PUBLISHER Wilson Press Ltd VOL. 10 NO. 6 APRIL 2003 GPO Box 11435 Hong Kong Tel: Editorial (852) 2893 3676 Fax: Editorial (852) 2892 2846 E-mail: [email protected] Web Site: www.orientaviation.com Chief Executive and Editor-in-Chief Barry Grindrod E-mail: [email protected] Publisher Christine McGee E-mail: [email protected] Chief Correspondent Tom Ballantyne COVER STORY Tel: (612) 9638 6895 Fax: (612) 9684 2776 E-mail: [email protected] WHAT PRICE China Melody Su Tel: (852) 2893 3676 WAR? Page 12 E-mail: [email protected] Long conflict could reverseA sia-Pa- Japan and Korea Daniel Baron cific airlines’ spectacular recovery Tel: (813) 3203 7106 E-mail: [email protected] ALSO: Photographers • Fuel: timing of hedging ‘critical’ Patrick Dunne (chief photographer), Rob Finlayson, Andrew Hunt, Hiro Murai • Insurance: nervousness over war Design & Production risk cover; ICAO accuses govern- ü Design + Production ments of apathy Colour Separations Twinstar Graphic Arts Co. Printing Hop Sze Printing Company Ltd ADVERTISING South East Asia and Pacific NEWS Tankayhui Media, Tan Kay Hui THAI signs MoU to purchase B747-400s from United Airlines 6 Tel: (65) 9790 6090 Fax: (65) 6280 2823 China Airlines for sale again 6 E-mail: [email protected] Airbus executive optimistic of a quick post-war recovery 7 The Americas/Canada Australian Airlines to fly to Shanghai 7 Barnes Media Associates Ray Barnes Air Hong Kong launch customer for new freighter 8 Tel: (1) 434 927 5122 Cathay Pacific profit increases six-fold 10 Fax: (1) 434 927 5101 E-mail: [email protected] Air New Zealand back in the black 10 Europe REM International FEATURE Stephane de Remusat Tel: (33 5) 34 27 01 30 Australian inventor’s links to the Wright brothers 20 Fax: (33 5) 34 27 01 31 E-mail: [email protected] SPECIAL REPORT – Safety in THE ASIA-PACIFIC New Media & Circulation Manager Leona Wong Wing Lam Safety: its about working together say IATA experts 23 Tel: (852) 2865 1013 China establishes its priorities 26 E-mail: [email protected] LOSA wins Cathay approval 27 © All rights reserved Wilson Press Ltd, Hong Kong, 2003. HELICOPTERS The views expressed in this magazine are not necessarily those of the Association of Asia Pacific Airlines. Hong Kong operators frustrated by obstacles to China cross border services 28 Orient Aviation BUSINESS AVIATION and the Iraq War Metrojet project a shop window for Gulfstream in Hong Kong 30 At press time, the war in Iraq had started. Orient Aviation’s cover SPECIAL REPORT – FLEET CENSUS UPDATE story “What Price War?” has been Orient Aviation’s twice-yearly update of Asia-Pacific fleets 31 updated where possible. Inter- views were conducted before the REGULAR FEATURES conflict started. Other stories in Comment 5 the magazine were also written before the outbreak of fighting. Inside Greater China 22 Business Digest 40 April 2003, Orient Aviation 3 COMMENT WAR LIFTS UNCERTAINTY he questions have been answered, the waiting is over conflict. It depends on a list of imponderables: how long will and the bombs are falling on Iraq. At least a decision the war last? How widespread will it be? Will it spawn more has been made although, to say the least, it is one the terror attacks? What will be the impact of the conflict on fuel airline industry could have done without. prices and insurance costs? And what will be the extent of traffic But the constant uncertainty had reached losses and the rate of recovery after the war. Ta point where it was in danger of causing more damage than These “unknowns” make the airlines vulnerable because the war itself. The uncertainty was affecting stock market prices the biggest problems they face are ones that are almost totally and un-nerving investors and business in general. This was outside their control! reflected in the market gloom and by travel jitters. They have no say over economic conditions, fuel and in- In the past two years, according to the International Air surance costs, airport and air traffic control user fees or the Transport Association (IATA), airlines have stacked up some straightjacket of regulation that prevents them operating like US$31 billion in losses, more than their combined profits for other multinational companies. They have no control over ter- the 100 years since the Wright Brothers first flew. By the end rorist acts or wars in the Middle East. IATA reported additional of 2003, several billion dollars more will likely be added to security expenses for airlines since 9/11 have amounted to US$4 those losses. billion worldwide. Remarkably, in the midst of all this, Asia-Pacific airlines There is no quick fix to these problems. No doubt carriers have remained in the black and even ordered new aircraft. will have to cut costs again, rationalise, restructure, trim staff They recovered speedily