http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Air Connectivity and its Impact on Tourism in Asia and the Pacific ISBN (printed version): 978-92-844-1623-3 ISBN (electronic version): 978-92-844-1624-0
Published by the World Tourism Organization (UNWTO). First printing: 2014 All rights reserved. Printed in Spain.
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Citation: World Tourism Organization (2014), Air Connectivity and its Impact on Tourism in Asia and the Pacific, UNWTO, Madrid.
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For all remaining countries as well as for other permissions, requests should be addressed directly to http://publications.unwto.org/en/content/right-permissions. Table of contents
Acknowledgments 5
Foreword 7
Executive summary 9
Chapter 1 Introduction 19
1.1 General overview of aviation in Asia and the Pacific 20 1.1.1 Asia perspective 20 1.1.2 Collapse of the traditional order 20 1.1.3 Travel as part of Asia’s social status 21 1.1.4 Co-relation between growth of air transport and Asian wealth 24 1.1.5 Bilateral air agreements 28 1.1.6 Gulf carriers 28 1.1.7 Multiple-brand strategy for legacy carriers 28 1.1.8 Budget carriers 29 1.1.9 Challenges for airport development 33
1.2 Analysis of major opportunities and challenges associated with tourism and air transport 36 1.2.1 Visa facilitation and immigration/border procedures 36 1.2.2 Taxes and other levies 36 1.2.3 Economic regulation and air connectivity 37 1.2.4 Reduction of greenhouse gas emissions 37 1.2.5 Convergent rules on the protection of travellers and tourism service providers 38
Chapter 2 Case studies 39
2.1 Australia 39 2.1.1 Dubai: a new gateway to/from Australia 42 2.1.2 Attracting new air routes with China 43 2.1.3 The role of low cost carriers (LCC) 43 2.1.4 More low cost carriers to Asia 44 2.1.5 India: the next potential market 45
2.2 China: Chengdu 46 2.2.1 General profile 47 2.2.2 Tourism and transportation 50 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.4 Indonesia: Yogyakarta 65 2.4.1 General profile 65 2.4.2 Transportation and tourism 68 2.4.3 Key Issues Related to Air Transport and City Tourism 73 2.4.4 Results and lessons learned 78
2.5 Japan: Kagoshima 80 2.5.1 Key tourism issues 80 2.5.2 Results and lessons learned 81
2.6 Japan: Osaka 82 2.6.1 General profile 82 2.6.2 Tourism 87 2.6.3 Transportation 90
2.7 Malaysia: Kota Bharu 99 2.7.1 Key tourism issues 99 2.7.2 Results and lessons learned 100
2.8 Malaysia: Kuala Lumpur 101 2.8.1 General profile 101 2.8.2 Transportation and tourism 103 2.8.3 Strategy 108
2.9 Republic of Korea: Busan 117 2.9.1 Key issues related to air transport and city tourism 117 2.9.2 Results and lessons learned 119
2.10 Republic of Korea: Jeju Island 121 2.10.1 Key issues related to air transport and Jeju tourism 121 2.10.2 Results and lessons learned 123
2.11 Thailand: Phuket 127 2.11.1 General profile 127 2.11.2 Transportation and tourism 129 2.11.3 Strategy 133
2.12 Viet Nam: Hai Phong 142 2.12.1 Key issues related to tourism and air transport 142 2.12.2 Results and lessons learned 143
Conclusion and recommendations 145
List of acronyms and abbreviations 153 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Bibliography 159 T 5
Acknowledgments
The present study on Air Connectivity and its Impact on Tourism in Asia and the Pacific was commissioned by the World Tourism Organization (UNWTO) and conducted through the Paci c Asia Travel Association (PATA) and the Tourism Promotion Organization for Asia Paci c Cities (TPO) with the sponsorship of the the Ministry of Culture, Sports and Tourism of the Republic of Korea.
UNWTO, PATA and TPO wish to acknowledge the contributions of Mr. Luc Citrinot, Mr. Blaise Hopkinson, members of the APEC Tourism Working Group, the Interns/Associates of PATA and the following for the case studies of TPO: Ms. Xu Ting (Chengdu Tourism in China), Ms. Cai Meizi (Dalian Tourism in China), Mr. Satoshi Ishimiya, Mr. Shiro Kawabata, Mr. Satoshi Miyamae (Kagoshima Tourism in Japan), Ms. Artin Wuriyani (Yogyakarta Tourism in Indonesia), Mr. Byoung Gi Kim (Busan Tourism in Republic of Korea), Professor Chul Shin (Jeju Island Tourism in Republic of Korea), Mr. Azman Mohd Daham (Kota Bharu Tourism in Malaysia), and Mr. Hoang Tuan Anh (Hai Phong Tourism in Viet Nam) respectively.
The nal outcome would not have been possible without the authorship and expert contribution of Mr. John Koldowski of PATA, Dr. Eun Jung Kang of TPO, and the editorial and coordination work of Ms. Hyeon Jin Lee, to whom we extend our sincere thanks.
The study was prepared under the supervision of Mr. Xu Jing, Director, Regional Programme for Asia and the Paci c, ably supported by its Staff members, Mr. Harry Hwang, Deputy Director; Mr. Jae Hyun Kim, Senior Of cer; Mr. Omar Nawaz, Project Research Coordinator; and Ms. Veronica Handal, Assistant. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Foreword
More than 1 billion tourists crossed international borders during 2013, over half of whom travelled by air to their destinations. Improving air connectivity through closer coordination of tourism and aviation policies is thus fundamental to ensure the sustained growth of the tourism sector.
Critical issues related to bridging air transport and tourism policies include the regulatory framework, taxation and the facilitation of the whole travel process. In order to address these challenges, UNWTO has de ned connectivity as one of the Organization’s policy priorities, an area in which we work in close coordination with our sister UN agency, the International Civil Aviation Organization (ICAO).
Asia and the Paci c is one of the fastest growing tourism regions in the world. The number of tourists visiting Asia and the Paci c reached 249 million in 2013, up from 110 million in 2000, and is expected to more than double by 2030 to attain 535 million. Such progress has gone hand-in-hand with the economic wealth of the region, which has led to an increase in disposable income and leisure spending by an af uent and growing middle class. This growth is also closely linked to policy changes in air transport, namely the development of secondary cities’ airports, deregulation and the rise of low cost carriers (LCCs).
Air Connectivity and its Impact on Tourism in Asia and the Pacific is a pilot study that assesses the crucial role of tourism and air transport as an engine of economic growth and job creation, underlining the relevance of well-designed and well-coordinated tourism and air transport policies in the development of Asian countries.
Besides shedding light on the current opportunities and challenges of tourism and air transportation in Asia, the report also highlights the importance of interregional cooperation as the means for economic development through tourism, opening the way for further collaboration in this area.
I would like to express, on behalf of UNWTO, our sincere appreciation to the Ministry of Culture, Sports and Tourism of the Republic of Korea for funding this project and to PATA and TPO for their valuable contribution to the study.
Taleb Rifai Secretary-General, http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Executive summary
In his 2014 address to members of the International Air Transport Association (IATA) during their Annual General Meeting (AGM), the Director General and CEO, Mr. Tony Tyler highlighted the dramatic growth in signi cance of scheduled commercial aviation since its origins on 1 January 1914 when it began with one aircraft, operating on one route and with a single paying traveller. In the intervening century since that date, commercial civilian scheduled air connectivity has increased to the point that by the end of 2014 – according to Tyler – it will have connected 3.3 billion passengers and moved 52 million tonnes of cargo over almost 50,000 routes with around 100,000 ights a day.
Asia and the Paci c is a key player in that scenario; indeed according to Amadeus, seven of the world’s busiest air routes are in Asia, led by the Jeju–Seoul route, which takes out number one position as the world’s busiest by total passengers carried.
In addition, as is further pointed out, “Asia is the world’s most competitive aviation market with 75% of routes served by three or more airlines and just 25% of routes by one or two carriers, making this a region with intense competition across all its air travel routes.”
Despite such impressive global aviation statistics, de ning the relationship between air transport and tourism has never been a natural or easy choice for state planners. In fact in Asia at least, there has been a tendency to separate both activities for quite some time.
From one perspective airlines were seen as existing largely to connect a country to the rest of the world, and that was mostly an economic point of view. Tourism on the other hand, has rarely been seen as a tool, factor or contributor to air transport prosperity.
There are a number of examples of this apparent dichotomy between air connectivity and tourism, especially in the Asia and the Paci c region. Right up until the early years of this century for example, some governments were reluctant to open up air transport to carriers other than their own, while others loaded additional taxes and charges on foreign carriers while simultaneously exempting their own from those same charges. At the same time, these same governments were advocating tourism development!
Only a few governments adopted and drove a common policy of growing air transport and tourism simultaneously – Australia, Singapore and Hong Kong, China; were just three at the forefront of http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
However, the world as we know, is changing. The most recent phenomenon of this new century is the empowerment of regions and cities. Secondary and even tertiary-level destinations of today can rapidly turn into the leading destinations of tomorrow.
Regional ambitions, cross-border developments, new tourism attractions and new traveller needs generated by social media and increasing sophistication are a few of the factors that in uence the need to create new air linkages. Proper air connectivity will drive tourism growth for decades to come, more than ever.
Salient findings of case studies
The case studies selected in this report and which follow, consider the various issues faced by destinations and how countries or regions have been supportive (or not) of the growth in air connectivity. While “State will” has been preeminent in the development of Kuala Lumpur in Malaysia and Chengdu in Mainland China, regions have been behind the growth of Osaka and Yogyakarta in recent years. In Thailand, the private sector and the strong position of tourism have been the major driving forces behind the development of Phuket air connectivity.
It is clear from these – and other studies not included here – that chronic challenges in the relationship between airlines, airports and National Tourist Organizations (NTO) still exist and that openness between them is not universal. Where it does exist, and as highlighted in this collection of case studies, the bene ts to the aviation sector, the wider travel and tourism sector and the host communities are both positive and widespread.
Finally, it should be noted that the subject of air connectivity is overwhelming in both its content and its diversity. As such, the focus of this report has been very speci cally on Asia and the Paci c as a region and on scheduled commercial air transport operations across that region.
Having stated that, it is certainly true that lessons can be learned from land-locked countries and their activities in promoting air connectivity, as well as in the establishment of multi-modal transport corridors. Similarly the roles of other sectors – such as cruise – in diversifying the travel experience, in addition to those of air charter operators, airfreight operations and the signi cance of the air alliance partnerships are recognised but not speci cally addressed in this report.
From a consumer point of view, most of the elements that make for a positive air travel experience between two points are not totally visible, nor should they be, since the overall objective is to provide a seamless experience without any compromise on safety, security and ef ciency. For that to be successful however, cooperation and communication between all the supplier stakeholders is essential and that in essence is what the case studies that follow, and as highlighted in the map below, tend to illustrate. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Note: The cities marked in the map are included in the case studies. Source: Adapted from Central Intelligence Agency (2014), The World Factbook 2014 (online), available: www.cia.gov/library/publications/the-world-factbook/docs/refmaps.html (04-08-2014).
Australia
Australia provides an interesting model of integration as its relative geographic isolation makes the country almost 100% dependent on air transport. In the late eighties, the Australian government understood the necessity of allowing more competition in its skies to lower the average cost of ying, so airports and airlines were privatised and competition was allowed on both domestic and http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Today, despite its relative small population base, Australia has air traf c of almost 90 million passengers a year with Sydney being the 11th busiest airport in Asia and the Paci c handling over 38 million passengers in 2013. 12 Air Connectivity and its Impact on Tourism in Asia and the Paci c
More interestingly perhaps has been Tourism Australia’s integration of air transport into its marketing strategy as an evident component of the destination’s continued success. Tourism Australia publishes and analyses all air transport and passenger movements and works with airports and airlines to improve connections with the rest of the world.
China: Chengdu
Chengdu city, the capital of China’s Sichuan Province, is today the fth largest air gateway in China – with some 32 million passengers a year, largely as a consequence of the Chinese government policy of developing the western part of the country in order to rebalance economic growth.
The “Go West” move has turned Chengdu into the principal gateway to an area comprising eight provinces and is in part a result of the Central Government’s exibility in allowing traf c rights for certain international carriers wishing to y to new Chinese destinations. In the last three years, British Airways, Qatar Airways, and Air China to Frankfurt and Sichuan Airlines to Melbourne and Vancouver have helped raise the total number of international destinations to 26 – including Hong Kong, China; Macao, China; and Taiwan Province of China.
In the years to come, it is highly likely that China will continue to support Chengdu as a destination by allowing more low cost airlines, as well as regional connections – strangely enough though Chengdu still lacks a dense network with Japan and the Republic of Korea.
This interest in airlines is driven to some degree not only by the enormous potential from China’s outbound market but also from the desire (and need) to be in one of the world’s most dynamic economies. In parallel, the rise of Chengdu as an international gateway adds to tourism activity in the region particularly as Sichuan is one of the country’s most attractive destinations thanks to UNESCO world heritage sites, ancient cultures, gastronomy and panda sanctuaries.
China: Dalian
Further north in China, at the southernmost tip of the Liaodong Peninsula, lies the city of Dalian, the second largest city in Liaoning Province and an important international trade hub for China. In approaching its own development challenges, Dalian worked to resolve a number of related issues including an expansion of the city’s airport capacity, expanding its international and domestic travel markets and lifting city entry restriction for visitors.
More importantly perhaps, the tourism and air transport industries worked closely together and in concert to increase the number of visitors to the city. The Dalian Travel and Tourism Bureau and Dalian International Airport jointly established the Committee of the Dalian Air Travelling Market, which is exclusively devoted to expanding the existing travel markets and creating new travel markets. They also invested heavily and continuously in tourism promotion and tourism product http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The result speaks for itself with Dalian City realising a three-fold increase in total tourism revenues between 2006 and 2012 along with an increase in various tourism supply-side businesses including accommodation facilities and travel agencies. T 13
Indonesia: Yogyakarta
In Indonesia, Yogyakarta’s regional government has put all of its support behind the airport’s development and the creation of new routes. Yogyakarta today still remains a domestic destination more than an international one despite the opening of a few daily ights to Kuala Lumpur and Singapore.
While Yogyakarta is already among the top ve most visited destinations in Indonesia, more still can be done. Yogyakarta faces the typical problem of many Asian secondary cities – a lack of funding for marketing tourism initiatives, lack of knowledge and lack of coordination with other institutions including airports and/or airlines. The city would undoubtedly bene t from an initiative at the national or ASEAN level to increase interest from air carriers and thereby improve air connectivity.
