Vol. 24 No. 3 April 2017 orientaviation.com

A STEADY HAND Astute CEO Ken Choi keeps Jeju Air top of the LCC league despite North Asia’s politics

Qantas Group CEO, Alan Joyce, Sleeping LCC Is tracking on track receives the Orient Aviation giant awakens as ICAO deadline 2016 Person of the Year award in Japan draws closer?

INDUSTRY INSIGHT: passengers Wifi theonboard airline determineschoice of ELIMINATE CREDIT CARD FEES NEW REVENUE STREAMS

COMPETITIVE MARKET INTELLIGENCE SELF-FUNDING PROGRAMS

CONNECT TO ALTERNATIVE FORMS OF PAYMENT THROUGH UATP CONTENTS Volume 24, Issue 3

COVER STORY

20 A STEADY

PUBLISHED BY HAND

ORIENT AVIATION MEDIA GROUP CEO Ken Choi has used Mailing address: his financial engineering GPO Box 11435 Hong Kong background to build Office: 17/F Hang Wai Commercial Building, Jeju Air into an LCC leader 231-233 Queen’s Road East, Wanchai, Hong Kong Tel: Editorial (852) 2865 1013 E-mail: [email protected] Website: www.orientaviation.com

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

Chief Correspondent Tom Ballantyne Tel: (612) 9638 6895 Fax: (612) 9684 2776 E-mail: [email protected]

Greater China Correspondent Dominic Lalk Cover Photo: Gareth Jones Tel: (852) 2865 1013 E-mail: [email protected]

North Asia Correspondent COMMENT 14 Trump’s domino effect in Gulf Geoffrey Tudor 5 Asia: an early adopter of tracking rules 19 Unfair and unreasonable: British regulator fights Tel: (813) 3373 8368 E-mail: [email protected] for passengers’ compensation ADDENDUM 24 North Asia’s conflicts hurt region’s carriers India Correspondent R. Thomas 6 Back to the drawing board at THAI 25 United’s premium class rollout curtailed by Tel: (852) 2865 1013 6 promises its own domestic carrier troubled Zodiac E-mail: [email protected] in India 26 Inviting the digital shopper into the airline cabin Photographers 7 Tarnished Thailand spends big on aviation Rob Finlayson, Graham Uden, Ryan Peters revamp MAIN STORY 8 and China Southern find new 16 Is tracking on track? Chief Designer Chan Ping Kwan airline bedfellows 8 Mueller to succeed Hogan at Etihad Aviation Printing Printing Station(2008) Group? 8 Australian and New Zealand airlines form lobby ADMINISTRATION group General Manager 10 Orient Aviation Person of the Year dinner and Shirley Ho E-mail: [email protected] award presentation: Group CEO, Alan Joyce, receives the Orient Aviation’s 2016 Person ADVERTISING of the Year before 120 industry leaders in Hong

Asia-Pacific, Europe & Middle East Kong. Clive Richardson INDUSTRY ADDENDUM Tel: (971) 50 554 6608 E-mail: [email protected] 27 Embraer lands in Silicon Valley 27 Boeing shakes up industry with car interiors The Americas / Canada Barnes Media Associates partnership Ray Barnes 27 Accelya and Mercator complete merger Tel: (1 434) 770 4108 Fax: (1 434) 927 5101 27 China recycler buys aged B737-700s E-mail: [email protected] 28 Trading partners with CPaT [email protected] 28 GE Aviation buys cloud based digital records company Follow us on Twitter @orientaviation 28 signs on AFI/KLM E&M for its A320s also - keep up with the news of the week with Orient Aviation’s Week in 13 Sydney airport CEO resigns ahead of second the Asia-Pacific airport funding decision INDUSTRY INSIGHT © All rights reserved WiFi onboard critical for Asia-Pacific airlines Wilson Press HK Ltd., NEWS BACKGOUNDERS 29 Onboard Wifi determines airline passenger Hong Kong, 2017 12 Sleeping LCC giant awakens in Japan loyalty

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Asia is early adopter of tracking rules

Global aviation learnt harsh lessons from the tragic loss to install the upgraded tracking equipment, but there is of flight MH370 three years ago. The no reason for alarm. They are not operating long-haul still unsolved disappearance of the aircraft and its 239 routes over remote oceanic spaces. passengers and crew is a stark reminder that airlines Service providers also have acted quickly. Dozens of and the systems that allow them to fly across the world satellites, launched by giant satellite conglomerates such needed an regulatory overhaul. as Iridium, are circling the planet and offer upgraded As a direct result of the MH370 loss, the industry tracking systems to airlines that need improved looked again at its rules for monitoring airlines as monitoring equipment. they flew. With the support of the International Air Tracking systems from companies such as Aireon, Transport Association, airlines and manufacturers, the Rockwell Collins, Arinc and SITA, to name a few, International Civil Aviation Organization (ICAO) has set recognize that some airlines will struggle to meet the new rules for the tracking of the world’s airline fleet. costs of adhering to the new ICAO regulations and are From November next year, all aircraft, wherever putting together cost effective packages. they are flying, must be tracked every 15 minutes. A study released at the CANSO ATM conference In addition, from January 2021, all commercial in Madrid last month revealed more precise airline airlines must have systems on their fleets that will tracking, coupled with improved satellite communication autonomously transmit an aircraft’s position at least (satcom), has benefitted the global airline bottom line to once a minute if it is in distress. the tune of US$3 billion in the last 15 years. Asia-Pacific’s major airlines already have, or will So, better tracking will not only mean safer flying for easily beat, that deadline. Some smaller airlines have yet all, but cheaper flying for airlines.■

TOM BALLANTYNE Chief Correspondent Orient Aviation Media Group

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

ORIENT AVIATION ORIENT AVIATION CHINA

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

APRIL 2017 / ORIENT AVIATION / 5 ADDENDUM

Back to the drawing board at THAI

Thai Airways International’s (THAI) continues operations, including its two affiliates, as long as needed, though I’ve never thought I to flounder. The flag carrier’s board was critical to strengthening its position. Areepong was indispensable at ,” he said. scheduled to debate the structure of the new said the THAI Group was a concept that would The cost-cutting program would improve THAI Group – THAI itself and part-owned allow the three airlines to compete more yields and revenue and take Nok to break subsidiaries, Nok Air and THAI Smile - at its efficiently by working closer together. even by year end and to profit for fiscal March board meeting, but the plan fell of the THAI and THAI Smile have improved 2018, Sarasin said. The turnaround will be agenda because “several parties” did not fully synchronization of their operations. THAI supported by a $43.3 million capital injection understand the issue, the airline said. Smile has relocated to in the airline in the next few months, he said. Instead, THAI chairman, Areepong from Don Mueang which has improved Nok, with a fleet of 22 B737-800s, Bhoocha-Oom, instructed THAI’s acting connections between the two carriers. eight Bombardier Q400s turboprops and president, Usanee Sangsingkeo, to write a But Nok Air, 39%-owned by THAI, is two ATR 72-500 turboprops, is shedding detailed plan of the proposal for THAI board proving to be a problem child. It was the only capacity. It took delivery of five new aircraft directors, a task that is expected to take at airline in Thailand to lose money last year. last year, three B737-800s and two Q400s, least a month. It reported a record deficit of $94.6 million, which resulted in too many seats in a highly THAI must act swiftly to avoid returning up from $47.9 million 12 months earlier. competitive market. The airline has sold some to the red. It reported a $375 million net loss Nevertheless, the THAI board has approved of its B737-800s to Indian LCC, SpiceJet. in 2015 but scraped home last year with a the purchase of more equity in listed Nok, The Don Mueag-based carrier will profit of $431,000, largely achieved by a 28% although the sale cannot proceed until the launch Bangkok-Phnom Penh in October cut in fuel costs. THAI carried 4.8% more budget carrier’s shareholders have been and debut regular services to several Indian passengers in 2016, but operating revenue fell consulted. cities in the next 12 months. Patee said the 4.3% and passenger yields declined by 4.5%. Media reports constantly speculate that Chinese market will be critical to improving THAI sees a strategic overhaul of its when THAI increases its holding in Nok it will yields. It will launch six China destinations in replace its boss, the well-connected Patee 2017: Phuket-Chengdu, Chiang Mai-Nanjing, Sarasin. Areepong has declined to comment Phuket-Nanjing, Bangkok-Nanning, Bangkok- either way on the subject, while Patee has told Linyi and Phuket-Wuhan. the Bangkok Post that rather than worrying Sarasin and three top Nok executives about rumours of his imminent demise he was have cut their salaries by 25% to demonstrate preoccupied with turning around the airline. they embraced the restructuring program. “I can’t just jump ship, I’m responsible for “That does not really mean much in terms getting Nok Air back in the black by ensuring of reducing cost, but we wanted to send out the recovery plan is properly executed,” said a clear message that we’re responsible for the 55-year-old, who has led the airline since past financial performance,” he said.By Tom its founding 13 years ago. “I will stay on as Ballantyne ■

Qatar to change tactics in India?