from the effects of 9/11, thanks to and find new business models that work in these uncertain astute management and rapid reaction to market conditions. times. There will be more pain and a strong possibility exists In recent times, many have announced healthy and, in some that some carriers may not survive. At least Asian airlines are cases, record profits. Despite these facts, the director general better placed than their counterparts elsewhere to see this crisis of the Association of Asia Pacific Airlines (AAPA), Richard through and emerge successfully at the other end. Stirland, pointed out that given current circumstances, many We can only wait – and hope for a speedy end to the con- airlines in the region might be “on the verge of a situation where flict. they could be suffering catastrophic losses within a very short space of time”. Our cover story on the impact of war with Iraq reports that TOM BALLANTYNE airlines do not know the ultimate price they will pay for the Chief correspondent THE ASSocIatIon OF ASIA PacIFIC AIRLIneS memBERS anD contact LIST: Air New Zealand Dragonair Philippine Airlines Chief Executive, Mr Ralph Norris Chief Executive Officer, Mr Stanley Hui President, Mr Avelino Zapanta General Manager Group Communications, Corporate Communication Manager, VP Corporate Communications, Mr David Beatson Ms Laura Crampton Mr Rolando Estabilio Tel: (632) 817 1234 Fax: (632) 817 8689 Tel: (64 9) 336 2770 Fax: (64 9) 336 2759 Tel: (852) 3193 3193 Fax: (852) 3193 3194 Qantas Airways All Nippon Airways EVA Air Managing Director and CEO, President and CEO, Mr Yoji Ohashi President, Mr Steve Lin Mr Geoff Dixon Senior VP, Public Relations, Mr Koji Ohno Senior Vice President, Group General Manager Public Affairs, Tel: (81 3) 5756 5675 Fax: (81 3) 5756 5679 Mr K. W. Nieh Mr Michael Sharp Tel: (8862) 8500 2585 Fax: (8862) 2501 7599 Tel: (612) 9691 3760 Fax: (612) 9691 4187 Asiana Airlines President & Chief Executive, Garuda Indonesia Royal Brunei Airlines Acting Chairman, Mr Park Chan-bup President, Mr Indra Setiawan Dato Paduka Haji Hazair Managing Director, PR, VP Corporate Affairs, Mr Pujobroto Chief Executive, Mr Peter Foster Mr Hong Lae Kim Tel: (6221) 380 0592 Fax: (6221) 368 031 Tel: (673 2) 229 799 Fax: (673 2) 221 230 Tel: (822) 758 8161 Fax: (822) 758 8008 Japan Airlines Singapore Airlines Cathay Pacific Airways President, Mr Isao Kaneko Deputy Chairman and CEO, Chief Executive Officer, Mr David Turnbull Director, Public Relations, Dr Cheong Choong Kong Corporate Communications General Mr Geoffrey Tudor VP Public Affairs, Mr Rick Clements Manager, Mr Alan Wong Tel: (813) 5460 3109 Fax: (813) 5460 5910 Tel: (65) 6541 5880 Fax: (65) 6545 6083 Tel: (852) 2747 8868 Fax: (852) 2810 6563 Thai Airways International Korean Air President, Mr Kanok Abhiradee China Airlines Chairman and CEO, Mr Yang Ho Cho Director, PR, President, Mr Philip Hsing-Hsiung Wei Managing VP, Corporate Communications, Mrs Sunathee Isvarphornchai VP, Corp Comms, Mr Roger Han Mr Jun Jip Choi Tel: (662) 513 3364 Fax: (662) 545 3891 Tel: (8862) 2514 5750 Fax: (8862) 2514 5754 Tel: (822) 656 7065 Fax: (822) 656 7288/89 Vietnam Airlines Malaysia Airlines President and CEO, Chairman, Tan Sri Azizan Zainul Abidin Mr Nguyen Xuan Hien Dep Director, Corp Affairs, Tel: (603) 2165 5154 Fax: (603) 2163 3178 Mr Nguyen Huy Hieu Tel: (84-4) 873 0928 Fax: (84-4) 827 2291 April 2003, Orient Aviation 5 NEWS REGIONAL ROUND-UP THAI SIGNS 9/11, had a maximum range MOU FOR UNITED of 17,000 kilometres. The first AIRLInes’ B747-400s delivery to Asia – to EVA Air emonstrating a thrifti- – was planned for early 2004. ness that has no doubt Boeing also has produced the D disappointed Airbus B777-300RL, which is now and Boeing, Thai Airways going through flight testing, International (THAI) is an aircraft that can carry up buying seven Boeing 747-400s to 365 passengers. from its struggling alliance partner, United Airlines CHINA AIRLINES (UA), for an estimated US$330 FOR SALE AGAIN million. Taiwan’s national govern- When THAI announced ment has revealed it wants to the deal, it said the planned Thai Airways International: has signed an MoU to buy seven resurrect plans to sell up to purchase was for five air- B747-400s from United Airlines 30% of its national flag car- planes built in 1998 and two rier, China Airlines (CAL). manufactured in 1997. All the – now planning a comprehen- Japan Airlines and Japan Government controlled Chi- 347-seat aircraft are powered sive expansion programme Air System, also announced na Aviation Development by Pratt & Whitney PW4000 – intended to add its first it would cut another 600 jobs Foundation, which owns engines. dedicated freight carriers to at the merged carrier by 2006, 71% of CAL, hopes to find The airline’s chairman, its fleet this year.