Japan: Kagoshima
On the southernmost tip of Kyushu Island lies the Japanese city of Kagoshima, the capital of Kagoshima Prefecture and one that is intent on becoming the gateway for South Kyushu and eventually Asia. Even though it is well known in the domestic market, Kagoshima has not been popular amongst international tourists, largely because of dif culties of access.
Once identi ed, that restriction was minimised by an expansion of ight services coupled with active tourism promotion that involved local tourism businesses, airlines and travel agencies across a number of identi ed source markets. Kagoshima also introduced measures that encouraged Japanese tourists to use its airport as a departure point for overseas travel. By encouraging inbound and outbound tourists to use its airport, the city worked with the airlines to maintain their international ight loads in both directions and ensure a continuation of those international routes.
Japan: Osaka
Osaka in Japan and Yogyakarta in Indonesia could be considered as Asia’s models of the future where secondary destinations and regions are becoming preeminent, and often even more dynamic than the state in which they are located.
Osaka for example, looks likely to be one of the most positive destinations for air connectivity and tourism growth in the years to come. Osaka has grown – on the aviation front at least – in the shadow of Tokyo, although it is a powerful economic engine for Japan in its own right. Currently the city and the Kansai region are now playing on attractiveness and image, holding forth ancient old cities surrounding Osaka such as Kyoto and Nara in their tourism promotion activities.
The local government now has an ambition to turn Osaka into Japan’s metropolis for entertainment. Theme parks and the strong possibility of hosting one of Japan’s rst casino resorts will no doubt http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
However, incorporating the needs of both the airport and its servicing airlines will strengthen Osaka’s marketing strategy. Here, as is the case in many parts of the world, stakeholders from the tourism and aviation sectors still seem to lack cohesion.
Malaysia: Kota Bharu
Kota Bharu in Malaysia faces one particular issue common to many secondary or tertiary cities – the elevation of the existing domestic airport to one of an international standard. It now appears that the Federal Government and Malaysia Airports Holdings Berhad have agreed to promote the airport to international status in 2014.
The rst international direct ight route of the airport is scheduled to connect Kota Bharu to Bangkok and be operated by Fire y Airlines, a low cost carrier (LCC). Kota Bharu will also open a direct route to Singapore, Ho Chi Min city in Viet Nam and Bandung in Indonesia in 2014. The need for international connections was recognised and acted upon – rapid development can only follow and will certainly be worth watching.
Malaysia: Kuala Lumpur
South-East Asia – beyond Singapore at least – has been slower to embrace any such similar move and yet two of the most dynamic international air markets in this part of the world are Malaysia and Thailand.
Necessity and the ambition to put Kuala Lumpur international airport on a par with its competitors in the region – namely Bangkok and Singapore – drove the Malaysian government to implement a new development strategy for Malaysia’s main gateway.
Coupled with the agenda of turning Malaysia into South-East Asia’s leading tourism destination, the Government of ex-Prime Minister Mohammad Mahathir supported and encouraged low cost carriers to establish bases in the country and compete head-on with national carrier Malaysia Airlines. That was indeed a fortuitous move as the emergence of Asia’s largest low cost airline group, AirAsia, has been highly rewarding.
Kuala Lumpur today is the “hub” of budget airlines and is linked to 100 destinations mostly across Asia and the Paci c. This also led to the steady rise of regional tourism in the area. Malaysia Airports Holdings Berhad (MAHB), which runs most large airports in the country, has been increasingly active (with others) in promoting both new routes and tourism and over the last decade has hosted a series of conferences and exhibitions bringing together airlines, airports and a wide range of tourism stakeholders.
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Busan is a metropolitan city located on the south-eastern part of the Korean include Peninsula and is a prime example of a city that has bene tted signi cantly through the expansion of the low cost carrier (LCC) network. This did not however, happen by accident. T 15
The city encouraged airlines with incentives and bene ts to expand ight services and also implemented a 72-hour visa-free policy. In addition, it established the Busan Tourism Organization in order to promote its tourism industry more systematically and arranged regular meetings to discuss a variety of tourism matters including the expansion of ight routes to connect Busan with other cities.
All of these efforts were instrumental in the success of Busan Metropolitan City, but perhaps the most signi cant was the launch of a regional airline combined with joint international marketing efforts. Once again the bene ts of coordinated tourism activity across the entire tourism stakeholder domain can be seen.
Republic of Korea: Jeju Island
Jeju Island is another successful study in the development of tourism in the Republic of Korea. As an island destination, it is easily apparent that improving air connectivity between the island and the mainland would further facilitate arrivals to the island.
Previously there were a number of major issues facing the development of Jeju’s tourism, including air capacity for domestic and international tourists, the expansion of international routes by low cost carriers, changes in consumer expenditure and behaviour patterns, a shortage of Jeju International Airport capacity, the visa waiver programme and an increase in accommodation facilities.
The destination was regarded as being uncompetitive as a destination partly because the cost of reaching the island was relatively high. The local government therefore launched a regional airline, Jeju Air in 2006, in cooperation with the Aekyung Group.
Being one of the major shareholders of Jeju Air, the local government initiated agreements with the other shareholders to boost the island’s tourism when the airline was launched. Following these agreements, the airline has aggressively promoted the island as a tourist destination, consumed Jeju products on its ights and employed many of the island’s residents. Currently, more than 90% of Jeju Air employees working on the island are Jeju citizens. The bene ts of cooperation are obvious.
Thailand: Phuket
In a slightly different approach to Malaysia, and while the Thai government has facilitated the growth of air transport through the liberalisation of both its domestic and international skies, the surge in air transport in Phuket – Thailand’s second busiest international airport with over 11 million passengers annually – occurred largely due to the dynamism of the tourism destination with growing investments in real estate, retail and hotel projects. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
With Bangkok also being more prone to political turmoil, many airlines established direct ights to the southern Island in a way to soften the impact of Thailand’s various political crises on their activities. Although the Tourism Authority of Thailand has been talking for many years with airlines 16 Air Connectivity and its Impact on Tourism in Asia and the Paci c
and organising a yearly round-table with the air transport industry, there appears to be as yet, no real de nitive action plan integrating both tourism and air transport.
Such a plan properly designed and executed would certainly be of advantage to all.
Viet Nam: Hai Pong
Hai Pong is a coastal city in north-east Viet Nam and the third largest in the country. Given its geographic location and a relatively large local population, it is well suited to operating as an air hub in the region, especially as a northern gateway from the East Sea.
As with many of the cases in this report, Cat Bi, the local (ex-military) airport was promoted to international status in 2006 after which the number of ights operating between Hai Phong and Ho Chi Minh City and Da Nang increased, along with an international air route connecting the city to Macao, China.
It also established the Macao Tourism Hub connecting Hong Kong, China; the Pearl River Delta (Guangzhou) and Hai Phong. Furthermore, Vietnamese travel agencies carried out aggressive marketing in each of Macao, China; Hong Kong, China; and the cities of Guangzhou and Shenzhen on the Chinese Mainland. As a result, the number of international visitors to Hai Phong has increased signi cantly.
The success has been such that in April 2013 the local government announced the Cat Bi International Airport expansion project in order to meet increased air transport demand in Hai Phong and neighbouring regions.
In addition, the city has also created favourable policies and conditions for airlines operating between Hai Phong and other cities, and established policies to attract foreign and domestic investment in upgrading tourism infrastructure facilities.
The way forward
Across the wider Asia and the Paci c, international institutions and government bodies including the World Tourism Organization (UNWTO), the World Travel and Tourism Council (WTTC), the Paci c Asia Travel Association (PATA), the International Air Transport Association (IATA), the Airports Council International (ACI) and even the Association of Southeast Asian Nations (ASEAN) in South-East Asia can all play positive roles as drivers for new initiatives.
Regular government fora concerned with common marketing and growth strategies for both air transport and tourism, for example, could be organised at various destinations across the region.
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Asia and the Paci c as a rapidly expanding region in the 21st century needs to take the initiative to develop its own growth strategies and tools. But above all, the governments must rst undertake the necessary changes to bridge existing gaps in communication and cooperation across all the stakeholders within the tourism and air transport sectors – and to then dare go a step further.
Through the examples given here, it is clear that the improvement of air connectivity has positive effects on city tourism and the city economy with those bene ts often rolling across the wider province/region.
Opening direct ight routes, launching low cost carriers, and undertaking well targeted but aggressive marketing for air travel products have routinely brought sharp increases in tourist arrivals to the cities. This in turn has boosted their respective tourism sectors, delighting both visitors searching for a new experience and rewarding the local communities through the creation of employment and business opportunities in servicing those very same visitors. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Chapter 1 Introduction
Background and objectives of the study
Tourism has been increasingly recognized as an economic force and as one of the human activities best able to lead a new decade of responsible and sustainable growth. It is unquestionable that the innovation and expansion of air transport has made a signi cant contribution to the exponential growth in international tourism. In 2012, more than one billion tourists crossed international borders, and over half of these tourists arrived at their destination by air.1 UNWTO expects that the number of international tourist arrivals worldwide will increase by an average 3.3% a year over the period 2010 to 2030. The arrivals to the fastest growing region of Asia and the Paci c are forecast to increase by 4.9% per year.2
In order to meet the growing demand, it is critical to look at the inter-linkage of tourism and aviation in a holistic manner. At present, the status quo is that these two sectors are not well coordinated. Separate sectorial policies on air transport and tourism result in a fundamental, and too often even con icting disconnect which constitutes a severe constraint on the development of travel and tourism. There is an urgent need, therefore, to strategically review and coordinate actions on areas such as: – Travel facilitation; – Taxation; – Economic regulation and air connectivity; – Protection of travellers and tourism service providers; and – Sustainability and climate change.
In this manner, the tourism and air transport sectors can achieve common goals and work towards harmonizing their respective socioeconomic bene ts.
It is equally crucial to have a detailed look at destinations at national, provincial and city levels where successful policies have been implemented in a harmonious manner between tourism and aviation. These best practices would showcase how a coordinated strategy of tourism and aviation can contribute to the socioeconomic development of a destination. In particular, the fundamental changes in second-tiered cities in the region are taking place as a result of tourism and air transport developments. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
1 World Tourism Organization (2013), UNWTO World Tourism Barometer, January 2013, UNWTO, Madrid. 2 World Tourism Organization (2011), Towards Tourism 2030, UNWTO, Madrid. 20 Air Connectivity and its Impact on Tourism in Asia and the Paci c
With the overall goal of achieving tourism sustainability and competitiveness at regional, national and destination levels, and simultaneously removing travel impediments, the speci c objectives of the study were as follows: – To produce a comprehensive review of how air transport has contributed to tourism development in the Asia and the Paci c region and vice versa; – To analyze the key trends and major challenges and opportunities associated with tourism and air transport; – To highlight best practice cases in terms of harmonized policies, strategies and marketing programmes between the tourism and aviation sectors at national, regional and city levels; and – To formulate practical guidelines for policymakers and other stakeholders to foster sustainable development in both the tourism and air transport sectors.
1.1 General overview of aviation in Asia and the Pacific
Nowhere in the world has air transport contributed so strongly to the recent development of tourism than in the Asia and the Paci c region even though in many parts, the phenomenon is surprisingly recent. Through its early development and evolution up until the 2000s, both air transport and tourism seemed to be totally disconnected from each other. Singapore Airlines has been notable in that regard as it has been one of the few airlines in the region that has routinely worked with tourism authorities to promote travel beyond its home market.
1.1.1 Asia perspective
While North America and Europe, both embraced deregulation of their skies in the early eighties and nineties, Asian air transport seemed to largely ignore calls for deregulation until the late 1990s/early 2000s. National carriers predominantly controlled markets with seat capacities being regulated by bilateral agreements, which in reality xed duopolies on all routes. Asia in the early nineties also lacked regional connections and had very few low cost carriers (LCC).
1.1.2 Collapse of the traditional order
In an interview in the early 2000s, the former Secretary General for the Association of Asia Paci c Airlines (AAPA) Richard Stirland explained that the lack of regional routes was due to the fact that most business and tourism activities were concentrated around capital cities and metropolises, and in a few iconic holiday destinations (Bali or Phuket). He also predicted that low cost airlines would have a hard time in Asia as Asian travellers were used to a high level of comfort and service.
Mr. Stirland’s vision re ected the opinion of many government of cials and airline executives at the time as they were seemingly more focused on ways of protecting their national airlines rather http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The most decisive change came from Malaysia in 2001 when the government of the day decided to sell AirAsia to private entrepreneur Tony Fernandez for the symbolic equivalent of USD 0.25. Even then, however, this may have been more motivated by saving the government-owned carrier from inevitable bankruptcy than by deregulating the skies. Introduction 21
Nevertheless, Fernandez’s decision in 2002 to turn the small carrier into a low cost airline began a revolution in the skies over Asia.
1.1.3 Travel as part of Asia’s social status
The decision of Fernandez decision came at the right time: rising living standards within Asia, simpler travel formalities and more sophisticated consumption habits helped nurture travel demand from most emerging economies over the past decade. Interestingly, the travel phenomenon even reached into Asia’s most impoverished countries, thanks to the emergence of a new middle class.
In its Current Market Outlook for the period 2013–2032 aircraft manufacturer Boeing, United States of America, forecasts that Asian gross domestic product (GDP) is likely to grow at an average annual rate of 4.5% over the next 20 years, compared with a global average of 3.2%. Boeing furthermore predicts that the region’s share of world GDP will expand from 28% in 2013 to 36% by 2032.
Additionally, European manufacturer Airbus Group estimates that the Asian middle class will increase by a factor of ve between 2011 and 2031, reaching 3.38 billion individuals in that latter year, and representing some 60% of the world population.
New consumption habits have deeply in uenced the way Asians travel today. As with a branded bag, watch or the latest smart phone, travelling abroad is today considered as a benchmark of wealth and social status. It is reinforced by the possibility for travellers to immediately show their travel consumption through mobile devices. Social media is fostering the desire for Asians to venture outside their home cities and countries.
In contrast with previous cycles in travel growth, demand is now coming from both ends of the travel spectrum: luxury and exclusive travel options continue to grow at a superior pace to average travel due to the quest for social status. At the other end of that same spectrum, budget travel is also developing rapidly as more travellers from emerging economies look to reap the bene ts of simpler and cheaper travel options.
