
“Very nice airport, airy, and comfortable. Well organised, and enjoyable place to spend a couple of hours between flights. It is also relatively quiet at times, and there isn’t the noise and congestion you get at some airports”
“I was in KLIA for 3-4 hours last year on my way to Tokyo and back to Singapore. Very few shops and limited variety of restaurants, so time went by very slowly. Moreover the ambience was not conducive enough for travellers to rest. The architectural landscape seems very cold and unwelcoming.”
148 A Geographical Analysis of Air Hubs in Southeast Asia
Hong Kong International Airport
“Loved it. It was clean, and very accessible. They had a baggage locker area which was great because I had a 17 hour layover and so took the time to go out and visit Hong Kong. I also loved it because the transportation to the city was also accessible.”
“The airport architecture is nice, but as I am not a shopper, I was bored to tears walking through the malls and attempting to find something interesting to do without costing me a cent. I couldn’t find anything interesting after an hour or so.”
Singapore Changi Airport
“Lovely and spacious. Never had much time to wander about so never got to use the free internet or pool. The layout was a bit unusual to navigate but it was very clean and everyone was friendly. I also once bought some alcohol from here duty free and was amazed at how cheap it was.”
“Staff RUDE/arrogant. Now tend to avoid – why should I pay airport taxes for this (BTW I know SYD and LHR staff are also rude but we are comparing Asia) Choice of goods & shops very limited – have also had experience of unauthorised credit card charge being made after I left SIN.”
Bangkok Suvarnabhumi International Airport
“New and interesting interior design.”
“Suvarnabhumi smacks of urbanised living all gone wrong, with too much awkward grey and silver colour making the place seem unwelcoming. No one should ever complain of having too much leg room but the new Bangkok airport is simply so big it becomes more like ‘all space and not feeling free’ – having to walk so long from one end of the airport to another.”
Dubai International Airport
“I loved the layout as it is just a triangle, it’s impossible to get lost. The décor is really lovely and the duty free goods offer fantastic. The cheap prices surprised me.”
“Nice, huge, modern airport with great duty free shopping. Food/cafes are not well signed though. So for a non-Arabic speaker like me, I had problems even trying to find MacDonald’s. Free internet ports were all down as well. Not many places for people to sit around, therefore many people ended up sitting on the floor, blocking passageways.”
149 A Geographical Analysis of Air Hubs in Southeast Asia
6.7 Chapter Summary
In this chapter I have chosen the case of the Kangaroo Route and assessed the
ways in which the hub airports compete for this lucrative market. This is particularly
important as one of the key indicators of a good hub is the amount of transiting traffic that goes through it. The impacts of aircraft technology and airline strategies have tremendous spatial and economical implications for this route. Also, I have used the case study to explain the temporal dynamics of hub operations and how airlines schedule their flights in waves through hub airports. Finally, the passenger is not forgotten as the results of a quantitative survey are presented to see what are some of the key factors influencing consumer choice in deciding which airline/airport to use
for long-haul routes such as this one.
150
CHAPTER SEVEN SUMMARY AND CONCLUSION
A Geographical Analysis of Air Hubs in Southeast Asia
CHAPTER SEVEN: SUMMARY AND CONCLUSION
7.1 Summary
The central aim of this thesis is to assess the current status of the three key air
hubs in Southeast Asia. This was done through a variety of means, by first discussing some of the theoretical aspects of hub formation and operations which is necessary knowledge for anyone interested in air hubs. Apart from a mere citation of existing works, the notion of a “hub” is given some scrutiny and I have explored the dynamics and intricacies into how hubs come about and what a good hub should entail. Such issues are important from an academic perspective as they show the dynamism and evolving nature of the industry. A rudimentary typology of air hubs was also proposed to help us understand and classify these hubs better. A brief summary of the key developmental milestones of the air hubs in the region was then provided. This gives us an insight into how and why the airports came about and the processes and key
decisions undertaken by the airport authorities to shape them into what they are today.
The regional perspective I have adopted also shows the distinct geographical and economic characteristics of the region which make it unique and a worthwhile study site.