India’s crowded skies could become more Airways and our state investment arm as market share in the world’s fastest growing crowded if Qatar Airways genuinely intends India now allows foreign direct investment in domestic airline market. Dubai’s to establish a domestic carrier on the domestic carriers within India.” He said the Airline has the largest number of bilateral subcontinent. proposed carrier eventually would have a The big three Gulf carriers have thrown fleet of 100 aircraft. a lot of capacity on to Indian routes, but If the Indian government approves Qatar Airways said in March it planned to go the application, the new carrier would be one better by setting up a Qatari-controlled the first 100% foreign owned airline to fly domestic airline in India. India’s skies. Prime Minister Narendra Qatar Airways boss, Akbar al Baker, Modi’s government opened the sector to whose airline is a member of the 100% foreign direct ownership (FDI) last alliance, said in Berlin last month that the June, although a foreign airline is limited to alliance’s partners would soon be making an a 49% holding. It is expected Qatar Airways application to that effect. will hold 49% and the investment company “And from there we will proceed. Yes, 51%. we will have a 100%-owned domestic Al Baker’s announcement is the carrier in India that will belong to both Qatar latest strike from Gulf carriers looking for

6 / ORIENT AVIATION / APRIL 2017 ADDENDUM

Tarnished Thailand spends big on aviation revamp

Thailand’s military junta has announced a multi-billion dollar aviation reform program that includes massive investment in airports, maintenance, repair and overhaul (MRO) facilities and the development of a reputable air safety regulatory regime. Top of the junta’s list is a $11.59 billion investment in airport development that is intended to increase annual passenger air traffic in Thailand from 130 million travelers now to 277 million by 2027. If successful, the reforms would increase passengers processed at Bangkok’s main international airport, Suvarnabhumi, from 45 million a year to 90 million annually in the next decade. regulatory standing by the International Civil Phrae, Mae Hong Son, Mae Sariang in Mae Under the revitalization plan, the Aviation Organisation almost two years ago. Hong Son, Tak, Phetchabun, Hua Hin, Nakhon city’s second airport, Don Mueang would The ICAO red flagging of Thai aviation Ratchasima, Pattani, Betong, Chumphon and increase passenger throughput to 40 million safety oversight damaged the country’s U-tapao. passengers a year from 30 million and U-Tapao standing worldwide, a blow that was Caps on foreign direct investment into airport would expand capacity from three exacerbated by a crackdown on scams Thailand have been lifted to allow non-Thai million annually to 30 million a year. committed on Chinese tourist groups, one companies to run the nation’s airports and The investment program also would spend of Thailand’s primary passenger markets. hold equity of more than 51% in new MRO $2.5 billion to upgrade 10 regional and 26 Tourism receipts account for about 10% of facilities. International (THAI) secondary city airports across Thailand. G DP. is scheduled to sign a Memorandum of Intended to restore Thailand to its former Despite the damaging reputational issues, Understanding with Airbus in August to status as a regional aviation hub, the project is Thailand attracted 32.6 million foreign tourists establish a commercial MRO centre at U-tapao vital to the country’s economic growth, said last year with the numbers forecast to increase airport, which is planned to be operating Kobsak Pootrakul, vice minister in the office to 34-35 million this year. It intends to reach a within three years. of Thailand’s prime minister. target of 53 million visitors a year by 2032. Kobsak also said the government wanted Several factors have slowed aviation The government funding package, annual freight business to achieve a target of 3 expansion in Thailand, but chief among them approved last month, included a public-private million tonnes a year from 1.3 million tonnes at was the downgrading of the country’s air safety partnership (PPP) program for 11 airports: present. By Tom Ballantyne ■

traffic rights to India and Abu Dhabi-based number of international passengers out both countries can operate a stipulated, and its strategic Indian of the country. Etihad owns 24% of Jet, a equal number of flights. partner, Jet Airways, carries the largest relationship that facilitates significant access It is too early to predict if Qatar will to Indian domestic passengers transiting to succeed in setting up a subsidiary carrier in international routes. India. While regulations to allow 100% FDI in By starting its own domestic airline, the country’s airlines haves been approved, Qatar would challenge that network rules still exist that state substantial strength. Al Baker has never made a secret ownership and effective control (SOEC) of his carrier’s ambitions in India. He has needs to rest with an Indian entity in the talked about acquiring equity in LCC, IndiGo, country’s aviation industry. but apparently this came to nothing. Modi’s government has not announced He also has aggressively argued there any modifications to that rule, even after it should be Open Skies or unlimited flying approved 100% FDI in airlines. So, before rights between India and the Gulf, where Qatar receives the go-ahead for its venture vast numbers of Indians are employed. Qatar the new regulatory framework must be and India operate under a traditional bilateral clarified – and in India things seldom move air service agreement where airlines from fast. By Tom Ballantyne ■

APRIL 2017 / ORIENT AVIATION / 7 ADDENDUM

Cathay Pacific and China Southern choose new bedfellows

Hong Kong’s Cathay Pacific Airways and the Mainland’s signed up to relationships with and , respectively, in March. At the end of the month, Cathay Pacific chief executive, Ivan Chu, announced the oneworld carrier would code share on flights operated by Star lead member, Lufthansa German Airlines, Swiss and . In return, Lufthansa and its affliates will code share with Cathay from Hong Kong to New Zealand, Cairns, Melbourne and Sydney. The code share agreement will give Cathay planned for 2018. of Cathay Pacific. Delta Airlines completed Pacific passengers 14 new destinations in Across the border in Guangzhou, its purchase of a minority holding in China Germany, Belgium, Hungary, Norway, Italy government controlled China Southern Eastern almost two years ago. and Switzerland. Airlines has welcomed privately owned In a joint statement, American and China The agreement extends to the frequent American Airlines into its fold as a minority Southern said they expect to begin code flyer programs of both airlines, including the shareholder. The Texas-headquartered carrier share and interline agreements later this year, ability of Cathay’s Marco Polo club members will acquire 8.83%, for US$200 million, of the giving American customers access to 40 to earn club points on Lufthansa code share largest airline in Asia. In the process, China destinations beyond Beijing and more than 30 flights.Cathay Pacific Cargo and Lufthansa Southern will become the last of the Big Three beyond Shanghai. More than 80 destinations Cargo jointly market their capacity on Mainland airlines to welcome a foreign owner beyond San Francisco, Los Angeles and New flights between Hong Kong and Europe with to the share register. Cathay Pacific owns 18% York will become available to China Southern joint shipments from Europe to Hong Kong of , and Air China owns almost 30% in the deal. ■

Mueller to succeed Hogan at Etihad Aviation Group?

The Gulf airline rumour mill has been set second half of the year, along with CFO, James The chairman also said: “We must ensure spinning by “insider” reports that Christoph Rigney. At the time, Hogan said he planned to the airline is in the right size and shape. We Mueller, the Emirates boss of Innovation and a shift his career gears to finance. must continue to improve cost efficiency, recent CEO of Malaysia Airlines, is on his way In the announcement issued on January productivity and revenue. We must progress to Etihad Airways as James Hogan’s successor. 24, the Etihad Aviation Group chairman, H.E. and adjust our airline equity partnerships even The Etihad Aviation Group president and CEO Mohamed Mubarak Fadhel Al Mazrouei, as we remain committed to the strategy.” Its announced in January that he would retire from said he “looked forward to James’ continued the perfect job for airline corporate doctor the Abu Dhabi headquartered group in the association with Abu Dhabi in new ways”. Mueller. ■

Australian and New Zealand airlines form lobby group

A new airline association, Airlines for Australia fees and improved infrastructure. finding that passengers and airlines have paid and New Zealand (A4ANZ), was established A short time before the association was in excess of A$1.6 billion (US$1.22 billion) for last month to advocate public policies for the launched, the Australian Competition and access to Australian airports in the last ten years. aviation sector. Areas of focus include taxes, Consumer Commission (ACCC) announced its Former ACCC chairman, Professor Graeme Samuel, will chair the group which is being funded by members , , Regional Express (REX), Qantas, Australia and . The board will be made up of a representative from each member airline. A chief executive will be appointed in coming months. The Australian and New Zealand governments do not have the jurisdiction to regulate fees and charges as major airports are privately owned. ■

8 / ORIENT AVIATION / APRIL 2017

PERSON OF THE YEAR AWARDS DINNER

Alan Joyce honored as Orient Aviation’s 2016 Person of the Year

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ore than 120 guests from times. Orient Aviation’s 2015 Orient the aviation industry, Person of the Year, Tony Tyler, told guests media and tourism how much he appreciated Alan’s support gathered at Hong Kong’s on issues both small and overwhelming China Club on March 16 when he served as an IATA board member Mto honor Qantas Group CEO, Alan Joyce, and then board chairman. Accepting his as Orient Aviation’s 2016 Person of the Year. award from Tony, Alan said it was the Airbus’ John Leahy and Boeing’s Dr. 30,000 Qantas staff that made the airline Dinesh Keskar paid tribute to Alan’s vision what it is today. ■

and steadfastness in his 11 years of leading Photos: Graham Uden the airline, often through very difficult

Sponsored by 1

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1. Alan Joyce 4. Tony Tyler 2. John Leahy 5. Christine McGee 3. Dinesh Keskar and Alan Joyce

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6. Alan Joyce with tourism colleagues 10. Dennis Choo, Koay Peng Yen, Xu Hai-Bing 14. Gavin Haslemore and Tarynn Haslemore 7. Ben Wong, Andrew Cowen, Philip Herbert 11. Ricky Chong, Kinto Chan, Yvonne Ho 15. Thusitha Wickramasinghe, Howard West 8. Mark Sutch, Idalina Silva, Angus Barclay 12. Paul Tuck, Tom Ballantyne, Iain Grant 16. Tim Wilson, John Bloemen 9. Allen Chan, Maureen Dougherty, George Liu 13. Andrew Herdman, Rupert Hogg 17. Mark Watson, Sophie Watson

APRIL 2017 / ORIENT AVIATION / 11 LOW-COST CARRIERS

Sleeping LCC giant awakens

It has taken time, but Japan’s low-cost carriers are catching up with the Asia-Pacific budget airline boom as they make serious inroads into the domestic and international traffic of full service airlines.