An Amadeus research report on the future of travel in Asia and the Paci c has identi ed four important factors that will in uence travel behaviour in Asia and the Paci c until the year 2030 including: 1. The “Me Effect” translates into the fragmentation of the travel market into ever-increasing niches as the need for a more sophisticated mode of travel emerges. Large groups are likely to make way to smaller groups and individuals, as well as groups with speci c interests or belonging to speci c “travel tribes” – diving, culture, eco-tourism, biking, GLBT, seniors, honeymooners, female business travellers etc. Individualism in Asia is beginning to overtake community-based behaviour; 2. The “Red Tape Effect” is the breaking down of barriers to travel within the Asia and the Paci c http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
from travellers visiting from Indonesia, the Philippines and Thailand. In addition, air travel agreements are likely to be revised to accommodate demand; 3. The “Leapfrog Effect”: Technology, infrastructure and behaviour in the Asia and the Paci c region will leapfrog those witnessed elsewhere as travellers nd new ways to experience travel, thereby generating new behaviours; and 4. The “Barbell Effect” as the name implies, is the growth of the upper and lower segments of the travel market.
In another study commissioned by Amadeus and conducted in partnership with Oxford Economics,3 total foreign visitor arrivals into Asia and the Paci c are predicted to reach 535 million by 2020 while Asian outbound travellers would reach 447 million in that same year. This would give Asia a global share of close to 22% of all inbound markets by 2020 and a global share of 27% of all outbound markets in the same year.
Figure 1.1 Evolution of GDP per capita, 2005 and 2010–2012 (USD)
12,000 10,201 10,281 10,000 9,307 8,501 9,037 8,000 7,138 7,415 ■ World 6,000 5,187 4,699 4,700 ■ East Asia 3,885 (all income levels) 4,000 ■ East Asia 1,623 2,000 (developing countries)
0 2005 2010 2011 2012
Note: Graph represents rounded figures. Source: World Bank Database (2013), GDP per capita (current USD) 2005–2012 (online), available: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD (04-08-2014).
Between 2005 and 2012, Asia’s GDP per capita has been slowly closing the gap with the world average. While Asian GDP per capita was still 34.2% lower than the world average in 2005, it was only 12.1% lower in 2012 and the gap for developing countries in East Asia fell from 77.3% in 2005 to 49.5% in 2012.
Asian countries enjoyed the world’s highest growth in GDP per capita (in purchasing power parity; PPP) since the dawn of the 21st century. Macao, China; and China have been the pacesetters with GDP growing at a rate of over 250% during the period of reference while Cambodia, India, Indonesia, Lao PDR, Sri Lanka and Viet Nam each enjoyed GDP growth of over 100%. In the http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
3 Amadeus and Oxford Economics (2010), The Travel Gold Rush 2020 (online), available: www.amadeus.com/amadeus/documents/corporate/Travel-Gold-Rush-2020-EN.pdf (04-08-2014). Introduction 23
Table 1.1 GDP per capita in PPP for selected economies, 2000, 2005, 2010 and 2012 Economy 2000 2005 2010 2012 Change (USD) (USD) (USD) (USD) 2012/2000 (%)
Macao, China 21,263 38,295 64,712 86,341 306.1
Singapore 33,884 45,375 57,557 60,800 79.4
Brunei Darussalam 42,536 47,760 49,861 52,482 23.9
Hong Kong, China 26,965 38,440 47,143 51,103 89.5
Taiwan Province of China 20,321 26,657 35,296 38,357 89.6
Japan 25,909 30,441 33,668 35,178 35.8
Republic of Korea 17,197 22,783 28,613 30,801 79.1
Malaysia 9,453 12,131 15,185 16,919 79.0
Thailand 4,957 6,791 8,788 9,660 94.9
China 2,375 4,115 7,503 9,083 280.8
Maldives ≤ 4,000 5,249 8,074 8,925 n.a.
Sri Lanka 2,675 3,550 5,062 6,146 129.8
Indonesia 2,385 3,141 4,261 4,876 104.4
Philippines 2,391 3,041 3,910 4,339 81.5
India 1,554 2,234 3,434 3,813 145.4
Viet Nam 1,593 2,354 3,334 3,787 137.7
Lao PDR 1,191 1,684 2,467 2,879 141.7
Pakistan 1,651 2,154 2,557 2,741 66.0
Cambodia 939 1,508 2,131 2,454 161.3
Nepal 846 1,029 1,325 1,457 72.2
United States of America 36,467 44,314 48,358 51,749 41.2
Australia 26,272 32,526 39,093 44,598 69.8
United Kingdom 26,355 33,324 35,752 37,456 42.1
Russian Federation 6,833 11,853 20,770 23,501 243.9
Brazil 7,038 8,502 11,090 11,716 66.5
Source: World Bank and International Monetary Fund (2013), World Economic Outlook, October 2013 (online), available: www.imf.org/external/pubs/ft/weo/2013/02/ (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 1.2 Rise of Asia and the Pacific middle class, 2011, 2021 and 2031 (million)
8,400 World population 7,000 7,700 5,048 World middle class 2,101 3,413
739
Asia and the Pacific 560 middle class × 5 3,377
419 1,889 746 265 263 254 671 701 678
2011 2021 2031
■ Others ■ Asia and the Pacific ■ North America ■ Europe + CIS
Source: Airbus (2013), Future Journeys – Airbus – Global market forecast – Air travel demand, p. 21 (online), available: www.airbus.com/company/market/forecast/?eID=dam_frontend_push&docID=33752 (04-08-2014).
1.1.4 Co-relation between growth of air transport and Asian wealth
Increasing wealth and more sophisticated travel demand are driving air transport in the region. According to an Amadeus analysis, Asia became the world’s largest air passenger market in 2012 with approximately 787 million air travellers, while from the estimated 800 million new passengers transported in 2013, 360 million originated from within the Asia and the Paci c region. China alone generated 214 million of these new air travellers.
Underlining Asia and the Paci c’s growing importance, seven of the 10 busiest world air routes – by number of passengers – are located in Asia with one in the Paci c.
In its latest forecasts for 2013–2017, IATA predicts that the Asia and the Paci c region is expected to add 300 million additional passengers by the end of 2017. Of these, around 225 million or 75% are expected to be domestic passengers. Routes within or connected to China will be the single largest driver of growth, accounting for 24% of new passengers during the IATA forecast period. Of the anticipated 227.4 million additional passengers, 195 million will be domestic and 32.4 million will be international.
Boeing, in its Current Market Outlook 2013–2032, estimates that over the next 20 years nearly half of the world’s air traf c growth will be driven by travel to, from, or within the Asia and the Paci c region. Total traf c for the region will grow at an average of 6.3% per year while domestic and international travel within the region is likely to grow by 6.5% per year. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 1.3 Air passenger volumes, 2012 (approximate figures)
North America Asia (787 million) 9% Growth 2012/2011 (597 million) 2% Europe (680 million) 4% Middle East (99 million) 2% Africa (52 Million) 2%
South America (189 million) 6%
South-West Pacific (82 million) 4%
Source: Adapted from Amadeus (2012), Global air traffic trends infographic, Amadeus Travel Intelligence (online), available: www.amadeus.com/blog/16/04/travel-intelligence-in-the-digital-era-amadeus-air-traffic/ (04-08-2014).
Five countries are now generating a high number of air travellers in Asia and the Paci c: China, India, Indonesia, Japan and the Republic of Korea. There is also high potential for rapid air transport growth in the Philippines, Viet Nam and Thailand. Despite a relatively small volume of passenger traf c (25.4 million in 2012), Viet Nam has seen its volume of passengers multiply ve- fold since 2000. According to World Bank data, the total number of passengers on local airlines jumped from 2.88 million in 2000 to 17.1 million in 2012.
Besides their dynamic economic growth rates, the Philippines and Viet Nam both bene t from natural geographical constraints (7,700 islands in the Philippines and a 1,650 km length from north to south in Viet Nam) while Thailand bene ts from a very liberal open-skies policy and increasing popularity among international tourists.
Meanwhile, cities such as Hong Kong, China; and Singapore generate a high volume of air travellers as they are positioned as major intercontinental and regional hubs, for North-East and South-East Asia respectively.
According to IATA data, three Asian centres will be among the top largest international air passenger markets in 2016: China with 103 million passengers, Hong Kong, China, with 73 million http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 1.4 Air passenger volume in selected Asian countries, domestic and international routes, 2000–2012 (million)
350
318.5 China
300
250
200
150
100 98.9 Japan
77.2 Indonesia 70.5 India 50 40.0 Republic of Korea 39.2 Malaysia 35.7 Thailand 27.8 Philippines 0 2000 2005 2010 2011 2012
China Japan Indonesia India Republic Malaysia Thailand Philippines of Korea
2000 61.9 109.1 9.9 17.3 34.3 16.6 17.4 5.8
2005 136.7 102.3 26.8 27.9 33.9 20.4 18.9 8.1
2010 266.3 109.6 56.8 64.7 37.0 34.2 28.8 22.6
2011 292.2 89.3 67.8 74.4 39.9 38.2 31.5 25.6
2012 318.5 98.9 77.2 70.5 40.0 39.2 35.7 27.8
Note: Graph represents rounded figures. Source: World Bank (2012), Air transport and energy efficiency (online), available: http://siteresources.worldbank.org/INTAIRTRANSPORT/Resources/TP38.pdf (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 1.2 Top air passenger markets in Asia, 2012 (million) Economy Total passengers International passengers
China 679.8 361.4
India 159.4 43.0
Indonesia 148.1 21.4
Japan 146.7 60.7
Republic of Korea 91.1 47.7
Thailand 84.5 48.0
Malaysia 68.6 32.6
Hong Kong, China 56.6 56.6
Singapore 51.2 51.2
Taiwan Province of China 45.4 34.7
Philippines 37.5 16.9
Note: Data for Japan are for the financial year 2011/2012 (1 April to 31 March). Sources: The Civil Aviation Authorities, Ministries of Transport and Airport Authorities for each economy listed.
Figure 1.5 Top 10 busiest global air travel routes by passenger volume, 2012 (million)
Jeju–Seoul 10.16
Sapporo–Tokyo 8.21
Rio–Sao Paulo 7.72
Beijing–Shanghai 7.25
Melbourne–Sydney 6.94
Osaka–Tokyo 6.74
Fukuoka–Tokyo 6.04
Hong Kong–Taipei 5.51
Okinawa–Tokyo 4.46
Cape Town–Johannesburg 4.41
0 2 4 6 8 10 12 Passenger volume (million)
Source: Amadeus (2012), Seven out of ten of the world’s busiest inter-city routes are within Asia, news release, 08-05-2012 (online), available: www.amadeus.com/web/amadeus/en_1A-corporate/Amadeus-Home/News-and-events/News/2012-5-8_Seven-out-of-ten-of-the-worlds-busiest- http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
28 Air Connectivity and its Impact on Tourism in Asia and the Paci c
1.1.5 Bilateral air agreements
Bilateral agreements have freed capacities over the past decade. From Australia to Taiwan Province of China and from Nepal to Thailand, many countries helped stimulate air traf c ows thanks to additional frequencies and routes.
Among the most focused on open-skies at a regional level are the ASEAN countries, with a continuing agenda for open-skies over the next few years. This agenda is taking shape despite some hesitation from a few member states.
Association of Southeast Asian Nations (ASEAN) and China signed an almost complete open-skies agreement in 2010, and are looking to obtain similar agreements with Japan and the Republic of Korea. Both countries recently unlocked some of the restrictions to new entrants or new routes from ASEAN. Another bilateral air agreement is in negotiation between ASEAN and India as part of a wider free trade agreement on services and investments, which is due to come into effect by mid 2014. Many destinations, including Hong Kong, China; Macao, China; Singapore; Cambodia; Malaysia and Thailand; offer a fairly liberal air policy.
1.1.6 Gulf carriers
The rapid growth of Middle East carriers is another dynamic element to growth. With ambitious policies to become global mega-carriers, the three largest airlines of the Gulf (Emirates, Etihad and Qatar Airways) have systematically built up their capacities in the past decade, signing liberal air agreements with most Asian countries.
In just three years, Gulf carriers have built up substantial frequencies and destinations, also serving many secondary destinations. Emirates opened ights to Clark in the Philippines, as well as to Phuket and Taipei; Qatar Airways started ying to Hangzhou, Phnom Penh and Yangon while Etihad is now present in Chengdu and Nagoya. Over 50 Asian cities are now served by non-stop or one-stop ights, compared to 35 cities in 2005.
With the delivery of more aircraft to Gulf carriers – over 400 new aircraft are due to be delivered over the next ve years – Gulf carriers will continue to strengthen their networks to Asia, targeting more secondary destinations. Among the most likely to be linked to the Abu Dhabi, Doha or Dubai axis are Busan, Cebu, Fukuoka, Kunming, Medan, Penang, Sapporo, Surabaya, Wuhan, Xian and/or Xiamen.
1.1.7 Multiple-brand strategy for legacy carriers
Another growth element is the new market segmentation of legacy carriers to answer the emerging needs of a far more diversi ed group of travellers. Pioneered by Singapore Airlines, which created http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Thai Airways with Thai Smile (regional premium carrier) and Nok Air (low cost), All Nippon Airways with Peach and Vanilla Air (low cost), Malaysia Airlines with MASwing (Regional) and Fire y (low cost) are just a few examples of similar strategies targeting air passengers with speci c needs.
Table 1.3 Medium-term air passenger forecasts for Asia and the Pacific, 2012–2017 Region/ 2012 Growth sub-region (million) (%)
2013 2014 2015 2016 2017 2013–2017
Asia and the Pacific 1,709.7 6.3 7.0 7.2 6.9 6.8 6.8
South Asia 144.8 3.0 6.1 6.8 6.5 6.8 5.8
South-East Asia 348.8 9.8 8.9 8.6 7.9 7.8 8.5
North-East Asia 1,053.3 6.3 6.9 7.2 7.0 6.8 6.8
South Pacific 159.9 3.4 4.3 4.4 4.3 4.2 4.1
Note: Table based on 2012 data. Source: Forecast prepared by Traffic Forecast Advisory Services (TFAS), a partnership between ACI and DKMA (online), available: www.aci-forecast.aero/ (04-08-2014).
Table 1.4 Annual scheduled air seat capacity between Asia and the world, 2012 and 2013 Year Asia Middle Europe North Pacific Africa South East America America
2012 (million) 316.54 100.97 79.75 27.06 18.82 18.24 0.78
2013 (million) 356.01 110.30 84.47 27.66 20.34 20.72 0.96
Annual growth (%) 12.5 9.2 5.9 2.2 8.1 13.6 23.8
Note: Graph represents rounded figures. Source: Innovata (2013), online database via SRS Analyser, available: www.innovata-llc.com/ (04-08-2014).