A series of spatial and temporal measures were used to evaluate the relative
success of the three air hubs and these ranged from spatial mapping to network
analysis to flight schedule comparisons. It is shown that the respective hubs have
varying focal areas, and there has been relative strong growth for all three airports
over the past decade or so through the intensification of key air routes. The roles of
primary and secondary carriers which operate out of these airports were also
highlighted as no hub airport will be successful without strong carriers operating out
151 A Geographical Analysis of Air Hubs in Southeast Asia
of it. The new and evolving low cost segment of the market has been alluded to in this thesis, and perhaps should have been given greater consideration due to its increasing significance. Finally, I had chosen to depart from conventional forms of transport analysis by adopting a case-study approach to tie together many of the seemingly
disparate issues and trends discussed in the earlier chapters. The Kangaroo Route is of
great importance both to the airlines and the airports of Southeast Asia and it was
shown that competition is intense on this lucrative route. Using measures of
intermediacy, I have shown the most geographically-suitable stopover points on the
Kangaroo Route, but at the same time it was also explained why sometimes the most
geographically ideal airports may not develop into hubs. Lastly, the passenger perspective is not forgotten as they too play a key role in the air transport arena being
the dominant consumers of air transport. The results of a passenger survey were
presented and various generalizations can be made about factors which affect their choice of airline (and subsequently transit airport) when embarking on long-haul
journeys such as the Kangaroo Route.
7.2 Implications of Study & Future Research
The nature of air transport is so dynamic that a large proportion of the data I
have presented here will soon become obsolete. However, it has never been my
intention to write an everlasting tome or encyclopedia. It is hoped that anyone reading
this thesis will gain a basic understanding of the air transport scene in Southeast Asia.
Such knowledge seems sorely lacking in the general public as I have often had to
answer questions like “Why doesn’t airline A fly to city B?” or “Why must I transit at
airport C to get to city D”. The fact of the matter is that the vast majority of people do
not like to take airplane trips, especially if it involves sitting in cramped conditions,
152 A Geographical Analysis of Air Hubs in Southeast Asia
watching obscure movies and eating overcooked food for anything more than two
hours. This is compounded by the reality that transit stops through hub airports have
become the norm in the industry, whether one likes it or not. Thus, an appreciation of
how the whole hub-and-spoke phenomena works will allow passengers to make more
informed decisions when they embark on their next trip and perhaps more should be
done to move this field out of its academic insularity to a wider audience.
From the point of view of the airport and airline operators, an understanding of
the market is essential towards ensuring healthy revenue margins. This is especially
true for airports as there has been a gradual shift from functional excellence to experiential distinctiveness. With competing airports hot on their heels, the premier hub airports must know what passengers look for in an airport to stay relevant to their
needs. I have shown through this research that the most important factor is the choice
of airline. Passengers by far are willing to transit at most airports provided they are on
an airline of their choice. Thus, airports should continue to strive to attract a healthy
mix of carriers to call at their airport. However, due to the regulatory hurdles that still
exist in the region, there is very little fifth freedom traffic within the region. There is
great potential for further research in this respect, especially given the boom of the
LCCs which have drastically lowered fares and provided plenty of new options for
travellers.
Consequently from the statist perspective, ensuring the survival of the national
carrier is no longer the key imperative of any developmental state. Instead, to secure
the position of the city’s airport as the key hub airport in the region has become the
dominant agenda of many governments. With increasing global interconnectedness,
153 A Geographical Analysis of Air Hubs in Southeast Asia the race to become a global city has intensified and the role of the airport in providing the physical means of connecting to distant places has also gained prominence over the years. I have shown how some governments use various policies and incentives to attract carriers to call on their airports, whilst others continue to deny entry to foreign competitors. It seems just a matter of time, given the sweeping global wave of deregulation in aviation that states will have little choice but to allow their airlines to stand on their own feet or risk their cities and economies being isolated from the global network.
Even as I write the concluding section of this research, new developments are taking place. For instance, Tiger Airways has announced their first Australian domestic routes (Melbourne-Perth, Melbourne-Darwin, Melbourne-Alice Springs,
Melbourne-Rockampton, Melbourne-Mackay, Melbourne-Sunshine Coast,
Melbourne-Launceston and Melbourne-Gold Coast) following the establishment of
Melbourne as their base to compete in the Australian domestic market. What is interesting is that passengers are able to book “combi” tickets from Melbourne all the way to Singapore using the existing SIN-PER service as an add-on to the domestic leg. It is still too early to fathom what the expansion plans of the carrier may be, but immediate questions which come to mind will be whether Perth will eventually develop into a key hub for both Australian domestic and international traffic
(especially given aircraft range restrictions which make Perth the only viable airport in Australia for Kangaroo Route services), and what the subsequent impacts for
Southeast Asia’s airports will be.