By Tom Ballantyne

apan has been a sleeping extract profit from the business. giant when it comes “We think Japan is one that is the to no-frills air travel. case. We are adding a significant Conservative Japanese amount of capacity in the airline passengers would Japanese market,” he said. neverJ take up budget travel, said Profitable Jetstar holds 53% any number of analysts. But they of the domestic LCC market in are being proven wrong. In the Japan. “It has the best brand in last three years, Japan’s low-cost Japan for low-cost carriers and carrier (LCC) market has been the best customer service. There catching up with its regional rivals are so many opportunities for us and also winning market share up there,” he said. from full service carriers. ANA HOLDINGS chief As 2017 got underway, executive, Shinya Katanozaka, LCCs were operating 16% of said Peach’s shareholders decided all scheduled capacity in Japan. on consolidation as the best On current growth trajectories, way to accelerate the growth of they may end the year with a Osaka-based LCC. 20% share of the nation’s airline “Since Peach launched in market, reported scheduling 2011, it has become a driving consultancy, OAG. force in Japan’s LCC market. Last year, LCC capacity We are proud to support the in Japan was split almost acceleration of its growth across evenly between domestic Asia. Peach is a key component and international routes, a of ANA HOLDINGS’s strategy. It consequence of strong LCC provides customers with greater growth between Japan and its travel choices, expands our major international markets and network and enables us to better a plateauing at domestic LCCs, serve the increasing numbers of OAG said. tourists visiting Japan,’’ he said. By year end, LCCs had around they failed to create the market 67%. The share transfer from Nevertheless, Peach and 18% of international scheduled disruption that took place in other joint venture partners in won’t have it all seats - up from 9% two years Malaysia, Brazil and the UK. At the six-year-old LCC is a sure sign their own way. Five other LCCs ago - and 15% of domestic seats. last, LCCs in Japan are tracking Japan’s biggest full-service airline - Solaseed, , Spring At press time, 22 LCCs were flying the same growth in market share group wants to strengthen its Airlines Japan, Skymark and into and out of Japan offering that has occurred elsewhere, position in the budget sector. SkyFlyer - operate in the market. annual capacity of around 18.5 albeit ten years earlier,” said OAG. At Jetstar Japan, jointly Jetstar dominates Tokyo’s million seats. Seven domestic The report was released as owned by (JAL) Narita airport and Peach leads LCCs share capacity of 22 million ANA HOLDINGS, the parent of and the Qantas Group, the LCC at Osaka/Kansai. Apart from seats. All Nippon Airways, announced is upping the competitive ante. increasing its holding in Peach, “There’s been an LCC it would spend US$270 million to Qantas Group CEO, Alan Joyce, ANA HOLDINGS has equity in presence in Japan for many increase its shareholding in LCC, said recently he was very focused Solaseed and Skymark, although years but for much of that time, , from 38.7% to on new means for Qantas to some industry analysts don’t

12 / ORIENT AVIATION / APRIL 2017 LOW-COST CARRIERS

regard Skymark as an LCC, and OAG said international ANAH fully controls Vanilla Air. Unlike the domestic market, capacity would continue to In an investor guidance note, strengthen, especially among SMBC Nikko Securities analyst, characterized by Japan’s dominant LCCs, given average annual Hiroshi Hasegawa, said: “We take carriers which, in one guise or another, growth of LCC capacity has the move by ANA management have a strong grip on capacity growth, been 55% since 2010. Last as a positive step to bring a year, International LCC capacity second major LLC under its wing, Japan’s international capacity seems expanded by 51% and four LCCs which would give it more leverage set to continue to grow apace, entered the market. However, and flexibility, including a possible driven by competing foreign carriers less than a quarter of low-cost Peach merger with Vanilla.” capacity - just 22% - is operated While growth is forecast OAG report on Japanese low-cost carrier growth by Japanese airlines. Peach is the for the sector, OAG said there largest LCC flying international also are reservations about routes to and from Japan, with forecast market expansion. growth causes and the potential share, but its Mainland parent’s a 12% share of low cost seats Overall capacity growth in Japan impact of their presence on the goal is to double passengers and capacity expansion of 44% moderated last year and OAG dominant full service carriers in carried between Japan and China in 2016. questioned the ability of LCCs the domestic market. In the last by 2022, at a rate of 1.25 million The next largest international to stimulate travel in the mature year, growth has stagnated and passengers a year. LCC in Japan is ’s Jeju Japanese market. this may continue.” Peach, the third largest LCC in Airlines. Along with other South “LCCs are either 100% The only LCC operating in Japan, has committed to purchase Korean airlines - , Jin owned by ANA or JAL or these Japan that is not linked to ANA 10 A320neo and three A320ceo Air, T’way Air and - they two carriers have a equity stakes or JAL is Spring Airlines Japan, to add to its fleet of A320s. By operate 29% of LCC seats to and in them. This acts to effectively a subsidiary of Chinese budget doubling its fleet, Peach may from Japan. Jeju Airlines achieved put a brake on aggressive LCC carrier group, Spring Airlines. have international routes in mind bigger growth than Peach, with expansion, given the downward Spring Airlines Japan has a for the new aircraft, rather than 45% more seats in 2016 than it pressure on fares that LCC relatively small domestic market servicing domestic destinations. flew in 2015. ■

NEWS

deeply uneconomic investment Sydney Airport CEO quits ahead proposition”. “It would be decades before you would see reasonable cash flows on of second airport decision a very significant outlay,” she said in a report in the Australian ydney Airport has investors have said it would Mather has been quoted as Financial Review. Mather will set about finding a be uneconomic to build the saying that private development remain as the airport’s CEO replacement for long- A$5 billion airport without of the second airport without until a replacement has been serving CEO, Kerrie government assistance. government assistance was “a found. ■ Mather, after she put Sin her resignation to airport owner, Macquarie, on March 27. Mather, who has had a long and successful career at Macquarie took on the Sydney Airport job in 2002. Her decision to depart was made at a crucial time for the investment and finance group. On May 8, or earlier, Macquarie must inform the government if it will, or will not, take up its option to build Sydney’s second airport at Badgerys Creek in the western heartlands of the city. Influential

APRIL 2017 / ORIENT AVIATION / 13 NEWS BACKGROUNDER

Trump’s domino effect in Gulf The U.S. and British ruling that banned passengers from several Gulf and North African countries from carrying portable electronic devices, except for smart phones, on flights to the U.S. and the U.K. is feeding unease at airlines that fly to North America and the U.K. from the effected countries.

Dominic Lalk reports

he British and we will recapture the original of movies, live TV and Sports U.S. governments booking curve is anyone’s and well as games and music in astonished the guess.” every seat means “guests are world in late March Emirates is expected to able to keep themselves busy when they declared present a sobering balance throughout their journey without Tpassengers departing or sheet to investors this year after the need of a laptop or tablet”, transiting through Abu Dhabi, it made a record profit of $1.9 the airline said. Doha, Dubai, Kuwait City, billion 12 months earlier. Its Travel data consultancy, Casablanca, Cairo, Amman, revenue is said to have tumbled ForwardKeys data, said demand Istanbul, Riyadh and Jeddah by more than 75% or worse, as for travel to the U.S. had would be forbidden from carrying nobody can predict the impact flattened, with flights to and electronic devices larger than the U.S. electronics ban will have from the Middle East the hardest smartphones on flights to the and surveillance, I find amazing. on the gulf carriers’ premium hit. International net bookings U.S. and the UK until October 14. The Department of Homeland passengers. immediately dropped 4% after The decision, attributed Security (DHS) and TSA also “We used to have one Trump’s initial travel ban, while to fears terrorists could plant regard our procedures as of these business-damaging forward bookings from the explosives in larger devices, left excellent. We have coordinated events once a year, but now we Middle East to the U.S. declined airlines scrambling to implement and worked with them since we have them more than once a by 10% year-on-year. the ruling and travellers began flying to the U.S. in 2004.” month,” Clark said after Trump Also, bookings from the U.S. wondering what to do with their “Our decision to implement announced the electronics ban. to the Middle East and South laptops, tablets and cameras. additional security procedures Emirates can take comfort Asia have plummeted by 25% One unanswered question is at selected airports was based from the fact that its super- since the travel ban was first why the U.S. ban covers several on our assessment of the threat connector rivals in the Gulf also announced and have stayed that countries that the U.K. ban does environment and our mission are hurting. has way even though the U.S. courts not. Four countries included in to protect air travellers from the suspended flights on 22 routes, have declared both the first and the U.S. list – the United Arab threat of terrorism,” said acting mothballed 30 planes and the revised travel bans to be Emirates, Qatar, Kuwait and deputy assistant secretary for the deferred deliveries. Industry illegal. Morocco – are absent from the DHS, David Lapan. analysts have predicted the Emirates’ Clark said: “There U.K. restrictions. The three gulf majors carrier will report its first annual might be a contagion effect. The difference is “a have found themselves in an loss for a decade. Qatar and Other European countries may mystery”, Emirates president, increasingly tight spot since Etihad also may end up in the take a view, as may the Asian Sir Tim Clark, said. “It seems President Trump announced red. countries,” he said. the British government regards his first travel ban in January. In a March 25 statement, Trump also is calling for our secondary screening “The first U.S. travel order saw Etihad Airways sought to reassure radical change in the funding methodologies as best in class, the booking velocity fall by passengers after the electronics of U.S. aviation security. Under particularly as they have audited 35% overnight. The effect was ban was announced. “All the administration’s plan, the our procedures and security instantaneous,” Clark told Orient Etihad Airways U.S. flights have overwhelming majority of the training on an on-going basis,” Aviation in Berlin last month. mobile and WiFi connectivity, funding burden for security at he told CNN. “I am concerned. It’s the together with power and USB U.S. airports would be shifted “To suggest that Dubai tone of it. We have brought points at every seat, enabling from the federal government to does not have equal capabilities millions of Muslims to the United guests to remain connected airline passengers and state and or better than the Europeans, States, but now they may not feel throughout their journey with local governments, which would the Americans and the Asians welcome. They may look at going mobiles and smart phones,” it make flying more expensive and in terms of search, interdiction on holiday elsewhere. When said. A comprehensive IFE suite most likely, riskier. ■

14 / ORIENT AVIATION / APRIL 2017 JOIN US AT ASIA’S FINANCIAL SKIES The first conference exclusively dedicated to discussion of the issues shaping aircraft leasing in the Asia-Pacific PUTTING HONG KONG ON THE AIRCRAFT LEASING MAP Understanding Hong Kong’s new beneficial tax regime for aviation leasing

Date: Monday May 8, 2017 Venue: Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Admiralty, Hong Kong Early bird rate (register on or before 14 Apr 2017): USD450 per delegate Standard rate (register on or after 15 Apr 2017): USD570 per delegate Group bookings available on request Booking and sponsorship inquiries: Shirley Ho Orient Aviation Media Group Hong Kong E: [email protected]

Supported by InvestHK and the Hong Kong Aircraft Leasing and Aviation Finance Association Presented by the Orient Aviation Media Group Hong Kong

ORIENT AVIATION MEDIA GROUP: ORIENT AVIATION · E-ORIENT AVIATION · ORIENT AVIATION CHINA · ORIENT AVIATION’S WEEK IN THE ASIA-PACIFIC · WWW.ORIENTAVIATION.COM MAIN STORY IS TRACKING ON TRACK? On March 8, 2014, the world was shocked to learn that Malaysia Airlines flight MH370, a sophisticated jet aircraft with 239 crew and passengers on board, had disappeared into thin air. To ensure such a tragic accident would never be repeated, new aircraft tracking rules will come into effect in November next year.