1.1.8 Budget carriers
By far however, the biggest Asian revolution has been the introduction of low cost carriers. Today, budget carriers, particularly in South-East Asia, increasingly dominate intra-Asia traf c. According to an analysis from Amadeus Air Traf c Intelligence, approximately 19% of all passengers in Asia travelled on LCCs in 2012. This represents a gain of 2.1 percentage points over 2011. LCC market share in Asia remains, however, far behind LCC market share in Europe (38%), the South-West Paci c (36.6%) and North America (30.2%).
Interestingly, low cost carriers have been more progressive than legacy carriers in opening and fostering new markets, linking secondary destinations to main gateways and, of late, between http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Other routes such as Chiang Mai–Hangzhou (AirAsia), Boracay–Singapore (Tiger Air) and Busan– Kaohsiung (Air Busan) show that demand for routes to or between secondary destinations is emerging. There are, however, nuances that need to be considered. While South-East Asia fully embraces the low cost airline revolution, North-East Asia has been more reluctant to open its skies. LCC market share in total seats in 2012 represented only about 9.7% of all intra-North-East Asian routes compared with 52% for all intra-South-East Asia routes.4
The Republic of Korea and Macao, China; were the rst to allow the development of low cost carriers in North-East Asia, but Japan, China and Taiwan Province of China have been more cautious in opening up their skies to foreign airlines, particularly LCCs.
Figure 1.6 LCCs’ total seat capacity within Asia and the Pacific, 2003–2012 (share, %)
25 24.1
20 19.1 17.7 15.7 15 14.1 12.3
10 9.0 6.2 5 4.5 2.4
0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Official Airline Guide (2013–2014) (online), available: www.oag-flights.com/ (04-08-2014).
The factor behind both countries’ reluctance is easy to understand. In both Japan and China, air transport depends overwhelmingly on a huge domestic market shared among a rather small number of local players. In nancial year 2012, Japan’s domestic air travellers generated almost 86 million trips, however, this was down from a peak of over 95 million in FY 2007.5 The volume of domestic air travellers was still 25 million higher in FY 2012 than the volume of international air passengers (61 million in 2012).
Japan
Japan, however, decided to deregulate its aviation industry in 2012, a measure taken to boost air transport activity, which had been severely affected by over a decade of economic stagnation within the country and, of course, the devastating earthquake and resultant tsunami in 2011. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
4 Centre for Asia Pacific Aviation (2013), Asian carriers post-solid traffic & load factor increases in 2012 but cargo remains a headache: AAPA, 08-02-2013 (online), available: http://centreforaviation.com/analysis/asian-carriers-post-solid-traffic--load- factor-increases-in-2012-but-cargo-remains-a-headache-aapa-96761 (04-08-2014). 5 Japan Ministry of Land, Infrastructure and Transport (n.d.), Travel statistics 2012 (online), available: www.mlit.go.jp/index_e.html (04-08-2014). Introduction 31
The government also hoped to revive a sluggish domestic air travel market to be in line with developing demographic trends in Japan (more leisure time in the country, an ageing population, a more individualistic youth and a growing female market).
New international slot capacities due to the expanded or new runways at Tokyo Narita and Tokyo Haneda airports, as well as in Osaka Kansai also freed up much-needed landing slots for all airlines, including LCCs.
Both Japanese mega air-carriers All Nippon Airways (ANA) and Japan Airlines (JAL) launched subsidiaries in the middle of 2012. All Nippon Airways has two LCCs at Osaka Kansai (Peach) and Tokyo Narita (Vanilla Air, formerly AirAsia Japan) while Japan Airlines entered into a joint venture with Jetstar for Jetstar Japan. Prior to ANA and JAL entry into the low cost market, there were two other low cost carriers Skymark Airlines and Air Do.
New LCC entrants helped to grow the Japanese domestic market in 2013, a rst since 2006. Over 50% of all new domestic passengers in nancial year 2011/2012 came from LCCs, representing an additional 3.6 million air travellers. With the launching of more international ights on LCCs, the Japanese Government now sees LCCs as a mechanism to help reach its target of 25 million inbound tourists by 2019, up from the 10 million received in 2013.
Taiwan Province of China
Taiwan Province of China also is showing more exibility; in 2013, more budget airlines were allowed to y to the Island, although a major breakthrough would be to allow LCCs to compete on Cross-Strait routes or to Hong Kong, China.
Changes however, are in the air as a joint venture was signed at the end of 2013 between China Airlines and Tiger Air to launch a subsidiary low cost carrier. The carrier is due to be launched by the end of 2014 and will serve routes to Japan; the Republic of Korea; Hong Kong, China; and Macao, China; as well as to South-East Asia. The carrier will launch with a eet of three aircraft before expanding to 12 by 2016.
Another regional airline, TransAsia Airways Corp, also announced in November 2013 that it would look to launch a budget carrier subsidiary within a year.
China
In recent months, the Chinese government has been reconsidering its position. Low cost carriers in China have the lowest penetration rate for the whole of Asia. LCCs in China had a share of 4.5% of all available seats on international routes in 2012 and a share of 6.2% between January and November 2013 compared with a share of over 50% for LCCs within South-East Asia in 2012 and http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
6 Centre for Asia Pacific Aviation (2012), New routes to China to flourish in the next few years (online), available: http://centreforaviation.com/analysis/new-routes-to-china-to-flourish-in-the-next-few-years-74230 (04-08-2014). 32 Air Connectivity and its Impact on Tourism in Asia and the Paci c
The government is likely to push low cost carriers to operate out of western China (Sichuan, with Chengdu and Chongqing; Yunnan with Kunming; Guangxi with Nanning and Guilin; Urumqi), however, alternative airports in the vicinity of China’s largest metropolises are likely to welcome future low cost airlines. This is already the case for Tianjin (as an alternative to Beijing), Hangzhou (as an alternative to Shanghai) and Shenzhen (as an alternative to both Guangzhou and Hong Kong, China). China currently has only one large domestic low cost carrier, Spring Airlines, which carries some 10 million passengers a year.
South-East Asia
In South-East Asia, budget airlines are building their share of traf c. Within the region, LCCs already represent over 50% of all regional capacities – expressed as available seats – in ASEAN’s four largest domestic markets, Thailand, Indonesia, Malaysia and the Philippines. According to the Centre for Asia Paci c Aviation (CAPA), low cost airlines have seen their share – again expressed in available seats – growing from 4% in 2003 to 52% by 2012. In a recent analysis, CAPA even sees the Philippines as the world champion of LCC capacities. It estimates that over 80% of all seat capacity on domestic routes is now held by LCCs, although their share on international routes remains far lower.
Although most of the LCC growth in Indonesia targets the fast-expanding domestic market, international demand of the Indonesian Provinces is catching up. Over the past three years, many new international ights have been added including those from Medan, Surabaya, Balikpapan, Bandung and Lombok.
Viet Nam is also poised to become one of the fastest growing countries for air transport. IATA estimates that the country is due to become the world’s third fastest growing air market. From over 25 million passengers a year in 2012, Vietnam could record 34 to 36 million passengers by 2015 and between 52 and 59 million by 2019. A large part of the growth will come from a further development of budget carriers.
New LCC Vietjet, which became operational at the end of 2011, has already achieved a 20% market share of all domestic capacities in 2013 and is now expanding to regional destinations. There is still however, a strong need to open more destinations to regional ights. So far, only Hanoi, Ho Chi Min City, Danang and (partially) Phu Quoc welcome international ights. Destinations such as Dalat, Hue and Nha Trang are probably the next ones on the list for future international airports.
Myanmar is also to be watched as it could be dubbed as the Asian air transport market of the next decade. The combination of an important population (53 million inhabitants), strong tourism potential and de cient land transport infrastructure make it ideal for the development of LCCs.
Since 2011, international seat capacity from and to Myanmar has grown vefold from 50,000 seats in April 2012 to 81,000 in January 2013 and 233,000 in January 2014,7 while total passenger http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
7 Rounded figures. See: Innovata (2013), online database via SRS Analyser (online), available: http:// www.innovata-llc.com/ (04-08-2014). Introduction 33
Table 1.5 LCC market in available seats by region, intra-regional traffic, 2005 and 2010–2012 (share, %) Sub-region 2005 2010 2011 2012
South-East Asia 13.6 30.7 32.4 52.0
North-East Asia 0.8 5.9 6.8 9.7
South Asia 5.8 50.0 50.0 57.0
Source: Official Airline Guide (2013–2014) (online), available: www.oag-flights.com/ (04-08-2014)
1.1.9 Challenges for airport development
Asia and the Paci c airports already hold a global market share of 25.8% of all passengers, according to data from the Airports Council International (ACI). In 2012, Asia and the Paci c airports recorded the world’s second fastest growth rate of 7.5%, welcoming 1.31 billion passengers. Asia and the Paci c is now the world’s third largest source of air passengers, behind Europe with 1.52 billion and North America with 1.48 billion. Additionally, there were 10.1 million aircraft movements at Asia and the Paci c airports during 2012.
Asia and the Paci c is also increasing its global share of airports accommodating over 10 million passengers a year. In 2012, among the top 50 busiest airports, Asia and the Paci c accounted for 19 of them – 17 in Asia (excluding West Asia) and two in Australia. Asia alone had 47 airports with more than 10 million passengers in 2012. In 2013, new airports to join the club are likely to be Busan, Harbin, Karachi and Phuket. Makassar in Indonesia could also possibly pass the 10-million-passenger-mark, as the airport enjoys annual growth rates of between 15% and 22%.
In China alone, there were 24 airports with over 10 million passengers a year, nine more than in 2010. Nine Chinese airports handled more than 20 million passengers in 2012, with Hangzhou likely to have entered the “20-million-passenger” club in 2013. Ten years ago, Beijing was the only airport to handle over 20 million passengers a year while Guangzhou, Shanghai Hongqiao and Shanghai Pudong were the only air gateways with over 10 million passengers a year.
The rapid growth in passenger traf c is, however, turning into a challenge for aviation authorities as airport facilities are becoming increasingly crowded. Few airports in Asia are equipped to cope with the future growth in traf c, particularly in South-East Asia where most large and even secondary airports are working at the limit of their capacities.
In Indonesia for example, Jakarta airport is receiving three times more passengers than its theoretical capacity while Surabaya, Yogyakarta and Bandung receive twice as many passengers as the design of their terminals allow. In Thailand, both Bangkok Suvarnabhumi and Phuket International Airports receive between 2 to 2.5 times more passengers than their stated capacity.
The necessary modernisation of airport facilities is of utmost importance to continue welcoming http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Many expansion projects have already started with large-scale development taking place in Jakarta, Denpasar, Semarang and Surabaya in Indonesia; at Bangkok Suvarnabhumi and Don Mueang, as well as Phuket in Thailand; in Kuala Lumpur in Malaysia; in Singapore; in Manila NAIA, Clark and Cebu in the Philippines; in Taipei, Hong Kong, China; and Beijing; and Colombo in Sri Lanka.
Figure 1.7 Passenger growth at selected Asian airports, 2005–2012 (%)
Tokyo Haneda 5.5
Hong Kong, China 39.2
Seoul Incheon 50.3
Bangkok 51.3
Singapore 57.8
Kuala Lumpur 71.8
Shanghai 89.6
Manila NAIA 96.8
Beijing 99.8
Guangzhou 105.1
Jakarta 106.7
Denpasar 117.7
Chengdu 127.3
Ho Chi Minh City 138.8
0 30 60 90 120 150
Source: Airports Council International (2013), World Report December 2013 release (online), available: www.aci.aero/media/daa9a04b-38dc-4cff-b50a-269b63a314b3/News/World%20Report/ACI-World-Report-December-2013_pdf (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 1.6 Passenger traffic at selected major Asian airports, 2000, 2005 and 2010–2012 Location 2000 2005 2010 2011 2012
Beijing 21,691,077 41,004,008 73,948,113 78,674,513 81,929,352
Tokyo Haneda 56,402,206 63,303,843 64,211,074 62 584 826 66,795,178
Jakarta CGK 10,350,000 27,947,482 44,355,998 51,533,187 57,772,762
Hong Kong, China 32,752,359 40,269,847 50,348,960 53,328,613 56,057,751
Bangkok Suvarnabhumi 29,616,4321 38,985,0431 42,784,967 47,910,904 53,002,328
Singapore 28,618,200 32,430,856 42,038,777 46,543,845 51,181,804
Guangzhou 12,790,999 23,558,274 40,975,673 45,040,340 48,309,410
Shanghai Pudong 5,543,667 23,664,967 40,578,621 41,447,730 44,880,164
Kuala Lumpur 14,538,831 23,213,926 34,087,636 37,704,510 39,887,866
Seoul Incheon 36,727,1242 26,051,466 33,478,925 35,062,366 39,154,375
Shanghai Hongqiao 12,139,462 17,797,365 31,298,812 33,112,442 33,828,726
Tokyo Narita 30,257,266 31,451,274 33,868,682 28,068,714 32,793,596
Manila NAIA n.a. 16,216,031 27,119,899 29,552,264 31,878,935
Chengdu 5,524,709 13,899,929 25,805,815 29,073,990 31,595,130
Shenzhen 6,422,685 16,283,071 26,713,610 28,245,738 29,569,725
Taipei 18,681,462 21,700,702 25,114,413 24,847,551 27,836,550
Ho Chi Minh City 3,600,000 7,345,387 15,500,000 16,668,400 17,538,000
Fukuoka n.a. 18,651,670 16,404,617 15,431,078 17,400,000
Osaka Kansai 20,491, 333 16,278,653 14,353,443 13,525,441 16,113,639
Surabaya 2,712,074 8,217,415 12,072,059 13,778,287 15,259,050
Denpasar (Bali) 4,443,856 6,506,207 11,120,171 12,780,563 14,166,336
Osaka International n.a. 18,948,300 14,788,543 12,909,865 13,147,365
Hanoi3 n.a. 3,500,000 9,500,000 ≥11,000,000 ≥12,000,000 1) Traffic for Bangkok is at Don Mueang Airport, 2000 and 2005. 2) Traffic for Seoul is for Gimpo international airport, financial year 1999/2000. 3) Traffic data for Hanoi is estimated. Note: Only in 2012, the traffic was of more than 10 million passengers per year. Sources: Airport Council International (2013) World Report December 2013 release and additional data from respective Transport Ministries. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
1.2 Analysis of major opportunities and challenges associated with tourism and air transport
1.2.1 Visa facilitation and immigration/border procedures
Visa facilitation and immigration/border procedures have a direct bearing on travel and tourism. At the beginning of 2008, destinations requested from an average of 77% of the world’s population to apply for a traditional visa prior to departure but by 2013 this had dropped to 64%. From a regional perspective, destinations in Asia and the Paci c have facilitated international travel the most with 20% of the world’s population not requiring a visa, a further 20% obtaining a visa on arrival and another 6% eligible for an eVisa.