154 A Geographical Analysis of Air Hubs in Southeast Asia
Another exciting development in the low cost sector in the region is AirAsia’s
announcement of their long-haul services and the purchase of A330 planes to ply
these routes. Will the introduction of long haul low cost travel be popular and
sustainable? How will this development affect Malaysia’s KLIA which has been
lagging behind its two rivals in terms of international traffic? Will we see the
development of similar hub-and-spoke networks for LCCs? Could we see the
development of air hubs that are not region-centric but instead based on airline
products, e.g. LCC hubs, Full Service Carrier hubs, or even premium traffic hubs?
Finally, in October of 2007, Singapore Airlines launched the maiden A380
service from Singapore to Sydney. This will mean a large increase in capacity on the route and as more A380 aircraft are deployed by airlines, we will undoubtedly see the intensification of key air routes with these “Whalejets”. How will the current spatial hierarchies of air hubs be changed with the introduction of this aircraft? Will airports be able to cope with the increased number of passengers, especially during the busy wave periods of the day?
Implicit in all these questions is the role of geography and its importance in
providing the “big picture” perspective, bringing together different disciplinary
viewpoints and methods in a holistic way. Air transport is inherently geographical and the spatialization of key trends and patterns in contemporary air transport allows for the researcher to posit the information at different scales for varying levels of analysis. I have shown that a simple tool such as a map can yield immense research benefits for explaining regional trends. As much as air transport is a business, the very nature of it lies in spatial interaction, manifesting in issues like deciding “who flies
155 A Geographical Analysis of Air Hubs in Southeast Asia
where?” and “where can I fly from here?” A geographical insight is therefore
extremely valuable when examining these questions and phenomenon.
7.3 Concluding Comments
Since I started this thesis with a quote by Lee Kuan Yew, it is apt that I should
conclude with one as well. At an event commemorating Changi Airport’s 25th
Anniversary, Minister Mentor Lee Kuan Yew had this word of caution with regards to the intensifying air hub competition in Southeast Asia:
“However, as with all ‘icons’ of success, previous achievements are no guarantee of growth. The competition for Changi’s hub position has grown keener with newer, bigger airports around all the latest equipment. Enhanced cost pressures on airports and airlines, new aircraft technology, and the introduction of low-cost carriers, they all add the pressures of competition on CAAS” (Lee Kuan Yew, 1st July 2006)
The short excerpt has, in essence, captured what this whole thesis and research is
about. Commercial aviation has come a long way since it first started in Southeast
Asia and today the region is home to some of the world’s best airports and airlines. I
would contend that the air transport industry in the region is still at a fairly early
developmental stage as there exist abundant avenues for growth, but such growth can
only be facilitated by an open and liberal operating environment which ASEAN is
striving for.
As with all competitive industries, there are bound to be winners and losers
and we can already see, though various measures, that KLIA has fallen further behind
in the intense race to be the premier hub of the region. This of course begs the
pertinent question of whether Southeast Asia has a large enough market for the co-
156 A Geographical Analysis of Air Hubs in Southeast Asia existence of more than one major air hub. I would venture a “yes” to this question simply on the basis of the vast potential of growth for aviation in the region which has for many years borne the brunt of the SARS epidemic, the Asian Financial Crisis, and more recently the Indian Ocean Tsunami. All the literature I have come across in the process of writing this thesis have pointed to the immense potential for the region to be comparable, if not more successful than the established air travel regions of Europe and North America, barring any more catastrophes, both natural or human-induced.
Enormous research opportunities are present and will continue to emerge given the dynamism of the industry. The future looks bright indeed.
157
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Derudder, B., Witlox, F. & Taylor, P.J. (2005b) “United States cities in the world city network: comparing their positions using global origins and destinations of airline passengers” in GaWC Research Bulletin (173) http://www.lboro.ac.uk/gawc/rb/rb173.html
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171 A Geographical Analysis of Air Hubs in Southeast Asia
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Interviews
Interview with Mr. Gerald Ng, Air Transport Manager, Air Transport Division, Civil Aviation Authority of Singapore (CAAS) on 6th March 2007 at 1015hrs at CAAS Office.
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