Tom Ballantyne reports

sia-Pacific airlines and air navigation service at Asiana, Kyungsuk Jun. providers are among the earliest adopters of the “We are anticipating the seamless integration of technology necessary to conform to the Rockwell Collins’ Arinc MultiLink data feeds into our International Civil Aviation Organisation’s situational display system will enable us to track our aircraft (ICAO) upgraded aircraft tracking regulations. anywhere in the world.” AThe latest Asia-Pacific airlines to lock in a deal that will Asiana and Air Busan are the latest of the region’s carriers track their fleets anywhere and at any time in the world are to ensure they will meet ICAO’s November 2018 deadline for South Korea’s and its budget subsidiary, Air more frequent monitoring of the global airline fleet. Since the Busan. 2014 disappearance of MH370, carriers worldwide have been In February, they signed up to install Rockwell Collins’ moving towards meeting new ICAO rules on tracking. Arinc MultiLink aircraft tracking service, which brings From that date, all aircraft must be tracked every 15 together multiple data sources to report the location of a minutes. In addition, from January 2021, they must have commercial aircraft anywhere in the world, particularly over systems that will autonomously transmit an aircraft’s position remote land and oceanic spaces. at least once every minute when it is in distress. “Proactively tracking our aircraft ensures we have the Nearly all the region’s major legacy carriers either have most up-to-date information to manage our complex flight met the upgraded tracking standards or have ordered systems operations,” said IT service manager of Operations Control to conform to the ICAO deadline. Many airports and Air

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Navigation Service Providers (ANSP) capability. The system will reduce across the region also are well ahead Airlines choose their aircraft operating costs by of schedule in upgrading their providers. Finding a cost determining the most efficient flight tracking capabilities. paths for airlines en route to their Hundreds of the latest generation effective system that meets destinations. of jets scheduled for delivery - from the new ICAO regulations and “We have been working the A350 and the A320neo to the also accommodates rapid strategically with Thales for over two B787, B777 and B737 MAX years to implement a robust third families- are being assembled with developments in tracking party data validation set of processes the required equipment on board, technology is a challenge and procedures,” said Aireon chief although some tracking systems will executive, Don Thoma. require additional hardware to be “Thales is a leading air traffic installed in time for the implementation of the ICAO management automation platform provider and we want to standard. ensure that space-based ADS-B will be incorporated The Civil Aviation Authority of Singapore, in partnership seamlessly into the system. Thales will have a direct with Aireon, announced as far back as 2015 that it would connection to our service delivery point and will be ready to commence operation of an automatic dependent surveillance- go live with the Aireon data when we are operational in broadcast (ADS-B) system that uses satellites to monitor all 2018.” flights in real time. Asiana’s newly ordered system, in addition to utilizing The Indian government instructed its airlines to track Rockwell Collins’ proprietary high-frequency data link planes in real time in 2014, soon after MH370 disappeared. (HFDL) performance data, merges ACARS position reports, Inmarsat has been working with Airservices Australia and ADS-C, ADS-B, ASDI radar data and EuroControl position Qantas and Virgin Australia to develop an operational information. concept for the use of Automatic Dependent Surveillance Arinc MultiLink is designed to receive notifications when – Contract (ADS-C) satellite technology over Australia’s an aircraft has unexpectedly stopped reporting positional oceanic regions. Airservices Australia was the first ANSP to data or when it has deviated from its expected flight path. trial the ICAO standard, using Inmarsat’s global flight “As a carrier that focuses on providing our passengers tracking service. with the lowest airfares possible, we find Arinc MultiLink to Airlines choose their providers. Finding a cost effective be a highly economical solution for global aircraft tracking system that meets the new ICAO regulations and also because it did not require us to add on board hardware on our accommodates rapid developments in tracking technology is aircraft,” Air Busan Operations Control Center leader, a challenge. Also, the tracking market is highly competitive Hyeonmin Lee, said. as existing and entry companies strive to lock in customers Another flight tracking company, Texas-based for their systems. FlightAware, has partnered with Aireon. It has announced its What is available now or soon will be? GlobalBeacon tracking system, using 81 ADS-B receivers Aireon, a subsidiary of satellite operator Iridium, aboard a constellation of satellites last year. announced last month that Thales has officially begun the “This is the most significant advance in flight tracking testing and validation of its space-based ADS-B data. The since radar was invented in World War II and will soon start of data validation marks a major milestone for the provide the first and only truly global flight tracking system, efforts of Aireon and Thales to successfully integrate including coverage over the North and South poles as well as space-based ADS-B into the TopSky–ATC automation every ocean and every desert in the world,” declared platform. FlightAware chief executive Daniel Baker. The Aireon service will be He said the system meets the operational in 2018, shortly after the long standing challenge of “getting completion of the Iridium NEXT For airlines, whatever the various pieces of technology satellite constellation. In January, the initial cost, there will be together” to meet the needs of a wide first ten Iridium NEXT satellites range of aircraft operator customers, carrying the Aireon ADS-B hosted a silver lining. A study released who will be able to incorporate the pay load were successfully launched at the World ATM Congress in new “near real-time” tracking from Vandenberg Air Force Base in Madrid in March said satellite capability into their operations California on a SpaceX Falcon 9 without any equipment upgrades. rocket. cockpit communications Airline-owned communications The constellation will consist of (satcom) had saved airlines and IT provider, SITAONAIR, has 66 operational low-Earth-orbit more than $3 billion been in the aircraft tracking sector satellites that will provide global since 2014 with its AIRCOM Server coverage. The service also will deliver in the last 15 years Flight Tracker solution. The system to ANSPs global aircraft surveillance allows airlines to track aircraft

APRIL 2017 / ORIENT AVIATION / 17 MAIN STORY

keep costs down. Other participants in the global flight tracking system market are SkyTrac Systems, FlightStats, Spidertracks, Blue Sky Network and FLYHT. Industry experts caution that upgrading in tune with technological advances is challenging. Putting a new tracking device on an aircraft, if that is necessary, does not happen quickly because additional equipment must go through procedural and regulatory processes before it is validated for installation. Another issue to note is that new tracking equipment will need battery back-up because the movements by merging tracking technology already on aircraft operates from the SITAONAIR’s airline dispatcher airliner’s main power source. centre system and airline operations centre system There are no specific figures for the value of the aircraft (AIRCOM) Server, with its Future Air Navigation System tracking business, but the global flight tracking system (FANS) ground application, which is available to ANSPs. market is expected to increase in value by up to 10% annually The advantage of the FANS system is it has been installed over the next decade. on large numbers of airliners, which makes it less expensive For airlines, whatever the initial cost, there will be a silver than other offerings. lining. A study released at the World ATM Congress in In 2016, Panasonic Avionics announced it would offer Madrid last month said that satellite cockpit communications global tracking to all its Satcom customers that would (satcom) had saved airlines more than $3 billion in the last 15 “seamlessly enable flight tracking on more than 1,500 years. aircraft. We expect to extend this capability to above 3,500 Conducted by aviation consultancy, Helios, on behalf of aircraft in the short term,” it said. satcom service provider, Inmarsat, the study said satcoms Last December, the U.S.’s Spire Global announced its improved safety and airline operating efficiency and that entry into the aircraft tracking market because of technology these benefits applied particularly to carriers flying over vast available from its constellation of satellites monitoring oceanic air spaces. maritime traffic and weather patterns. A single air traffic control (ATC) benefit mechanism - Spire Global said it could add aircraft on its tracking reducing longitudinal separation minima from 100 nautical capability by installing additional sensors on its future miles to 30 nautical miles - saved US$890 million between satellites. Spire expected to launch 25 satellites carrying 2001 and 2016, said Helios. More reliable communications ADS-B payloads by year end with 50 to follow in 2018. It and tracking produced the savings. ■ now operates 16 satellites. Although it did not disclose pricing for its ADS-B service, it indicated it would be less expensive than some competitors. ICAO’s date line for upgraded Innovative New Zealand satellite and cellular aircraft tracking communication company, Flightcell International, unveiled International Air Transport Association (IATA) director its next-generation tracking technology at a helicopter-focused flight operations, Atholl Buchan, said many airlines already Expo in Dallas, Texas last month. track their aircraft through a variety of means. Described as high-frequency low-cost tracking using “IATA, airlines and other stakeholders have worked Internet Protocol (IP) over cellular broadband, the company with ICAO to develop a tracking standard and accompa- said it offers more precise tracking than satellite rivals by nying performance-based Standards and Recommended dramatically increasing the number of GPS positions sent Practices,” he said. from an aircraft. “These become effective in July 2017 and will be This is achieved at a significantly lower cost than applicable from November 2018, at which point airlines traditional tracking. Cellular IP Tracking uses cellular will be required to track their aircraft in oceanic airspace (and recommended elsewhere) at a time interval of every broadband data services and IP routing instead of cellular 15 minutes. SMS or satellite data services. “In a few years, new systems and technology, if When out of cellular range tracking automatically adopted universally by ANSPs, will allow for global sur- switches to an Iridium satellite and the reverse applies when a veillance coverage. The adopted standard takes this into cellular network is available. When tracking via satellite the account.” frequency of the position points automatically decreases to