The Republic of Korea has one of the most detailed and accurate sources regarding visa information and China has introduced a 72-hour transit visa-free policy for nationals of 45 countries visiting its major city destinations Beijing, Shanghai and Guangzhou.
Australia is one of the countries with some of the most advanced visa policies towards its source markets and a commendable Electronic Travel Authority programme. Multi-entry visas for Chinese have been agged by Tourism Australia as recent research has shown growth in return visitors with around 90% of Chinese visitors stating they were satis ed with their stay in Australia.
An ‘ASEAN Common Visa’ is in the pipeline as called upon by their leaders at the 2011 ASEAN Summit in Jakarta.
In an age of technological progress, Asia and the Paci c has been at the forefront of eVisas with this system being particularly popular in South Asia (11%).
The UNWTO/WTTC report on The Impact of Visa Facilitation in APEC Economies concluded that APEC economies stand to gain between 38 and 57 million additional international tourist arrivals by 2016 from visa facilitation, with an additional in ow of international tourism receipts standing to reach between USD 62 and 89 billion. The total number of new jobs created as a result of this increase is estimated to range from 1.8 to 2.6 million.8
1.2.2 Taxes and other levies
Taxes, both direct and indirect, and other levies are a rightful source of income to countries and tourism being one of the fastest growing and most lucrative sectors, is a target for various taxes such as entry/departure tax, hotel tax, tourism development levy etc. Introduced quite recently, the aviation sector has been subject to a ‘carbon tax’. These worldwide taxes and levies are common to most regions and destinations but Asia and the Paci c has been particularly careful not to “kill the goose that lays the golden egg” by indiscriminate measures that are harmful to the tourism industry. This may also explain some of success of Asia and the Paci c tourism. However, http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
8 World Tourism Organization and World Travel & Tourism Council (2013), The Impact of Visa Facilitation in APEC Economies, UNWTO, Madrid. Introduction 37
Air connectivity within the region is, however, subject to national policies that have been fairly careful to safeguard the aviation sector of Asia and the Paci c. The Secretary-General of the UNWTO, Dr. Taleb Rifai, at the University of Queensland’s CAUTHE Conference on 11 February 2014, stated: “I would like to applaud the Australian Government for its commitment to minimizing taxes on tourism and reducing the red tape burden for businesses. Freezing the Passenger Movement Charge has been a very positive step towards the industry and will surely contribute to achieve Australia’s Tourism 2020 targets”.
Taxation and a regulatory framework in air transport limited in most cases by reciprocity in air transport agreements is still one of the main barriers to the sustainable growth of tourism and air transport.
1.2.3 Economic regulation and air connectivity
The Asia and the Paci c region generated 248 million tourists in 2013, doubling its share from 124 million a decade ago and now accounts for 23% of the world’s share of international tourist arrivals. Furthermore according to UNWTO estimates this is expected to rise to 30% in 2030. With a 6% increase in 2013 Asia and the Paci c outstripped the 5% average global growth. Of the sub- regions, South-East Asia registered a 10% increase.9 It is by far the fastest growing region with the largest potential for progress in the future. This growth is closely linked to accessibility where air transport is the dominating force.
The close connection and inter-dependence of tourism and aviation as a socioeconomic activity cannot be downplayed. As stressed by Mr. Tony Tyler, Director General and CEO of IATA in a keynote address at the 68th IATA Annual General Meeting in Beijing “Hong Kong, Singapore, and the United Arab Emirates are among governments building their economies around air connectivity. The result is a virtuous circle. They are great markets for airlines. Businesses prosper from connectivity. And governments reap the bene ts of increased employment and a stronger tax base. Aviation should be seen by governments as a source of revenue – but not as a cash cow. Aviation is a powerful workhorse. Using it wisely will deliver bene ts throughout the economy.”
The roles of multi-lateral and bi-lateral agreements between governments/national airlines have come into question in the face of increased deregulation and competition especially from LCCs that are examined in the respective city case studies.
1.2.4 Reduction of greenhouse gas emissions
There has been a noticeable increase in global warming since the mid-20th century. While the debate on the causes of global warming divide the scienti c community there has been suf cient evidence that the emission of greenhouse gases (GHGs) directly attributable to human activity through the vast use of fossil fuels in energy consumption, coupled with the depletion of the http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
GHGs, especially through carbon dioxide (CO2) emissions.
9 World Tourism Organization (2014), UNWTO World Tourism Barometer, January 2014, UNWTO, Madrid. 38 Air Connectivity and its Impact on Tourism in Asia and the Paci c
However, it has been estimated that tourism’s contribution, including air transport, to GHGs does not exceed 5%. Though this gure is small the public perception of the tourism industry as a major “polluter” is big. The Intergovernmental Panel on Climate Change predicted that the Asia and the Paci c region will account for 47% of all global carbon emissions by 203010 and the reciprocal growth in tourism including air transport could lead to a greater percentage in greenhouse gas emissions by the tourism sector, in the future.
The reduction of carbon emissions by the aviation sector is greatly dependent on technological changes taking place in the industry but unlike alternate sources of energy (solar, and wind in particular) that are making great strides, fossil fuel (kerosene) will continue to dominate air transport, at least in the immediate future. It is noteworthy, that aircraft manufacturers have made considerable progress in the eld of fuel ef ciency of modern aircraft that, to a certain extent, reduces the amount of carbon emissions.
1.2.5 Convergent rules on the protection of travellers and tourism service providers
The growth of tourism and concurrently air travel, which has become accessible to all, has led to operational problems where consumer protection has become imperative. The landmark agreement between UNWTO and ICAO (Aviation and Tourism, Hand in Hand for Sustainability) of the 18 March 2013 outlined convergent rules on the protection of passengers, tourists and tourism service providers, as one of the areas in which both organizations aimed to collaborate. The European Union has been in the forefront of legislation in this eld since 2004, and this has now been extended to other regional bodies.
In Asia and the Paci c, ASEAN appointed a coordination committee on consumer protection (ACCP) in 2007. Supplementary national protection acts have been implemented by Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam while other countries are in the process of drafting their own legislation. These policies concern consumer protection in general with tourism and air transport coming under its purview.
On a broader scale, protection has also extended to peripheral issues of social responsibility such as the initiatives pioneered by ECPAT (End Child Prostitution Child Pornography and Traf cking of Children for Sexual Purposes), which has been working closely with ASEAN. One of the pioneers of ECPAT has been Air France and airlines have taken a keen interest and pro-active measures to counter the sexual exploitation of children in tourism with Asia and the Paci c being in focus when the issue was rst brought into the limelight over two decades ago. The headquarters of ECPAT International is in Bangkok, Thailand.
Speci c country measures of consumer protection related to civil aviation in Asia and the Paci c are noteworthy in China (Rules of Civil Aviation, Passenger and Baggage, Decrees 49 and 70 CCAC), Singapore and Australia (Australia Consumer Law and Your Business/Tourism 2020). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
10 Intergovernmental Panel on Climate Change (n.d.), Fourth Assessment Report: Climate Change 2007 (online), available: www.ipcc.ch/publications_and_data/publications_and_data_reports.shtml (04-08-2014). T 39
Chapter 2 Case studies
2.1 Australia
The insularity of Australia necessitates air transport as being an essential element of any economic and tourism development strategy. It is not surprising therefore that the island continent has, since the late eighties in fact been gradually opening its air transport sector to international competition. Today there are more than 50 airlines offering international connections to, from and within Australia.
Total passengers in nancial year 2012/2013 – 1 July to 30 June – reached 57.12 million on domestic ights and 30.31 million on international ights. Australia has 13 major domestic routes servicing over 1 million passengers a year with six of those generating more than 2 million passengers annually. International routes currently generate over 1 million passengers a year.
Table 2.1 Top 10 domestic routes, by volume, 2012 and 2013 Rank City pairs Passengers Annual change (%) FY 2011/2012 FY 2012/2013
1 Melbourne–Sydney 7,727,898 8,200,614 6.1
2 Brisbane–Sydney 4,352,655 4,426,239 1.7
3 Brisbane–Melbourne 3,152,185 3,162,527 0.3
4 Gold Coast–Sydney 2,251,319 2,541,933 12.9
5 Melbourne–Perth 1,923,983 2,216,548 15.2
6 Adelaide–Melbourne 2,071,038 2,114,825 2.1
7 Perth–Sydney 1,785,368 1,804,751 1.1
8 Adelaide–Sydney 1,709,647 1,753,575 2.6
9 Gold Coast–Melbourne 1,699,532 1,735,871 2.1
10 Hobart–Melbourne 1,137,332 1,337,211 17.6
Note: Financial years (FY) are from 1 July to 30 June. Source: Australian Government, Bureau of Infrastructure, Transport and Regional Economics (2012/2013), Australian Domestic Aviation Activity Annual Publications (online), available: www.bitre.gov.au/publications/ongoing/domestic_airline_activity-annual_publications.aspx (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.2 Top 10 international routes to and from Australia, by passenger volume, 2012 and 2013 Rank City pairs Passengers Annual change (%) YE June 2012 YE June 2013
1 Auckland–Sydney 1,397,090 1,394,417 -0.2
2 Singapore–Sydney 1,168,812 1,336,560 14.4
3 Singapore–Melbourne 1,056,119 1,074,034 1.7
4 Singapore–Perth 999,115 997,523 -0.2
5 Auckland–Melbourne 919,305 962,217 4.7
6 Hong Kong, China–Sydney 957,099 922,156 -3.7
7 Los Angeles–Sydney 894,347 888,861 -0.6
8 Denpasar–Perth 837,626 851 071 1.6
9 Auckland–Brisbane 828,967 846,891 2.2
10 Singapore–Brisbane 777,054 2,114,825 3.7
Note: YE refers to year ended, as in year ended 30 June 2012. Source: Australian Government, Bureau of Infrastructure, Transport and Regional Economics (2013), International Airlines Operated Flights and Seats (online), available: www.bitre.gov.au/publications/ongoing/international_airlines-operated_flights_seats.aspx (04-08-2014).
The challenge now is to grow international aviation capacity by 40 to 50% in order to achieve Australia’s Tourism 2020 goal. The National Long-term Tourism Strategy – Tourism 2020 – is a whole of government approach to doubling the size of the industry’s overnight visitation to generate visitor revenues of between AUD 115 billion and AUD 140 billion by 2020. In nancial year 2012/2013, Australia welcomed 6.27 million tourists. By 2020, the country is expected to receive 8.42 million arrivals ( nancial year 2019/2020).1
According to the Department of Infrastructure and Regional Development, “Aviation is a major contributor to Australia’s tourism industry. As an island continent with no land borders, Australia relies almost exclusively on air services to bring international visitors to the country, with over 99% of inbound tourists arriving in Australia by air. Domestic tourism also relies heavily on air transport”.2 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
1 Australian Government, Department of Resources, Energy and Tourism (n.d.), Tourism 2020 (online), available: www.tourism.vic.gov.au/images/stories/tourism-2020-strategy.pdf (04-08-2014). 2 Australian Government, Department of Infrastructure, Transport, Regional Development and Local Government (December 2009), National Aviation Policy White Paper: Flight Path to the Future. Case study – Australia 41
Table 2.3 International passengers traffic from all Australian airports, 2012 and 2013 Airport International passengers Share 2013 Annual change (%) 2013/2012 FY 2011/2012 FY 2012/2013 (%)
Sydney 12,017,305 12,617,552 41.6 5.0
Melbourne 6,657,880 6,987,506 23.1 5.0
Brisbane 4,520,004 4,523,385 14.9 0.1
Perth 3,469,758 3,741,600 12.3 7.8
Gold Coast 725,004 882,536 2.9 21.7
Adelaide 618,749 709,469 2.3 14.7
Cairns 504,200 515,971 1.7 2.3
Darwin 357,210 313,032 1.0 -12.4
Norfolk Island 9,505 10,932 0.0 15.0
Sunshine Coast . . . 6,553 0.0 . . .
Townsville 2,733 ...... -100
Total 28,882,348 30,308,536 100 4.9
Note: Financial years (FY) are from 1 July to 30 June. Source: Australian Government, Bureau of Infrastructure, Transport and Regional Economics (2013), International Airlines Operated Flights and Seats (online), available: www.bitre.gov.au/publications/ongoing/international_airlines-operated_flights_seats.aspx (04-08-2014).
The dynamics of air transport in Australia are also fuelled by a very strong outbound market – approaching 9 million travellers a year – and this is obviously boosting yield and loads on routes to and from the country. It also lures carriers to serve what is a very attractive Australian market.
In contrast to many other countries in Asia and the Paci c, Tourism Australia is working closely with all institutions and partners involved into the development of air transport. This includes airlines, airports, air transport authorities and State/Territory Tourism Organisations. Taken together, these stakeholders identify the gaps and opportunities that aviation can ll.
Tourism Australia for example, has been working a programme to develop the following: – Building stronger relationships with global carriers through marketing and distribution; – Developing strategies to build aviation capacity on key strategic routes to ensure suf cient air seat capacity (with an eye on the Tourism 2020 goals); – Partnering with State/Regional Tourism Of ces and airports; – Supporting government on the Tourism Access Working Group and Air Services Agreement bilateral negotiations; – Attending key aviation events (World Routes and Routes Asia) to raise Australia’s pro le among senior route development executives; http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Australia began deregulating its air transport in the late eighties and early nineties by privatising airports and allowing new air entrants, both domestic and international. Over the last decade, the country has also attracted international carriers to serve new airports including those at the Gold Coast and Essendon (Melbourne).
One speci c characteristic of the Australian aviation market is its strong dependence on external air gateways as geographically it is too distant from major passenger ows. Besides Asia and the west coast of the United States of America, most routes are out of reach without a stopover.
The country consequently needs to continuously explore its access to/from other destinations in the region. For many years, Singapore has played a major role as a hub between Europe and Australia, however in recent years, this has shifted in favour of Dubai, which is now developing into a major gateway between Europe and Australia.
2.1.1 Dubai: a new gateway to/from Australia
The 2012 partnership agreement between Australia’s Qantas (QF) and Dubai-based Emirates (EK) has created one of the most comprehensive international networks in the world and includes not only ight coordination but also merged frequent ier programmes. With the implementation of the partnership in spring 2013, Adelaide, Brisbane, Melbourne, Perth and Sydney are now connected to 65 cities in Europe, the Middle East and North Africa. Australia is connected with 98 weekly ights to Dubai while there are over 800 ights per week to Europe, including Airbus A380 ights to Amsterdam, London Gatwick and Heathrow, Manchester, Moscow, Munich, Paris, Rome and Zurich.
For the top 10 European destinations, ying time through Dubai has been cut by an average of two hours. Emirates is now the third largest international carrier to and from Australia and on current growth projections will most likely overtake Singapore Airlines within a few years.
Table 2.4 Airlines carrying over 1 million international passengers, FY 2012/2013 Airline Inbound Outbound Total
Qantas Airways 2,633,922 2,584,823 5,218,745
Singapore Airlines 1,400,822 1,358,258 2,759,080
Emirates 1,355,339 1,325,275 2,680,614
Virgin Australia 1,211,528 1,241,112 2,452,640
Jetstar 1,205,112 1,242,384 2,447,496
Air New Zealand 1,205,504 1,191,779 2,397,283
Cathay Pacific 707,112 682,358 1,389,470
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Thai Airways International 523,713 520,755 1,044,468
Total 15,262,614 15,045,922 30,308,536
Source: Australian Government, Bureau of Infrastructure, Transport and Regional Economics (2012/2013), International Airline Activity Annual Publications (online), available: www.bitre.gov.au/publications/ongoing/international_airline_activity-annual_publications.aspx (04-08-2014). Case study – Australia 43
Table 2.5 Passenger traffic of Emirates Airlines, FY 2012/2013 Airport Inbound Outbound Total
Malaysia 20,626 27,534 48,160
New Zealand 297,448 274,738 572,186
Singapore 78,891 72,025 150,916
Thailand 31,019 26,914 57,933
United Arab Emirates 927,355 924,064 1,851,419
Total 1,355,339 1,325,275 2,680,614
Source: Australian Government, Bureau of Infrastructure, Transport and Regional Economics (2012/2013), International Airline Activity Annual Publications (online), available: www.bitre.gov.au/publications/ongoing/international_airline_activity-annual_publications.aspx (04-08-2014).
In addition, the advent of longer-range aircraft such as the Boeing 787 Dreamliner and the Airbus A380 can be expected to open up new destinations, routes and market segments over the next few years.
2.1.2 Attracting new air routes with China
The presence of a large Chinese community in Australia – estimated at 820,000 in 2011, excluding Hong Kong, China; and Taiwan Province of China – and the importance of China’s outbound market have turned the development of ights to and from China into a priority. According to data from Tourism Australia, in 2012, China became Australia’s second largest inbound market for visitor arrivals at more than 747,000 while Australian outbound to China reached a close to 400,000 departures during that same year.
The latest forecasts by the Tourism Forecasting Committee, released in October 2013, estimate that arrivals from China will grow by around 13% in 2013/2014 and 12% in 2014/2015, with an average annual growth rate (AAGR) of 6.4% between 2014/2013 and 2023/2022. Interestingly enough the arrival of Chinese for purposes designated as ‘leisure’ will increase at a slightly faster rate – by 17% in 2014/2013 and 13% in 2015/2014 with an AAGR of 6.5% out to 2022/2023.
2.1.3 The role of low cost carriers (LCC)
Low cost carriers have played a signi cant role in opening air travel to a wider number of travellers, particularly out of Asia.
Currently, seven airlines offer direct ights between seven cities in China – including Hong Kong, China – and six Australian cities.3 Together they link Australia to China/Hong Kong, China with 876 monthly frequencies and a combined seat capacity of 228,765. The Australia–Hong Kong, http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
3 Flightmaps Innovata (April 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014). 44 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Figure 2.1 Airline market share between Australia and China/Hong Kong, China; April 2014 (%)
Virgin Atlantic (3.8) Sichuan Air (2.0) Air China (11.0)
Qantas (16.9)
Cathay Pacific (40.5) China Southern (15.2)
China Eastern (10.5)
Source: Flightmaps Innovata (April 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
2.1.4 More low cost carriers to Asia
Facilitating Asian arrivals to Australia can be tackled at two main levels: visa issues and air transport/air fares. Without doubt, visas are easier to obtain today than in bygone days and electronic travel authority visas are easily obtained for a number of Asian residents, speci cally those in Brunei; Hong Kong, China; Japan; the Republic of Korea; Malaysia and Singapore. Other countries must apply through agencies or embassies with requirements for short stays under the ‘Visitor visa’, which is intended for people who want to travel Australia as tourists, for business or to visit family.
Meanwhile, the development of ights from low fare airlines is boosting demand from emerging destinations. The main low cost carriers ying to Australia are Virgin Australia, Jetstar – an af liate of Qantas – the AirAsia Group (AirAsia X and Indonesia AirAsia) and Scoot. By 2015, Thai AirAsia X and Nok Scoot are also likely to join the range of low cost carriers. The development of low cost carriers in Japan and Taiwan Province of China could also translate into new routes, particularly out of Japan, in the long-term.
Between 2012 and 2013, total passengers on budget carriers grew by 12.1%, three times faster than the average for all international passengers. The fastest growing airlines on this basis were AirAsia X and newcomer Scoot. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.6 LCC passenger traffic, 2012 and 2013 LCC Total passengers Share of total Annual change (%) (%) FY 2011/2012 FY 2012/2013
AirAsia X 689,448 900,609 3.0 30.6
Indonesia AirAsia 328,687 299,426 1.0 -8.9
Jetstar 2,339,162 2,447,496 8.1 4.6
Jetstar Asia 103,298 107,956 0.4 4.5
Scoot 23,850 397,930 1.3 1,568.5
Tigerair 106,433 121,657 0.4 14.3
V Australia 216,906 ......
Virgin Australia 2,194,383 2,452,640 8.1 11.8
Total LCCs 6,002,167 6,727,714 22.2 12.1
Total all airlines 28,882,348 30,308,536 100 4.9
Note: Financial years (FY) are from 1 July to 30 June. Source: Australian Government, Bureau of Infrastructure, Transport and Regional Economics (2013), International Airlines Operated Flights and Seats (online), available: www.bitre.gov.au/publications/ongoing/international_airlines-operated_flights_seats.aspx (04-08-2014).
2.1.5 India: the next potential market
According to Tourism Australia, India is developing as the next market with signi cant inbound potential for Australia. The number of Indian visitors rose by 9% (168,800) in 2013 after a gain of 7.6% in 2012. Within the framework of Tourism 2020, Australia has developed the “India 2020 Strategic Plan”.
Launched in June 2012, this plan identi es four strategic pillars to being competitive and winning market share in India: knowing the customer, a dedicated geographic strategy, delivering quality Australian tourism experiences, and building aviation and access.
While non-stop air services do not as yet exist, Tourism Australia is working closely with airlines from South-East Asia, particularly Silk Air/Singapore Airlines and Malaysia Airlines to y Indian travellers to the country. The Tourism 2020 Strategy identi es that India has the potential to be worth between AUD 1.9 billion and AUD 2.3 billion by the end of the decade. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.2 China: Chengdu
Chengdu, the capital of Sichuan Province, is the political, economic, military and cultural centre of south-west China. It is also a well-known tourist destination that boasts a number of beautiful natural and cultural attractions including several UNESCO World Heritage Sites, giant panda sanctuaries, Mount Qingcheng and Dujjangyan irrigation system, Jiuzhaigou Valley and Mount Emei.
With these beautiful and af uent resources, tourism has been a dominant contributor to Chengdu’s economy. Chengdu received 1.21 million foreign visitors in 2011 and 1.58 million in 2012, and earned a tourism-related income of CNY 107 billion (USD 17.4 billion), or 8.4% of the city’s GDP. Recently, the city has focused its effort on turning itself into a popular MICE (Meeting, Incentive, Convention and Exhibition) destination.
Figure 2.2 Number of foreign visitors to Chengdu, 2007–2012 (× 1,000)
1,600 1,580
1,400 1,210 1,200
1,000
790 800 730
580 600 470
400 2007 2008 2009 2010 2011 2012
Source: Chengdu Tourism Administration (2013), Statistics of Chengdu Tourism.
West China gateway
When Chengdu and Sichuan were affected by a powerful earthquake which claimed the lives of up to 80,000 people, it seemed that the region would need a long time to recover. But China put all of its weight behind the reconstruction of the affected areas and also the promotion of Chengdu as a central gateway.
The move initiated and then followed a new policy of rebalancing economic and urban growth westwards. Chengdu is today the main entrance point to the Province of Sichuan and also to the entire south-western region of China, including Tibet. This policy helped raise Chengdu’s pro le in both tourism and air transport. Today Chengdu airport is China’s fth largest and is connected http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.2.1 General profile
Chengdu is rapidly developing into one of the new Chinese metropolises under the policy of rebalancing economic development with a highly mature eastern China (from Xiamen to Shanghai/ Beijing) and an impoverished west with large cities such as Chengdu, Chongqing and Kunming. Chengdu has particularly strong potential, as it is relatively central in western China and at the crossroads of other Provinces including Guizhou, Yunnan, Shaanxi, Qinghai and Tibet. Its position as the Sichuan capital city is another asset for Chengdu, which is also considered as the main gateway in Mainland China towards the Himalaya region, including Tibet.
Sichuan is one of the most populated Provinces of China with 80.5 million inhabitants (2012); it is also among the ve largest Provinces with a surface area of 485,000 km2, equivalent to 5.1% of China’s total area, behind the Tibet Autonomous Region, Inner Mongolia Autonomous Region and Xinjiang Uyghur Autonomous Region.
Chengdu is the fourth-largest city in China according to the country’s 2010 census with (then) 14.05 million permanent residents, accounting for 17.5% of the population of Sichuan Province. In the past decade, the city has grown by around 2.4% per year, the equivalent of almost 3 million additional inhabitants.
In terms of population Chengdu is behind Chongqing (28.8 million inhabitants), Shanghai (23 million inhabitants) and Beijing (19.6 million inhabitants) but ahead of Tianjin (12.9 million inhabitants) and Guangzhou (12.7 million inhabitants). In 2010, there were over 20,000 foreigners living in the city with ten foreign consulates.
Table 2.7 Sichuan Province in comparison to selected Provinces in China, 2010 Province Capital city Population Density Area (million) (persons/km2) (km2)
Guangdong Guangzhou 104.30 579.46 180,000
Sichuan Chengdu 80.42 165.81 485,000
Jiangsu Nanjing 78.66 766.66 102,600
Hebei Shijiazhuang 71.85 382.81 187,700
Anhui Hefei 59.50 425.91 139,700
Zhejiang Hangzhou 54.43 533.59 102,000
Guangxi Zhuang Autonomous Region Nanning 46.03 195.02 236,000
Yunnan Kunming 45.97 116.66 394,000
Shaanxi Xian 37.33 181.55 205,600
Guizhou Guiyang 34.75 197.42 176,000
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Inner Mongolia Autonomous Region Hohhot 24.71 20.88 1,183,000
Shanghai Municipality Shanghai 23.02 3,630.20 6,341
Xinjiang Uyghur Autonomous Region Ürümqi 21.81 13.13 1,660,400 48 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Province Capital city Population Density Area (million) (persons/km2) (km2)
Beijing Municipality Beijing 19.61 1,167.40 16,800
Tibet Autonomous Region Lhasa 3.01 2.44 1,228,400
Qinghai Xining 5.63 7.80 721,200
Source: University of Michigan, China Data Center (2011), China 2010 Census Data (online), available: http://chinadatacenter.org/Announcement/AnnouncementContent.aspx?id=470 (04-08-2014).
Strong economic fundamentals
Thanks to a policy of rebalancing economic growth and wealth from coastal to central China – what the central government has called for the past 15 years the “Go West” initiative – Chengdu and Sichuan have gained in importance over the past decade. Between 2008 and 2012, the provincial GDP grew at an average rate of 13.6% and was slightly higher at around 14% for the city of Chengdu. In 2012, the provincial GDP reached CNY 2.38 trillion (USD 388 billion), turning Sichuan into the eighth largest economy nationwide and the largest in western China.
While coastal China experienced a slowdown in 2012 and 2013 due to export dif culties, Chengdu and Sichuan continued to show high growth rates and to attract investment. According to the China State Information Center, a government think tank, while foreign capital owing into China decreased by 3.7%, in 2012 it rose by 31.1% in Chengdu.
Chengdu is becoming one of China’s fastest developing cities. Following the successful hosting of the Fortune Global Forum in June 2013, attended by over 600 leaders from Fortune Global 500 and other top companies, government, and civil society, 31 more Fortune 500 companies established a presence in the Sichuan capital. Global companies including Roche, Henkel, JFE Steel Corporation, Danone, EDF Suez and Schneider Electric all have their regional headquarters in Chengdu. In total, the city has 238 companies of the Fortune 500 present or represented. Foreign companies have invested more than USD 8 billion into the city and the Province. Over two-thirds of all foreign direct investment (FDI) goes to the Chengdu metropolitan area.
The city has been well known as a major IT and telecommunication centre for more than two decades. IT names present in Chengdu include IBM, Intel, Nokia, Siemens, Xerox, Microsoft, Canon, HP and Lenovo. The electronics sector continues to attract the most investment. The reserves of hydropower resources in Sichuan amount 150 million kW, second only to Tibet, with the further potential to add over 100 million kW, more than in any other part of China.
Chengdu is also western China’s primary nancial centre with the presence of international banks including ANZ Bank, Citibank, Standard Chartered Bank, HSBC, ABN AMRO, JPMorgan, Bank of Tokyo-Mitsubishi UFJ, and Nanyang Commercial Bank. The city is also developing into an international logistics centre for rail and air in western and central China, playing host to large http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Chengdu is also a major centre of education in China and the largest in the south-west-west of the country. The city has some 50 colleges and universities, including the University of Electronic Case study – China: Chengdu 49
Science and Technology of China, Sichuan University and Southwestern University of Finance and Economics, with over 140,000 students.
Chengdu’s GDP in 2012 exceeded CNY 813.89 billion (USD 130.7 billion), making the city the third-largest economy among China’s top 15 provincial-level cities.
Figure 2.3 Evolution of Chengdu GDP per capita, 2010–2015 (USD)
5,000 ≥ 5,000
4,600
4,500 4,310
3,965 4,000
3,500 3,265
3,000 2010 2011 2012 2013 2015
Note: GDP per capita for 2013 and 2015 are estimates. Source: ‘Chengdu’s GDP surpassed $148b in 2013’ (2014), China Daily (online), available: www.chinadaily.com.cn/china/2014-03/05/content_17324466.htmChinadaily.com (04-08-2014).