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our position, and challenge the blanket application of EC Unfair and 261 to every situation, without consideration of context or the safety of our passengers. unreasonable? Many flight delays are caused by factors that are not the airline’s responsibility, such as inclement Britain’s aviation regulator and five global airlines are in weather, bird strikes and airport dispute over compensation payments for passengers who closures,” it said. Gulf neighbor, Etihad missed connecting flights because of delays. Airways, said: “Before even completing the dialogue, we find the CAA’s approach wholly By Tom Ballantyne unprofessional and unacceptable to publicly blame Etihad Airways ive airlines, including for infringements to passengers’ (SIA), rights we unreservedly deny. have been accused by Etihad Airways will, of course, the UK Civil Aviation abide by any decision of the Court Authority (CAA) of of Appeal.” Ffailing to pay compensation to The CAA conducted a passengers who missed their “comprehensive review” of the connecting services because of flight policies of the 31 top carriers flight delays. flying into the UK. “The airlines The CAA said compensation confirmed to the CAA they do not must be paid to passengers if they pay compensation to passengers arrive at their final destination who experienced a delay on the more than three hours later than first leg of a flight that caused scheduled. in decisions by the European its passengers. And the CAA them to miss a connecting flight CAA director of consumers Parliament, the European Courts has alleged SIA’s policy is to put and, as a result, to arrive at their and markets, Richard Moriarty, of Justice and in 2014, at the UK compensation claims “on hold” if final destination more than three said he was disappointed with Appeal Court. However, every they involve connecting flights. If hours late. The airlines’ refusal the stance of SIA as well as that year, thousands of disgruntled the Appeals Court finds in favour to pay compensation in these of American Airlines, Emirates passengers sue airlines, or of the CAA, carriers face fines that instances fails to meet the legal Airline, Etihad Airways and Turkish threaten to sue, because they will be greater than the disputed passenger rights requirements for Airlines. have not been compensated for compensation claims. flight disruption,” it said. “Airlines’ first responsibility delayed journeys. “Singapore Airlines has been It focused on airlines’ care should be to look after their The European law specifies in contact with the UK CAA on and assistance during disruption, passengers and not to find ways that passengers on long-haul this issue for some time. There is compensation for missed to prevent passengers from flights are to receive $316 if their a lack of clarity in the law, which connections, denied boarding upholding their rights,” said flights are delayed for three to four is the subject of ongoing litigation (when passengers are bumped Moriarty. “It’s disappointing to see hours and $632 if their journeys before the Court of Appeal. We from their original flights) and a small group of airlines continuing result in delays of more than four will continue to work with the downgrading (when passengers to let down passengers by refusing hours. CAA to resolve our differences are downgraded to a lower seat to pay them the compensation to For long-haul Asia-Pacific with respect to the application of class). which they are entitled.” carriers, operating wide-body EC Regulation 261/2004 to missed “Where we see evidence of Airlines have been protesting jets with hundreds of passengers connections,” an SIA spokesman passengers systematically being about passenger compensation on each service, this is big told Orient Aviation. denied their rights, we will not rules since they were introduced money. Delays caused by bad Emirates strongly denied the hesitate to take the necessary by the European Union (EU) in weather or strikes do not attract CAA claims, but the UK body action to ensure airlines change 2004. European Commission compensation claims. said its complaint data showed their policies and their customers Regulation 261 determined Emirates Airline is involved in the most criticized airline for get the assistance they are entitled compensation must be paid for a case that is proceeding all the non-payment of compensation to,” Moriarty said. certain types of passenger delay. way to the UK Court of Appeal for connecting flights was the In 2015, the CAA took similar The regulation was tested after it refused to pay flight Dubai-headquartered carrier. action against , Jet2 and upheld in passengers’ favour delay compensation to some of “We will rigorously defend and Wizz Air. ■

APRIL 2017 / ORIENT AVIATION / 19 COVER STORY

A STEADY HAND Ambitious low-cost carriers crowd South Korea’s skies, but 12-year-old Jeju Air is the undisputed market leader reporting impressive profits and expansion under the leadership of CEO, Ken Choi.

Tom Ballantyne reports Photos: Gareth Jones

20 / ORIENT AVIATION / APRIL 2017 hen the U.S. government last month “It was tough for the airline in the beginning, but I have reacted to recent missile tests in North been serving the carrier for almost five years and it has been Korea by preparing for deployment of a a very lucky ride,” he said. “My previous jobs were mainly Terminal High-Altitude Area Defense in financial services, venture capital and fund management. (THAAD) battery in South Korea, it was I had not worked in an airline. I started off with financial Wa body blow to the north Asian nation’s travel industry. engineering and distribution, but at the end of the day the Within days of the North Korean tests, the Chinese airline business is very much focused on operations. National Tourism Administration imposed a ban on “zero “The flight office still accounts for 70% of the business. dollar” shopping tours to South Korea and Mainland Making the product stable and uniform across the board to Chinese travel agents reported thousands of cancellations meet customer expectations is very important and hard to as tourists re-booked their trips to Japan or Southeast Asia. deliver. We were lucky enough to have financial resources South Korea’s southern resort island of Jeju, which draws to invest at least 2% every year in IT technology. That put some three million Chinese tourists annually, is bearing us in a relative position of leadership in IT. So we just keep much of the brunt. executing and we have been doing better.” “That’s a temporary setback,” the CEO of Jeju Air, Ken Jeju Air flies 28 B737-800s. Passengers carried have Choi, told Orient Aviation in an exclusive interview in Hong increased from 5.55 million in 2014 to 7.19 million in 2015. Kong last month. “The Chinese market has always been Last year, the numbers grew to 8.6 million with around 10 challenging. At the same time as million expected this year. it has been an opportunity for us. It has carried more than “Fortunately, or Where we can compete, 40 million passengers in its unfortunately, we will see. For we compete. Where we can’t, lifetime and expanded to 150 now, Chinese business accounts flights a day to 40 domestic and for only 5% of our schedule. we don’t. We try to move quickly international destinations. We were thinking to run more and that formula has been working Choi said the carrier had charter business this year, but well for us. We always try something forecast a fleet of 40 aircraft that plan might have to be set by 2020, but that has been aside for a while until things different and disruptive so that revised to 50 airplanes and 65 settle down.” or Asiana cannot fly as routes in the next three years. The unflappable 51-year- a monopoly. We have a winning “That [forecast] gives us the old’s response to the sudden economies of scale to provide fall off in his carrier’s bookings formula not only from our pricing a very stable cash flow. So I reflects the carrier’s steady but from other different products. think it will be very difficult for approach to barriers thrown up So the customers like us our competitors to come in,” on its path to expansion. And he said. there are always some. In late Ken Choi Until now, the carrier’s March, China denied Jeju Air’s Jeju Air CEO fleet was fully leased, but application to add flights from this strategy has changed. Seoul’s Incheon airport to Jinan and Yantai from this month In January, the airline ordered three next generation to October, although Mainland regulators did re-approve B737-800s. existing services to Weihai, Jinan and Yantai. Choi told Orient Aviation: “This acquisition is a major “We are focusing more on Japan,” he said. The challenge step in our strategy. We fully understand the benefits of is to adjust ourselves quickly.” Jeju Air, majority owned owning and operating airplanes. It drove our decision to by household products conglomerate, Aekyung Industrial purchase these airplanes. We are confident this order will Company, already is the leading LCC among Japanese and allow Jeju Air to strengthen its position as a leading low-cost Korean budget airlines operating between the two countries. carrier in Northeast Asia.” “We are running to six major cities and are adding some In 2015, Jeju’s net profit jumped 47.3% year-on-year, to secondary cities this year. Most importantly, we are trying to $38.8 million, driven in part by historically low oil prices build frequencies and capacity into our major markets where and supported by increased inflight sales and network we think we have a leadership, such as Kansai, Narita and expansion. The airline’s profit margin hit an all-time high of Nagoya. The market is very naturally suited to LCCs and 8.5%, well ahead of the industry’s global average. also is ideally distributed between inbound and outbound Last year also produced positive results, when revenue carriers. Depending on the currencies, they fill each other’s rose to $669.3 million and the airline’s reported profit was seats. So that works pretty well for us for now,” Choi said. $47.94 million. Its financial position is extremely healthy, with Founded in 2005 and launched in 2006, Jeju Air was equity rising from $32.2 million in 2012 to $239.3 million in Korea’s first LCC. Banker Choi was appointed as CEO in 2016. Analysts forecast revenue of around $814.5 million this 2012 and led the airline’s successful stock market debut in year, increasing to $945 million in 2018, with profits in 2017 November 2015. It has been a perennial profit-maker. of $51.3 million and nearly $59 million in 2018.

APRIL 2017 / ORIENT AVIATION / 21 COVER STORY

Regardless, Jeju will take an LCC leadership position and we hope to remain the cost leader. Our objective is to dictate that market as an LCC leader. I always see challenges as an opportunity. Market limitations and macro situations are challenging, but we can deal with it

Ken Choi Jeju Air CEO

their international businesses by placing their subsidiary LCCs on some routes, which Choi said had been an effective Jeju Air’s results are strategy. “Some of the routes where we thought we had being achieved in a very competitive leadership became kind of shaky,” he said. sector of the market, including several LCCs with powerful “But it’s in transition. It’s very important for us to keep backing. South Korea is served by six budget airlines. our market and leadership on certain routes and we have is owned by Korean Airlines and Air Seoul and Air Busan to be more aggressive in developing new routes that are are controlled by Asiana Airlines. Lesser players are Eastar profitable to us.” Jet and T’Way Air, Planned LCC, KAIR Airlines, recently Apart from China and Japan, Jeju flies to Hong Kong, ordered eight A320ceo and has said it intended to launch Macau, Kota Kinabalu, Cebu and Manila in the Philippines, services next year. Taipei, Bangkok and Phuket in Thailand, Hanoi and Another hopeful, Fly Yangyang, has been refused an air Danang in Vietnam and Guam and Saipan. operators certificate, but it intends to reapply for permission The domestic market is so crowded and finite - only to fly as soon as allowed. Nambu Air also has been set up, six of Jeju Air’s 40 routes are domestic – that international but no launch date has been announced. expansion is essential. It is why Choi and his team are “I understand new entrants might eventually have AOCs considering long-haul low-cost operations. and enter the market but good luck with it,” said Choi. Market limitations, particularly the country’s relatively Existing LCCs have 60% of South Korea’s domestic small domestic market, meant Jeju Air had to look to market and Jeju has 15% of the budget sector. Of that “expand beyond a 4,000km radius unless there is some kind market share, 22% is international traffic with analysts of a big break like open skies with China or North Korea forecasting that foreign routes will soon make up 30% of unification”, Choi said. Jeju’s traffic. For January this year, international passengers “It would be an opportunity, but we can never rely on carried by South Korean LCCs soared 48.3% year-on-year. that. In a three-year timeline we have to ask ourselves what Choi said Korean Air and Asiana have tried to protect will be the next phase of our growth engine?”