Table 2.8 Provincial nominal GDP per capita for selected Provinces, 2012 Province CNY Nominal PPP GDP per capita (USD) (USD) (%)
China 38,449 6,091 9,185 100
Tianjin 93,110 14,750 22,242 242
Beijing 87,091 13,797 20,804 227
Shanghai 85,033 13,471 20,313 221
Guangdong 54,096 8,570 12,923 141
Fujian 52,763 8,359 12,604 137
Chongqing 39,083 6,191 9,336 102
Hebei 36,584 5,796 8,739 95
Sichuan 29,579 4,686 7,066 77
Guangxi 27,943 4,427 6,675 73
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Yunnan 22,196 3,516 5,302 58
Notes: PPP: Purchasing power parity. The annual average exchange rate for 2012 is CNY 6.3125 = USD 1. Source: National Bureau of Statistics of China (2013), Statistical Communiqué of the Provinces on the 2012 National Economic and Social Development (online), available: www.stats.gov.cn/english/NewsEvents/201302/t20130222_26962.html (04-08-2014). 50 Air Connectivity and its Impact on Tourism in Asia and the Paci c
2.2.2 Tourism and transportation
Chengdu and Sichuan: the authentic China
China received approximately 130 million tourists in 2013 of which 26 million are not from the ‘Greater China Area’ (i.e. Hong Kong, China; Macao, China; and Taiwan Province of China). Asians – excluding Greater China – represented the bulk of all arrivals at 16.1 million, followed by Europe at 5.7 million and the Americas with 3.1 million.
According to PATA’s regional forecasts, south-west China welcomed 3.41 million foreign travellers (excluding Greater China) in 2010 and was predicted to reach 4.76 million overseas arrivals by 2014, an increase of 39.5% over 2010. In terms of average annual growth rates, south-west China would be the fth fastest growing regional area in China.
Sichuan recorded 596,600 arrivals from selected inbound markets in 2010, according to the PATA Regional Tourism Forecasts 2012–2014. This number is forecast to reach 760,000 arrivals in 2014.
Table 2.9 China regional area forecast international arrivals, 2010–2014 Region 2010 2012 2013 AAGR1 AAGR1 2014/2010 (million) (million) (million) (million) (%)
North China 6.23 7.44 8.10 8.78 9.0
North-East China 4.99 6.60 7.28 7.94 12.3
East China 15.80 19.45 20.79 22.09 8.7
South China 7.51 9.27 9.92 10.61 9.0
South-West China 3.41 3.99 4.37 4.76 8.7
North-West China 1.60 1.65 1.81 1.97 5.3
Notes: AAGR: Average annual growth rate. Table represents rounded figures. Source: Pacific Asia Travel Association (2012), China Regional Tourism Forecasts 2012–2014, PATA, Bangkok.
Sichuan is also one of China’s most attractive destinations from a cultural, natural and gastronomic point of view. Provincial tourism assets include: – Pandas; – The most world heritage sites in China, including the famous Emei Mountain with the Leshan Giant Buddha; – Sichuan food; – Sichuan opera; – Three Kingdom Culture; – Taoism; http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
One of those assets, Emei Shan, is a UNESCO world heritage mountain located 143 km south- west of Chengdu and is one of the Four Sacred Buddhist Mountains of China. Sources from the 16th and 17th century allude to the practice of martial arts in the monasteries of Mount Emei in the earliest extant reference to the Shaolin Monastery as the place of origin for Chinese boxing.
Table 2.10 Selected overseas arrivals to Sichuan, Chengdu and Chongqing, 2011 Source market Sichuan Chengdu Chongqing
Taiwan Province of China 277,807 149,545 254,515
Japan 236,973 183,684 151,728
Hong Kong, China 192,823 153,700 283,794
United States of America 146,381 129,025 218,709
Republic of Korea 96,611 50,117 48,658
United Kingdom 93,042 83,440 73,298
Singapore 67,926 49,703 88,553
Germany 53,627 45,759 177,102
Malaysia 46,835 34,523 62,148
France 42,517 34,603 87,602
Thailand 42,294 24,884 39,728
Australia 38,899 34,758 65,304
Canada 34,174 27,894 63,292
Macao, China 31,723 17,815 8,572
Russian Federation 8,899 7,914 12,749
Philippines 4,108 3,522 2,409
Source: China Tourism Press (n.d.), The Yearbook of China Tourism Statistics 2012, Beijing.
The attraction of the giant panda
As China’s “National Treasure”, the giant panda is one of the rarest animals in the world, currently numbering around 1,500, of which 80% live in Sichuan Province. The panda can be seen as the most unique attraction for international visitors to the city. With such an emblematic icon, the Chengdu government has developed innovative plans around the role that pandas can play in tourism.
Chengdu is the rst place for foreign visitors to be in contact with pandas through a breeding centre for giant pandas located north of the city. Nature reserves with pandas are located in http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The nature reserve was established in 1963 and covers an area of approximately 200,000 hectares. There are 4,000 different species of animals and plants in the nature reserve, including 150 highly endangered giant pandas.
The Wolong National Nature Reserve was one of the Sichuan Giant Panda Sanctuaries inducted along with Mount Siguniang and Jiajin Mountains as a UNESCO World Heritage Site in 2006.
Photography, visiting a panda museum, educational opportunities and also preservation and conservation efforts through volunteer work are some of the various activities on offer.
Table 2.11 International tourist arrivals to Sichuan, Chengdu and Chongqing, 2011 and 2012 Year Sichuan Chengdu Chongqing
2011 1,639,653 895,376 1,326,135
2012 1,512,930 1,170,643 1,526,320
Source: China Tourism Press (n.d.), The Yearbook of China Tourism Statistics 2012, Beijing.
Land transportation
The central location of Sichuan Province is turning it into a major distribution centre for south-west and western China. Sichuan has 7.3% of all road passengers in China. In addition, rail generates some 80 million passengers for Sichuan.
Chengdu is a major rail and road centre and Chengdu rail station is connected to 26 Provinces in China with direct services to 50 large cities. Since 2011, the Chinese high-speed train to Beijing and Shanghai is connected to the city. Travel time for both Chengdu–Beijing and Chengdu–Shanghai is approximately 15 hours 30 minutes and it takes 30 minutes by high-speed train to travel from Chengdu to Chongqing. Other major railway lines connect Chengdu to Kunming (19 to 22 hours) and Chengdu to Lhasa (43 hours).
Waterways also remain an important means of transportation for passengers. Amongst all the Provinces, Sichuan’s waterway passenger traf c was ranked second with 33 million passengers in 2012, just behind Zhejiang (35 million) and followed by Guangdong (27 million). China’s western region has the highest number of waterway passengers, at 85 million. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.12 Top 5 busiest Provinces in terms of road passenger traffic Province Passengers, 2012 Annual growth 2012/2011 (million) (%)
Guangdong 5,743 12.5
Sichuan 2,776 7.2
Jiangsu 2,677 8.4
Shandong 2,656 5.8
Zhejiang 2,331 25.6
Total 38,040 7.9
Source: China Tourism Press (n.d.), The Yearbook of China Tourism Statistics 2012, Beijing.
Airport facilities
Built in 1938 but open to civil use only from 1956, Chengdu Shuangliu International Airport is the largest in western China and is the fth busiest airport in the country. The airport was expanded from 1994 to 2012 and during the rst phase of expansion (1994–2001), the main runway was extended to 3,600 m, allowing large aircraft to land; in addition, a new terminal building with a capacity for 20 million passengers was opened. In 2008, a second expansion phase included a second 3,600 m parallel runway and a second terminal, opened in mid-2012.
With a total area of 9.3 million m2, its two parallel runways and 200 aircraft parking stands (including 74 positions directly connected to both terminals), Chengdu airport can currently serve up to 50 million passengers a year, a capacity which is likely to be reached before the end of the decade. Further expansion will take the airport to a total capacity of 65 million passengers by 2025. Since 2000, the airport has registered continuous growth, except in 2008, following the earthquake that devastated parts of Sichuan. In 2003, the severe acute respiratory syndrome (SARS) crisis also slowed passenger traf c to a single-digit growth rate. By 2013 however, it was China’s fth largest airport with total annual traf c of 33.4 million passengers.
A hub for Air China and Sichuan Airlines
Passenger traf c has tripled in a decade. Chengdu is a major hub for three Chinese carriers: Chengdu Airlines, Air China and Sichuan Airlines. Air China has its main hub for western China in Chengdu offering 27.9% of all seat capacity to and from Chengdu, equivalent to 543,000 seats per month. Sichuan Airlines follows with 21.6% of all seat capacity (421,000 seats/month) and China Eastern Airlines with 11.4% of all available seats (222,000 seats/month). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.4 Chengdu Airport ranking in passenger traffic among the top Chinese airports, 2012 (million)
Hong Kong, China 56.46
Xian 23.42
Kunming 23.98
Shenzhen 29.57
Chengdu 31.60
Shangha Hongqiao 33.83
Shanghai Pudong 44.88
Guangzhou 48.31
Beijing 81.93
0 10 20 30 40 50 60 70 80 90
Source: China Civil Aviation Report (2013) (online), available: www.chinacivilaviation.com (04-08-2014).
Table 2.13 Number of passengers and flights at Chengdu Airport, 2004–2013 Year Flights Passengers
2004 110,186 11,685,339
2005 132,999 13,899,636
2006 156,340 16,278,730
2007 166,382 18,586,217
2008 158,709 17,253,622
2009 190,103 22,638,796
2010 205,537 25,805,815
2011 222,425 29,073,990
2012 242,667 31,595,369
2013 250,553 33,445,817
Source: Chengdu Shuangliu International Airport (2014), Wikipedia (online), available: http://en.wikipedia.org/wiki/Chengdu_Shuangliu_International_Airport (04-08-2014).
Chengdu’s domestic air network
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4 Flightmaps Innovata (2013/2014), Flightmaps Analytics available monthly seats capacity for routes and airlines (online), available: www.flightmapsanalytics.com/ (04-08-2014). Case study – China: Chengdu 55
Sichuan, Tibet Autonomous Region, Xianjiang Autonomous Region and Yunnan. Chengdu offers a monthly seat capacity of 464,000 to these ten Provinces and acts as a gateway to Tibet and Yunnan with ights to ve destinations followed by Xinjiang and Sichuan with four destinations each and Gansu with three destinations.
Beijing–Chengdu is the largest route in terms of total seats, representing close to 10% of all capacity followed by Shanghai (Pudong and Hongqiao) with 8.6% and Guangzhou with 6%.
Table 2.14 Top domestic destinations in western China from Chengdu by flight frequency and seat capacity, April 2014 Destination Frequency/month Available seats/month
Kunming, Yunnan 558 82,987
Lhasa, Tibet 355 69,107
Urumqi, Xinjiang 358 59,391
Xian, Shaanxi 355 54,743
Jiuzhaigou, Sichuan 341 52,948
Guiyang, Guizhou 220 33,672
Lijiang, Yunnan 186 28,613
Lanzhou, Gansu 138 21,398 Source: Flightmaps Innovata (February 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Table 2.15 Top domestic destinations from Chengdu airport by frequency and seat capacity, April 2014 Destination Frequency/month Available seats/month
Beijing (BJS) 1,014 183,220
Shanghai (SHA) 930 157,920
Guangzhou (CAN) 690 108,793
Shenzhen (SZX) 593 93,070
Kunming (KMG) 558 82,987
Lhasa (LXA) 355 69,107
Urumqi (URC) 358 59,391
Hangzhou (HGH) 358 56,175
Xian (SIA) 355 54,743
Jiuzhaigou (JZH) 341 52,948
Xiamen (XMN) 251 39,893
Sanya (SYX) 257 39,695
Nanjing (NKG) 248 38,626 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Wuhan (WUH) 241 36,880
Total (88 destinations) 11,435 1,837,243 Source: Flightmaps Innovata (February 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014). 56 Air Connectivity and its Impact on Tourism in Asia and the Paci c
2.2.3 Key issues related to tourism and air transport
Noteworthy issues regarding Chengdu’s tourism and air transport include the 72-hour visa-free policy, the establishment of the Fly Chengdu Marketing Alliance, and the expansion of direct ight routes to other cities around the world. Chengdu introduced the 72-hour visa-free policy that went into effect on 1 September 2013, after Beijing, Shanghai and Guangzhou. The policy allows transit passengers from 45 countries with a valid visa and a ight ticket to a third country to stay up to 72 hours in Chengdu.
The Paci c Asia Travel Association (PATA), the Chengdu Tourism Administration, the Chengdu Culture and Tourism Development Group and the Chengdu Shuangliu International Airport jointly established the Fly Chengdu Marketing Alliance in 2013. The alliance aims to boost cooperation among the cities connected to Chengdu by air in terms of international travel, city brand promotion and cultural exchanges.
Chengdu has also put constant efforts into opening direct ight routes to major cities across the world including Seoul, Tokyo, Bangkok, Paris, and Frankfurt and London, which became connected in September 2013.
Strengthening international air capacity
There are a total 1.946 million available seats on 12,190 monthly frequencies.5 However, international seat capacity had a market share of only 5.6% in April 2014, the equivalent of 109,000 seats/month on 755 frequencies/month.
International air connectivity, however, has rapidly increased over the past two years. In 2013 Air China to Frankfurt, British Airways to London Heathrow, Qatar Airways to Doha and Sichuan Airlines to Melbourne ights were introduced. Chengdu is now linked to 114 cities including 22 international destinations, and to Hong Kong, China; Macao, China; and Taiwan Province of China.
Although the network has grown considerably over the past two years, Chengdu still needs to improve it. However, it depends very much on external factors at a national level. These include traf c rights reciprocity and open skies with neighbouring countries – particularly to Japan and the Republic of Korea – however political tensions with some neighbours will certainly retard any progress in the improvement of air transport links. In addition, the relaxation of rules for new Chinese airline entrants is a factor, particularly in the low cost carrier eld.
On a regional level, Sichuan and Chengdu should be more proactive in marketing activities in Japan, the Republic of Korea and South-East Asia. However, once more much depends on the evolution of political relations with individual countries. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
5 Flightmaps Innovata (2013/2014), Flightmaps Analytics available monthly seats capacity for routes and airlines (online), available: www.flightmapsanalytics.com/ (04-08-2014). Case study – China: Chengdu 57
North-East Asia
Surprisingly, North-East Asia – excluding the Greater China Area – is relatively underserved with only ve destinations and a monthly capacity of 34,190 available seats, 25% less capacity than to South-East Asia. Tokyo represents a third of all seat capacity. The total number of seats to Seoul is also relatively low, at less than 8,500 seats/month. There are only two legacy carriers competing on the Chengdu–Tokyo route (Air China and ANA) while the situation to Seoul is slightly better in terms of competition, with three legacy carriers (Air China, Sichuan Airlines and Asiana). Both markets would de nitely get a boost by allowing low cost carriers to compete with established legacy airlines.