22 / ORIENT AVIATION / APRIL 2017 COVER STORY

It is why Jeju is thinking about a long-haul strategy, he His problem, at the moment, appears to be size. Jeju Air said. “What kind of fleet? What kind of training systems? If approached oneworld alliance member, American Airlines, we address this what would be the most risk-managed way to about a partnership but it came to nothing. “We are still a deploy? We have just started addressing these questions with small carrier so the feedback we receive is they are not ready our top team,” he said. to pay attention to us. We are not a priority to them. We But he stressed the airline wanted to be cautious about recognize that. We need some time to prepare ourselves. But going long-haul. “There is no proven success formula in we clearly see there might be another market that effectively the long-haul LCC business. We have to address the cabin competes with the legacy airlines enjoying the cross trans- product very smartly. We have to structure the cost smartly Pacific market. If there is an opportunity (to partner with a to ensure it can be a profitable business,” he said. legacy carrier) we will certainly take it.” Choi saw Southeast Asia as important market, but he Choi said Jeju Air has been very fortunate to have conceded that on routes longer than four hours it was very exceeded its business plan every year by a certain percentage difficult to compete with budget carriers such as AirAsia and so it meets shareholder and employee expectations. Cebu Pacific. “That’s a very strong signal to the market and very strong “They are very respectful cost leaders so we have to confirmation to the people who invested in us. We feel very prepare ourselves. Scale and partnership are the answers. fortunate,” he said. Instead of fighting each other we would rather work with “On the other hand, the world is changing very quickly. them.” We have to be nimble. Our size has doubled in terms of This approach is the reason that Jeju was a founding employees and turnover, which adds more complexities in member of the groundbreaking LCC , along distribution and operations. So execution and nimbleness is with Cebu Pacific, Nok Air, NokScoot, , Tigerair, critical if we are to maintain our competitiveness against the and Vanilla Air. market players.” ■ Set up last year, it is part of the world’s first dedicated multi-carrier booking system created by Air Black Box (ABB). The booking system allows LCCs, for the first time, Honed by finance to interline and promote each other’s brands. Jeju Air chief executive, Ken Choi, has broad Eventually, it is expected to bring significant passenger international business experience and perspective from gains for each of the carriers, although it was not happening his cross-border investment and consulting career. Before overnight. The technology is still being integrated into the he moved to Jeju Air, he had a successful career at global system. Choi said this year’s traffic gained through Value financial institutions and venture capital companies would not exceed 1% of total sales. including Citigroup, Sit/Kim International, Bokwang “We should be realistic in our expectations. Hopefully Venture Capital and East Gate Capital Management. next year, once we promote the Value alliance, that will rise He is no stranger to government, as he served as to 3% and then 5%. It will gradually expand. This is very president of the Korea Game Industry Agency (KOGIA), the authority that governs and promotes the digital media much an investment in the future,” he said. industry in South Korea. Running KOGIA ranks at vice He is interested in other partnerships that will bring minister level in the nation’s Ministry of Culture, Sports and in feeder traffic to Jeju, even with full service carriers and Tourism (MCST). A U.S. certified financial analyst, Choi particularly airlines that fly trans-Pacific routes. South holds a Master’s degree in Engineering Management from Korea and the U.S. have an open skies agreement and Choi Stanford University and a Bachelor’s degree in engineering believed his country is ideally situated geographically to feed from Seoul National University. traffic from North America through to Southeast Asia.

APRIL 2017 / ORIENT AVIATION / 23 NEWS BACKGROUNDER

Under its initial contingency plan, the member North Asia conflicts said it would cancel 90 flights on 12 routes from March 15 to April 30, including 21 frequencies on hurt region’s carriers the leisure-heavy Incheon-Guilin route, 16 flights between Incheon and Dalian, ten on the Incheon-Jinan route and eight services from Muan and Beijing By Dominic Lalk and Jeju and Beijing, respectively. South Korea’s largest carrier, scalating tensions many online travel agents such as flights from Ningbo to Jeju due Korean Air, will eliminate 79 between China and China’s Ctrip have pulled South to “changing market conditions”. flights on twelve routes to China South Korea over the Korean offerings from their sites A Spring spokesman said the during the period, which is 6.5% deployment of a U.S. and both Mainland and South tourism and airline industries of its Mainland capacity. Terminal High Altitude Korean carriers have been forced would be “markedly affected” by As political conflict escalated EArea Defense (THAAD) missile to reduce their networks. the on-going situation between between China and South defence system in South Korea South Korea’s budget carriers China and South Korea and Korea, South Korean companies are taking their toll on the have long reaped the benefits added more adjustments to its based in China have reported region’s airlines. of undiminished Mainland tour schedule remained likely. cyber-attacks, store closures and Travel curbs imposed operator demand, both through has fines. State-controlled media in by a disgruntled Beijing on aggregate bookings on their terminated services from Ningbo China has called for a boycott Mainlanders booked to visit scheduled flights or chartered to Jeju and Cheongju from of South Korean goods and South Korea are likely to result services. These golden years have March 15 and is considering services. South Koreans have in more than US$5 billion in evaporated, at least for now. more cutbacks. has retaliated with their own boycott immediate revenue losses at South Korean LCC, Eaststar, cancelled its Nanjing-Jeju route. of popular Chinese products South Korea’s airlines and travel said it would temporarily At press time, 22 carriers such as Xiaomi smartphones and firms, Goldman Sachs has halt flights from Cheongju to operated Sino-South Korea Tsingtao Beer. forecast. Harbin, Ningbo and Jinjiang flights. The biggest players in “Some people are The China National Tourism from March 15 to October the market are Asiana Airlines automatically thinking, the Administration ordered Mainland 28 because of “worsening (22%), Korean Air (20%), China current situation is not good, tour operators to stop selling relations”. T’Way Airlines said it Eastern Airlines (15%), and China there is discrimination against tours to South Korea from March would “significantly” curtail its Southern Airlines (12%). us, so we shouldn’t go. The 15 or face “severe punishment”. network to the Mainland and As a result of these “sensitive recent actions of [the South China is South Korea’s most Jin Air, a Korean Air subsidiary, issues burdening the aviation Korean government] have hurt important inbound tourism has cancelled services from Jeju industry in Korea”, Asiana told many Chinese citizens,” said Che market. More than eight million to Shanghai and Xian. Jeju Air Orient Aviation it would pull Shanglun, chairman of Xiamen Chinese travellers visited the said its request for charter flights “most” of its wide body capacity Airlines. The airline boss said country in 2016. Mainland to Ordos in Inner Mongolia in that was scheduled for flights the carrier had 10%-20% fewer Chinese travellers account for March was rejected by China. between China and South Korea bookings on its flights to Seoul more than 85% of tourists on the Spring Airlines, the and would redeploy to Japan and and Jeju since the crisis became island resort of Jeju. Mainland’s largest LCC, cancelled Southeast Asia. more aggravated. ■ When tensions first flared in the final months of 2016, international passenger arrivals on Jeju declined from 1,661,777 in October to 1,376,446 in November, reported Sabre’s Airline Solutions practice. Carriers in China and South Korea immediately adjusted capacity from 2,622,012 available seats in October to 2,249,575 in November. Since then the situation has worsened. From March 15,

24 / ORIENT AVIATION / APRIL 2017 NEWS BACKGROUNDER

United’s premium class rollout curtailed by troubled Zodiac

By Dominic Lalk in San Francisco

nited Airlines’ (UA) The airline has added nine entry-into-service of routes between the U.S. and the its Polaris business Asia-Pacific since 2012, which class cabin proved expanded its regional network more challenging by 19%. In China, it serves Uthan the Chicago-headquartered Beijing and Shanghai and has airline thought, said the airline’s monopolistic routes to Chengdu, CEO, Oscar Munoz. Xian and Hangzhou. The airline is “not happy” Western China was “one of about production delays at the fastest-growing markets not Zodiac Aerospace’s UK facility, only in China, but in the world”, where its Polaris business seats UA said, so attention must be are manufactured. The spat hit a paid to this market. Its B787s new low when UA had to ground enabled it to serve “slimmer its two just-delivered -300ERs long-haul markets, making the because it did not have seats for development of interior China them. As it stands, the aircraft markets possible”. that operated the Hong Kong UA said its growth in China inaugural Polaris flight is only one is strictly curtailed by the Chinese of two airliners in United’s fleet government. It codeshares with equipped with the new seat. Air China on its Chengdu and debutted its Xian flights, but said additional B777-300ER on the Hong Kong- partnership opportunities hinged San Francisco route on March on “regulatory approval”. 27. The airline has 14 -300ERs on Chinese bureaucracy also order and hoped to receive all of stands in the way of a fully- them by July this year. fledged United-Air China joint Zodiac also was at the venture, the U.S. carrier said. “The forefront of A350 delivery delays, current regulatory environment which prompted a spat between does not allow an immunized Airbus and its A350 launch on the 2-4-2, B747-400 aircraft because of overcapacity in joint venture partnership, but customer, Qatar Airways. BusinessFirst product it is the market. At the Polaris launch, UA continues to build on a UA managing-director for replacing. UA declined to comment to “strengthened partnership” with Greater China and South Korea, Following the -300ER rollout, Orient Aviation on the subject. the Mainland flag carrier. Walter Dias, told Orient Aviation UA will equip its incoming A350- UA has lost its place as the Last year, it entered into the decision to launch the 1000 and B787-10 fleets with largest carrier flying between a multi-year extension of its B777-300ER and Polaris on the the new premium class offering. Greater China and the U.S. with state- Hong Kong route was to up its The carrier’s B767-300ERs and Its Star Alliance fellow, Air controlled Air China and created ante against airlines serving the B777-200ERs will be retrofitted China, overtook it this year. an executive board structure to route. Cathay Pacific flies from with Polaris by 2022. But the airline still offers more enhance commercial cooperation, Hong Kong to San Francisco up to Mystery still surrounds UA’s trans-Pacific services from Greater laying “the groundwork for a three times a day. A350 and B787 orders. Munoz China to the U.S. than any U.S. possible joint venture between United Polaris has 1-2-1 has said the carrier should carrier. It flies 100 flights a week our two carriers when these all-aisle access, a lie-flat bed reconsider these commitments between Asia and North America, partnerships become legally configuration; an improvement and perhaps opt for smaller excluding Canada. permissible,” UA said. ■

APRIL 2017 / ORIENT AVIATION / 25 NEWS BACKGROUNDER

Inviting the digital shopper into the airline cabin

By Dominic Lalk in Berlin

wo Asia-Pacific airlines are among the four launch carriers for a new merchandising content platform Tthat was unveiled at ITB Berlin in March. Airbus and Routehappy announced at the travel fair that they had teamed up to launch a visual flight shopping tool to encourage travellers to make flight bookings based on the quality of an airline’s cabin to expect when flying with Cathay coming from a time when all like the International Air Transport products rather than fares. Pacific and tailor that content that mattered was journey time Association’s (IATA’s) New Other launch airline to very specific flight criteria. and price. This does not keep Distribution Capability (NDC). customers for Routehappy are Routehappy lets us differentiate pace with the way we live our Routehappy is full compatible Emirates Airline and the Lufthansa our premium products. Without lives. We’ve become far more with NDC. Group. The tool will be available access to that rich content we sensitive to what we are buying, SIA told Orient Aviation through all sales channels, from could be in a very commoditised particularly when we are more that the “Airbus-Routehappy direct to indirect and from online sales environment.” aware of it.” initiative is about enriching the to offline, to showcase seat Atmosphere Research Group “From now on, passengers air travel shopping experience, width, personal space, in-flight president and travel industry will be able to visualise, choose empowering our customers with entertainment, connectivity, analyst, Henry Harteveldt, said: and reap the benefits of these relevant product knowledge to menus and jetlag-friendly ambient “Airlines that make this available new generations of aircraft and help them make more informed lighting. stand to benefit by showcasing cabins whenever they fly,” Lange decisions. This is very much at the The Routehappy rich data their differentiated products.” said. heart of IATA’s NDC project too, visual tool can accommodate Atmosphere data shows that 61% “At Routehappy, we have which is seeking to modernise a large amount of promotional of business travellers and 53% been thinking for many years airline distribution.” content, including videos and of leisure travellers pay attention that there is the problem of SIA senior vice-president for images. An example is its ability to the aircraft type when they commoditisation in flight sales and marketing, Campbell to focus on a passengers’ fly and make their decisions shopping. The hotel industry has Wilson, said “this important geographical location and feature accordingly. done an extraordinarily good initiative” allows SIA to highlight limited-time promotions, such Speaking to Orient Aviation job at differentiating. They get its unique cabin products, as lounge access for premium in Berlin, Airbus head of market consumers excited to buy their including its customised full-flat economy class passengers. and product strategy, Bob Lange, product. So should we in the bed seats in business class”. Cathay Pacific Airways said the latest generation aircraft airline industry,” Routehappy Lufthansa Group head of general manager Europe, stood out with passengers CEO, Robert Albert, said at the distribution, Xavier Lagardere Neil Glenn, said: “with a very because of their quiet and more Berlin launch. said: “Routehappy supports the small amount of technological spacious cabins. “Our alliance with Airbus much-needed transformation integration the Routehappy hub “But what’s the point of gives airlines an incentive to create of air travel retailing from was able to leverage our media putting these key attributes into and distribute rich content that commodity to feature-based content library and share this a cabin if nobody knows they is becoming a key feature in how shopping, by providing content across multiple channels. are there? It’s not through the we shop for flights.” passengers with additional rich We can show our customers what legacy GDS systems. They are The project looks and sounds content.” ■

26 / ORIENT AVIATION / APRIL 2017 INDUSTRY ADDENDUM

Embraer lands in Silicon Valley

Brazilian-headquartered commercial and worldwide and it has been accelerated business aviation manufacturer, Embraer, by the evolution of artificial intelligence, is to establish innovation teams in Silicon robotics, virtual reality and autonomous Valley and Boston to explore opportunities in vehicles. This is another step that Embraer air transportation. The group, which began takes as a key player in transforming global operations last month, plans to collaborate air transportation,” said the leader of the with startups, investors, academics and innovation program, Antonio Campello. corporations and seek partnerships that “We want to integrate with the Silicon enable new technologies and business Valley and Boston communities and create models. value for transporting people and cargo The innovations teams will be led through the world’s largest innovation by a Global Business Centre based in ecosystems,” said Embraer president and Melbourne Florida, where Embraer has an CEO, Paulo Cesar Silva. Embraer invests industrial, engineering and services facility, 10% of revenue in R&D and improved and will work with Embraer’s engineers at industrial operations each year. Almost the company’s home base in Sao Jose dos half of the company’s income comes from Campos. innovation and improvements implemented “A major transformation is unfolding in the last five years.■

Boeing shakes up industry with car interiors partnership

Detroit’s Adient, a global leader in to raise the bar on the aviation passenger to our customers and believe they would automative seating, is to collaborate with experience, building on our leadership in the benefit from a wider range of options with Boeing in the design of more functional automobile seat market,” Adient chairman more reliable, on-time performance in the and comfortable aircraft seating. The and CEO, Bruce MacDonald said. airplane interiors and seating category.” 75,000 employee company will offer Boeing “Boeing is building commercial airplanes The aircraft interiors market has an its expertise in design, craftsmanship, at record rates to deliver on an order backlog estimated value of US$21.7 billion by 2025. operational excellence and supply chain of more than US$400 billion,” said Boeing It is forecast to grow at a compounded management. vice president and general manager, supplier annual growth rate of 4.3% for the same “In our discussions with Boeing, we management, Kent Fisher. “We continually period. Adient outfits the interiors of 25 believe there is an opportunity for Adient look for opportunities to offer more value million cars a year. ■

Accelya and Mercator complete merger

Airline financial solutions provider, Accelya, airline customers, offers complementary cost management. and air transport software company, products and analysis to all sectors of the John Johnston, the CEO of Accelya, is Mercator, last month completed their travel and transport industries. Its portfolio the CEO of the new company. Jose Maria merger into a single entity and announced of products includes revenue accounting, Hurtado is the combined group’s Chief its new majority shareholder, private equity management and assurance, cargo and Financial Officer. Warburg Pincus held firmWarburg Pincus. shipping management, payment solutions, majority control of Mercator before the The combined group, which has 250 data analytics, commercial solutions and merger. ■

China recycler buys aged B737-700s

Aircraft Recyling Internatonal Ltd (ARI), at a new build plant in northern China. Harbin, with part one of the facility to begin majority owned (48%) by China Aircraft ARI, which was established by CALC operating this year. It will have a hangar that Leasing Group Holdings (CALC), received along with linked companies China can accommodate a B747 and the capacity to six aged B737-700s from Xiamen Airlines Everbright Ltd (14%), Friedmann Pacific disassemble up to 20 aircraft a year. last month; the company’s first old aircraft Asset Management (18%) and Sky Cheer ARI’s old aircraft solutions include acquisitions. The Boeing airliners, which International (20%), has commenced leasing, sale and leaseback, trading of aircraft are between 16 and 18 years old, will be construction of an aircraft disassembly components, teardown and disassembly disassembled by the two-year-old company centre recycling plant in northern China’s MRO and aircraft conversions. ■

APRIL 2017 / ORIENT AVIATION / 27 INDUSTRY ADDENDUM

All Nippon Airways Trading partners with CPaT Briefly …. All Nippon Airways (ANA) Trading has established a marketing partnership in the • Beijing-based MRO, Ameco, has Asia-Pacific with U.S. training academy, completed cabin modifications CPaT Global. ANA Trading will market CPaT’s on 10 of Air China’s A330-200s, distance learning solutions to airlines, flight as part of C-Check layovers training centres, universities and governments for the airlines. The Air China across the region. ANA Trading, set up in 1970, (75%)-Lufthansa German Airlines operates flight training and flight crew products, (25%) joint venture achieved a including simulator training academies, in Asia. turnaround average of seven days CPaT Global president, Brian Bergeron, per aircraft for the modifications. said the Asia-Pacific is the fastest growing • Hong Kong Aircraft Engineering and least served market in the world. The Company (HAECO) reported a net combination of its products and ANA Trading’s profit jump of 110%, or HK$975 experience, relationships and distribution million (US$125.65 million), for the would introduce customers to improved 2016 year, largely on the back of training and safety and cost savings. ■ the sale last June of its holding in Singapore Aero Engines Services Ltd (SAESL). GE Aviation buys cloud based digital records company • HNA Group, the parent company of , intends to GE Aviation has bought cloud-based digital 40 major airline customers with data centre acquire a 25% equity in London- records management company, AirVault, operations in Dallas and Oklahoma City. based Old Mutual’s US asset an acquisition that will provide web-based It manages the maintenance records of management unit for US$446 fleet maintenance records management in 50% of the North American airline fleet and million. Earlier in the month, it conjunction with GE’s Configuration Data 20% of the global aircraft fleet. GE is organized reached an agreement to buy 83% Exchange. The expanded capability will allow around a global knowledge exchange, the of white elephant facility, Hahn the collection of records and data across GE Store, where each business shares and airport in Germany aviation companies and the IT systems they use accesses the same technology, knowledge, • Hong Kong Airlines, through its to manage their fleets. AirVault has more than market, structure and intellect. ■ wholly-owned subsidiaries, has purchased 51% of SATS HK Ltd and 35% of the Asia Airfreight Terminal Cebu Pacific signs on AFI/KLM E&M for A320 support Company. Both enterprises are based in Hong Kong. Cebu Pacific, the largest carrier in the component support and solutions and includes • GE’s TRUEngine program hit Philippines, has contracted repairs and local pool access to maximize 25,000 enrollments last month Industries/KLM E&M, to provide component aircraft utilization for the carrier’s A320ceos from 200 airlines and lessors, a support for its A320 family fleet of 40 airplanes. and future A320neos. 25% increase over March 2016. Cebu expects to take delivery of 45 new aircraft “We are extremely proud to number Cebu The TRUEngine qualification from this year to 2021, which will increase Pacific among our clients, and support the process, launched in 2008, the LCC’s fleet to 85. The contract covers full development of one of the most successful ensures that engine configuration low-cost carriers in this fast growing market,” and overhaul practices are said AFI KLM E&M. “This is our first agreement consistent with GE and CFM with Cebu Pacific and also our first component engine manuals and other support contract in the strategic Phillipines recommendations. market”, said executive vice president, Air • Lufthansa Technik’s induction France Industries, Gery Mortreux. cooking platform, which will Also in March, the European joint allow fresh food to be prepared venture company signed a long-term support onboard quickly, has been cleared agreement with Vietnamese LCC, Jetstar for take-off. Rice cookers and Pacific, for its fleet of 14 A320s and secured toaster modules are available a contract with Cambodia’s Angkor Air for for integration into the platform. component support, MRO and pool access. The breakthrough design was The 10 airliner carrier, a and developed with Germany’s hs2 Cambodian government joint venture, flies Engineering. ■ seven ATRs and three A320s. ■

28 / ORIENT AVIATION / APRIL 2017 INDUSTRY INSIGHT WIFI ONBOARD CRITICAL FOR ASIA-PACIFIC AIRLINES Onboard WiFi determines airline customer loyalty

Onboard WiFi has been a promise rather than a reality for many airline passengers. Poor reception, slow transmission speeds and unreliability are common complaints. But as WiFi becomes a given in an airline’s offerings, carriers are being forced to invest in entertainment systems that match passenger experiences on the ground.

Tom Ballantyne reports

he global inflight WiFi market is becoming crowded with new players and the reason is easy to explain. TAccording to one research firm, Global Industry Analysts (GIA), the business is worth US$$1.85 billion. To prove how quickly it is growing, another consultancy, Persistence Market Research, said the sector could approach $5.5 billion in value by 2021. Factors driving growth are increasing demand for Onboard WiFi can now out of service; a development either offer some form of connectivity on aircraft, rapid deliver the same service in the that is incredibly important for onboard WiFi or are in the penetration of smartphones air that users experience on the their operations,” he said. process of introducing the service and other communication ground. Major provider, Gogo, The new modem will begin on their aircraft. gadgets across all population has taken the performance of its installation onboard from July Singapore Airlines (SIA), demographics, the robust 2Ku in-flight broadband service this year and eventually will be which is widely respected for economies and new aviation to very high speeds. available on more than 1,500 its leadership in inflight service sectors in developing regions, Utilization of a “next- 2Ku aircraft at 13 airlines. Gogo innovation, launched a $50 increasing Internet accessibility generation” modem and new works with several major carriers, million inflight connectivity and inflight WiFi technological Inmarsat satellites was trialled including Asian carriers, Japan program in 2012 to bring advances. last year onboard a Gogo test Airlines, Vietnam Airlines and Internet and mobile data services Also passenger mobility, aircraft. It allows passengers to . to passengers, when flying at more personalization of services stream video via the internet and The service is being rolled 35,000ft. offered and increasing interest in also access live TV on Gogo TV. out on nine B787s and 18 A350s Its low-cost, long-haul WiFi services as a revenue stream “Our 2Ku technology is as they enter service at Vietnam subsidiary, Scoot, makes onboard for airlines are fueling growth in delivering industry leading Airlines. WiFi available across its entire the market, GIA said. performance. With the new But Gogo and Inmarsat don’t fleet of B787s. It launched a Until 2014, North America modem and satellites, we are have the business to themselves. low-cost inflight WiFi plan, accounted for more than 60% of setting a very high bar for the Major competitors are OnAir, “Social-Lite”, last May, which the market, but the Asia-Pacific industry,” said Gogo president Panasonic Avionics, Rockwell allows guests to stay connected is catching up. By 2021, Inflight and chief executive, Michael Collins, EMS Aviation, SITA, with friends, families and WiFi penetration in the region is Smith. AeroMobile Communication, co-workers as they travel. forecast to expand by 26% per “We will deliver this Row44 Inc.,Thales Group and Optimized for messaging year to 2021 compared with the technology upgrade to our airline Honeywell International and chat services as well as light rest of the world, at 14.9%. partners without taking aircraft Most Asia-Pacific airlines surfing, “Social-Lite” costs US$5

APRIL 2017 / ORIENT AVIATION / 29 INDUSTRY INSIGHT WIFI ONBOARD CRITICAL FOR ASIA-PACIFIC AIRLINES

for 20MB of data at 64kbps per day or $30-50 per month on surfing speed. It complements At airlines there is a never ending appropriately equipped aircraft. Scoot’s existing inflight WiFi Gogo packages are available plan, which costs US$11.95 for debate about the charges they strike for direct purchase via gogoair. 60 minutes, $16.95 for three for WiFi - or if they should charge at all. com at $12.70 for 24 hours of hours and $21.95 for a one day Fees for inflight WiFi range from inflight internet access, $34.95 and night cycle. There is no cap for monthly unlimited access on data consumed. $5-$15 per day or $30-50 per month on on a single airline or $39.95 for Panasonic Avionics appropriately equipped aircraft monthly unlimited access on any Corporation vice president Gogo partner airline. Global Communications Services, OnAir offers Wi-Fi services David Bruner, the supplier of the connect to a local network to song they like with Foxtel, Netflix on Emirates Airline’s A380s Scoot service said: “Working watch movies, listen to music or and Spotify coming on board and charges $7.50 for a mobile with Scoot, we’ve changed the read information. this year. device and $15 for a laptop. game in inflight connectivity But this is changing. In Qantas said the service is ten Qatar Airways bills passengers to give guests more choices. March, Guangzhou-based China times faster than conventional at international mobile phone They can opt for a broadband Southern completed tests of inflight WiFi. Its domestic fleet roaming rates when they are experience or pay less for quick inflight WiFi onboard on flights of B737s and A330s will be using the Mobile OnAir service. texting or light email services between Guangzhou and Beijing, progressively equipped with the Some airlines equip their business to friends or loved ones on the Sydney and Melbourne, and expanded IFE options from mid class cabions with complimentary ground.” between Beijing and Amsterdam. year. WiFi, a service not extended to offers China Southern Airlines will The airline said the faster the economy cabin. its passengers GSM and WiFi gradually expand this service to connection speeds needed There is a view that Wifi Internet supplied by OnAir. more routes. for streaming are being made onboard will become a free China’s largest carriers, China Some airlines have been possible by the National service, matching the benefits Eastern Airlines, China Southern reluctant to roll out full onboard Broadcasting Network (NBN) Sky customers receive on the ground Airlines and Air China, received WiFi until they know what their Muster™ satellite service. The at restaurants, shopping malls regulatory approval to install customers want. Cathay Pacific service uses idle data capacity, and airports. The determining onboard WiFi on their fleets Airways has installed WiFi on with the signal reaching the factor, as always, will be in 2015. The first of the “Big its new fleet of A350s but not aircraft as it flies through the competition. Three” to capitalize on the on the rest of its fleet. “It is the satellite’s 101 spot beams across When some airlines switch go ahead was China Eastern. company’s intent to extend Australia. to free WiFi, other carriers will be Initially the Shanghai carrier was air-to-ground WiFi internet Qantas is in talks with forced to follow. It is expensive to permitted to use the AsiaSat-6 connections to other fleet suppliers to extend WiFi set up the hardware needed to satellite for WiFi services on types besides the A350. We services to its international and provide WiFi across a fleet, but 21 aircraft. This year, 70 of its are in the process of assessing regional (QantasLink) fleets, there have been studies - mainly aircraft are equipped with the IFE various technological options but the product must overcome in the U.S. – that say travelers technology. and commercial viability,” technical, performance and will not book on an airline if it Given the controls imposed said a Cathay Pacific Airways coverage challenges, particularly does not have onboard WiFi and on the Internet by the Chinese spokesperson. delivery of WiFi over large internet availability. That trend is government, WiFi was available In February, Qantas stretches of water. bound to be the same in the tech as intranet rather than internet, announced that passengers on At airlines there is a never savvy Asia-Pacific. So failing to which prevented passengers its WiFi enabled domestic flights ending debate about the charges install onboard WiFi, free or not, from emailing, web surfing or would be able to watch their they strike for WiFi or if they could be a false economy. Penny micro blogging to the ground. favourite shows, avoid missing should charge at all. Fees for pinching on WiFi could damage Passengers had to be content to live sport and listen to almost any inflight WiFi range from $5-$15 an airline’s brand. ■

30 / ORIENT AVIATION / APRIL 2017 No.1 Asia-Pacific commercial aviation magazine

ORIENT AVIATION SPECIAL REPORTS 2017 MAY AIR TRAFFIC MANAGEMENT IN THE ASIA-PACIFIC: AN UPDATE BONUS DISTRIBUTIONS: CANSO Asia-Pacific conference, Hanoi, Vietnam; ISTAT Asia, Grand Hyatt Hong Kong, Hong Kong; IATA Ground Handling Conference, Bangkok, Thailand; Passenger Check-in Summit, Shanghai, China

JUNE OCTOBER IMPACT OF BIG DATA ON AVIATION KEEPING YOUR AIRLINE SAFE IN THE ASIA-PACIFIC IN THE CYBER ERA BONUS DISTRIBUTIONS: BONUS DISTRIBUTIONS: 73rd IATA AGM and World Air Transport Summit, Cancun, Mexico MRO Asia-Pacific Singapore; IATA World AVSEC conference Paris Air Show, Le Bourget, France NOVEMBER JULY/AUGUST KEY ISSUES THAT KEEP ASIA-PACIFIC PILOT AND TECHNICAL TRAINING AIRLINE CEOS AWAKE AT NIGHT IN THE ASIA-PACIFIC BONUS DISTRIBUTIONS: AAPA Assembly of Presidents, Taipei, Taiwan BONUS DISTRIBUTIONS: Asia-Pacific Air Finance Conference, Hong Kong, China APATS, Marina Bay Sands, Singapore; 6th China International Aviation Services Trade Fair, Shanghai, China DECEMBER/JANUARY SEPTEMBER LOW-COST CARRIER REPORT: AIRCRAFT LEASING IN THE ASIA-PACIFIC THE WINNERS AND THE LOSERS BONUS DISTRIBUTIONS: IN THE ASIA-PACIFIC IATA World Financial Symposium; China Air Finance Development Summit, BONUS DISTRIBUTIONS: Tianjin, China; Aviation Expo China, Beijing, China Orient Aviation Person of the Year Awards Dinner, Hong Kong, SAR

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