Of note is the fact that despite being the fth largest airport in China, Chengdu still lacks ights to Osaka Kansai or to Fukuoka – two important business centres and outbound markets in Japan. Busan is also a potentially interesting destination as the Republic of Korea’s second largest metropolitan area.
The Greater China area
Although, there are close to 50,000 seats available each month, there is still potential to improve capacity and offer more competition. Hong Kong, China–Chengdu is the largest route with slightly over 30,000 seats per month and is served by four airlines (Air China, Dragonair, Hong Kong Airlines and Sichuan Airlines). Both Dragonair and Air China have a market share close to a third of all available seats. Meanwhile, the Chengdu–Shenzhen route has three times more seats than that the Chengdu–Hong Kong, China route. Five carriers serve the Taiwan Province of China–Chengdu market with four carriers to Taipei (Air China, Sichuan Airlines, China Airlines and Eva Air) and one carrier, Far Eastern Air, to Kaohsiung.
South-East Asia
Largely dominated by traf c to Thailand (45% of all seat capacity within South-East Asia), Chengdu still lacks air connections to Indonesia, the Philippines, and Malaysia. Current dif culties in diplomatic relations with the Philippines are probably re ected in the absence of frequencies between Chengdu and Manila, despite the high potential.
Secondary cities such as Penang or Johor Bahru in Malaysia are potential candidates due to in ows of traf c from both inbound and outbound travellers while another potential route is Chengdu–Yangon, a logical step to connect west ASEAN to west China. Yangon is currently accessible only via Kunming or Bangkok.
Intercontinental destinations http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Chengdu will, in summer 2014, be linked to eight intercontinental destinations, three to Europe, two in the Middle East and in North America, and one in Australia. 58 Air Connectivity and its Impact on Tourism in Asia and the Paci c
There is certainly potential for additional destinations overseas. For Europe, Chengdu is turning into a popular destination, both inbound and outbound. British Airways, which started ying on the Chengdu–London Heathrow route in September 2013 is switching aircraft from the B777-200ER to a B787 and is increasing frequency from three to ve ights per week.
In the medium-term Chengdu could easily support new routes to Moscow, Paris and Istanbul, the latter being an ideal gateway into Europe, as well as the entire Middle East. The Gulf region continues to have huge potential. Etihad is already Chengdu’s largest intercontinental airline with a capacity of 5,313 seats per month.
For the United States of America, United Airlines – the rst carrier from the United States of America to y into Sichuan – has received traf c rights to y the Chengdu–San Francisco route with a Boeing 787. The Boeing B787-8 has a range of 7,650 to 8,200 nautical miles; while San Francisco–Chengdu is about 7,000 miles, a 14-hour ight, the aircraft opens potential for more North American cities such as Los Angeles, Chicago, Dallas and Houston.
Sydney is a potential second Australian destination for both inbound and outbound traf c. According to the Center for Asia Paci c Aviation (CAPA), Chengdu is also looking for a potential route to Africa.
Figure 2.5 Chengdu’s airport air connections by monthly seat capacity, July 2014
Amsterdam 4,675 San Francisco 2,860 11,240 5,137 Frankfurt 3,367 Vancouver 2,457
London 3,198 Tokyo 11,940 34,190 Seoul 8,420
8,823 Nagoya 4,800 Abu Dhabi 5,313 Chengdu Hiroshima 4,680 Doha 3,510 Jeju 4,350
Bangkok 11,324 Hong Kong, China 30,532 8,800 Singapore 10,948 Taipei 12,315 Kuala Lumpur 10,830 48,808 Macao, China 4,620 46,128 Kathmandu 4,800 Phuket 9,390 Kaohsiung 1,341 Mumbai 2,720 Hanoi 2,379
Karachi 1,280 Ho Chi Minh City 1,256 Melbourne 2,184
Note: July 2014 was chosen as a reference month as it integrates a new route to San Francisco. Source: Adapted from Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
To complement Chengdu, nearby Chongqing also offers a small network of overseas destinations with exclusive services to Chiang Mai, Helsinki, Los Angeles and Sydney. Chongqing has a capacity of 90,107 available seats/month to 15 international destinations (including Greater China Area destinations). Case study – China: Chengdu 59
Figure 2.6 Chongqing’s airport air connections by monthly seat capacity, July 2014
Helsinki 4,932 8,712 14,118 Los Angeles 4,508
Doha 3,780 San Francisco 9,610
7,904 Tokyo 4,898 Chengdu Seoul 3,006 30,259
Bangkok 20,722 Hong Kong, China 14,694
Singapore 4,433 Taipei 7,769
Phuket 4,284 Macao, China 2,772 26,657 Chiang Mai 820 Sydney 2,457 Kaohsiung 1,422
Source: Adapted from Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Low cost carriers
A key mechanism for boosting international air traf c growth would be to allow more low cost carriers to y into Chengdu. So far, only two LCCs y into Chengdu – AirAsia X out of Kuala Lumpur and Spring Airlines, the latter ying only domestically (Shanghai and Shijiazhuang). The emergence of new medium/long-haul carriers from Thailand (Nok Scoot and Thai AirAsia X), as well as the conversion of some regional carriers into LCCs (Far Eastern) should help generate more LCC air capacity until 2015.
2.2.4 Future: new airport development
Knowing that Chengdu’s current airport is likely to reach its ultimate capacity after 2020, Chinese authorities are now aiming to build a second airport that might take over most of Chengdu Shuangliu’s passenger traf c.
During mid-2013, it was con rmed that the site of the new airport, Lujia in Jianyang County, would be approximately 50 km from Shuangliu airport. Plans include the construction of a “seamlessly integrated” transportation system to the airport encompassing high-speed rail, subway, BRT and highways. The management of both airports would be very similar to the one in Shanghai; one airport being both domestic and international while Shuangliu would handle mostly domestic ights, including those to/from Hong Kong, China.
The future facility will require an investment of USD 9.5 billion for the construction of ve runways and for a terminal with a capacity of 80 million passengers a year. The future airport is due to be completed by the end of 2017 and will be operational for the public in 2018. This new airport will http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Air traf c growth is likely to slow over the next years as GDP growth decelerates. At the same time, China air transport is entering a new chapter in its development as the market is slowly maturing, especially on the east coast. Meanwhile, central and western China are likely to see the fastest 60 Air Connectivity and its Impact on Tourism in Asia and the Paci c
growth rates over the years to come, thanks to ongoing political support of the authorities for the “Go West Policy” and the need to rebalance economic development. With the emergence of western China as an attractive tourism destination – Sichuan being the distribution point in both domestic and international tourist arrivals – Chengdu is likely to have more ights and destinations and become China’s fourth international air market after Beijing, Shanghai and Guangzhou.
Improved air connectivity has brought about bene ts to the locals directly and indirectly. Increasing the number of direct ight routes has attracted more visitors to the city, which in turn has facilitated the city’s tourism development. This has led to more jobs, raising the average income of the local residents. Furthermore, the improved city infrastructure has also contributed to the quality of life for the locals.
The case of Chengdu provides an important lesson: the importance of tourism infrastructure and transportation. Better infrastructure and transportation allow tourists to use their travel time more ef ciently, enabling them to spend suf cient time at tourist attractions and even visit more attractions. This increases tourists’ satisfaction with the destination and leads them to revisit or recommend the place. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.3 China: Dalian
Source: Tourism Promotion Organization for Asia Pacific Cities.
Dalian is a port city located at the southernmost tip of the Liaodong Peninsula in north-east China. It is the second largest city of Liaoning Province following Shenyang, the capital city. With a natural non-freezing deep-water harbour and a relatively well-developed transport system in north China, the city has developed as an important international trade hub. It is also a well-known tourism destination that boasts more than 13 beautiful natural scenery attractions, ten historic cultural attractions, and various unique local festivals and events. The tourism industry has steadily grown in the city, contributing greatly to the local economy. The city received a total of 49,432,800 visitors in 2012 – 48,144,800 domestic and 128,800 international – with domestic tourists spending an average of CNY 1,478 per day, and international tourists USD 688. The city’s tourism sector revenues reached CNY 767 billion in 2012 an increase of 18% year on year and almost three times the revenue of 2006.
2.3.1 Key issues related to the development of city tourism
Dalian tried to resolve a number of issues in order to stimulate the growth of the tourism and air transportation industries that included expansion of the city’s airport capacity, promotion of international and domestic travel markets and lifting city entry restriction for visitors.
Dalian Zhoushuizi International Airport is one of the top four airports in north-east China, and operates more than 130 ights routes to 89 cities in 15 nations. Since the year 2000, the airport http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The local government, therefore, has decided to build a new airport that can serve as a hub for north China and North-East Asia. Since this new airport is an extremely large project for the Province, it had to be approved by the State Council before the announcement. The project was included in the development plan of the Civil Aviation Administration of China in 2011, and in plans for the transport and logistics sector under China’s 12th Five-Year Plan in 2012. The city expects the construction to be completed by 2018 and the new airport is expected to serve more than 72 million passengers a year.
Figure 2.7 Passenger throughput at Dalian International Airport, 2003–2012 (million)
16
14 13.34 12.01 12 10.70 10 9.55 8.20 8 7.28 6.35 6 5.40 4.61 4 3.42
2
0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Dalian Bureau of Statistics (2013), The Number of Passengers who used Dalian International Airport from 2003–2012 (online), available: www.stats.dl.gov.cn (17-12-2013) (04-08-2014).
In Dalian, the tourism and air transport industries worked together to increase the number of visitors to the city. Recently the Dalian Travel and Tourism Bureau and Dalian International Airport jointly established the Committee of the Dalian Air Travelling Market, which is exclusively devoted to expanding the existing travel markets and creating new travel markets.
They also invested CNY 1 million each year for tourism promotion and tourism product development. The cities to which Dalian offered promotions were mostly those where a new ight route to Dalian was launched or ight occupancy rates to the city were low. In addition, the Dalian Travel and Tourism Bureau and other tourism businesses gave an air tour promotional presentation at their target cities twice during the year. They selected one or two travel agencies and a newspaper at a target city then advertised Dalian air tour products through them constantly for twelve months. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Source: Tourism Promotion Organization for Asia Pacific Cities.
Dalian International Airport and airlines also sought to develop new tourist products, particularly the ones that include Dalian as a stopover destination. In line with this effort, the local government has started a 72-hour visa-free stay service for international travellers from 45 countries from 1 January 2014. Dalian is the sixth city in China to introduce a visa-free policy.
2.3.2 Results and lessons learned
The development of city tourism brings about tangible bene ts to the city’s economy including increased tourism revenues and jobs. Dalian City has seen a sharp increase in total tourism revenues, with CNY 26 billion in 2006 and CNY 76.7 billion in 2012. The number of accommodation facilities has steadily increased from 2004 to 2012, and the number of travel agencies has also risen during the same period with some uctuations in between.
Table 2.16 Total tourism revenue of Dalian, 2006–2012 Year Revenue Dalian GDP rate (CNY billion) (%)
2006 260.10 9.8
2007 325.10 10.1
2008 400.80 10.4
2009 480.00 10.4
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2011 650.22 n.a.
2012 767.20 n.a.
Note: Table represents rounded percentages. Source: Dalian Tourism Administration (2013), Statistics of Dalian Tourism. 64 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Figure 2.8 Number of travel agencies and hotels in Dalian, 2004–2012
450
388 400 373 378 362 362 366 357 353 350 320
300 242 230 238 250 216 220 222 185 190 200 183 ● Travel agencies 150 ■ Hotels
100 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Dalian Tourism Administration (2013), Statistics of Dalian Tourism.
The case of Dalian presents two important lessons: the importance of air transport for city tourism development and the necessity for consistent destination marketing for city tourism. With the number of ight services from/to Dalian Zhoushuizi International Airport increasing, Dalian is becoming connected to more and more cities around the world thereby expanding tourism markets for the city.
Constant marketing activities in target cities were effective in increasing the number of visitors. The formation of a committee devoted to destination marketing and the joint development and promotion of air tour products by the airport and airlines have brought about a rise in the number of visitors, boosting the city’s tourism industry.
http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.4 Indonesia: Yogyakarta
Yogyakarta is the capital city of Yogyakarta Special Region in Java, Indonesia. Dubbed as the cradle of Javanese culture, the city is home to an active Sultan, who is today Governor of the Province. While other Sultanates and monarchies were abolished after World War II – although Sultans continue to live in their palaces without holding any political power – Yogyakarta Sultanate, the last fully- edged sultanate in Indonesia, continues to survive in the Yogyakarta Special Region. The region is a Province with its own institutions and budget. Yogyakarta Sultan SKS Hamengku Buwono X is today the head of the Special Administrative Region, which is subdivided into four regencies (kabupaten) and one city (kota).
2.4.1 General profile
The Yogyakarta economy is currently dominated by trade (20.8%), services (17%), agriculture (17.2%) and industry (13.3%). As a centre of traditional Javanese culture, Batik textiles are a major export commodity for the Province and are in fact, the largest export product today.
Royal customs continue to shape life in the traditional city, which features a high number of heritage areas and historical buildings. Yogyakarta is also the gateway to two iconic temples: Borobudur is South-East Asia’s largest Buddhist temple and one of the oldest in this part of the world while Prambanan is one of the most spectacular Hindu temple complexes to be found in South-East Asia.
There are more temples between Yogyakarta and Solo and many old Javanese cities, mountains and volcanoes to discover. As the second most popular destination in Indonesia after Bali, it has a number of additional tourist attractions including the palace of Sultan, museums, the biggest traditional market in central Java and modern markets, Jogja International Performance Street, Jogja Java Carnival, Jogja Fashion Week, and Jogja Gamelan Festival. Thanks to these Javanese cultural heritage attractions, the city received approximately 1.6 million visitors in 2011, up 12.7% from the previous year.
Yogyakarta is therefore recognised as an important centre for tourism – the second largest on Java Island – but also for education. The University of Gadjah Mada was the rst state university established after Indonesian Independence in 1945 and is among the top education institutions in the country. There are 19 universities and another 30 higher education colleges located within the city. Creative industries are seen as a major activity in the years to come, particularly in the design industry. The Indonesian Institute of Arts Jogja is considered as one of the nest education centres in the art eld in the country. The city is already a well-established centre for fashion.
Being located in Central Java, Yogyakarta is an important rail and road transit point from Bandung (West Java) to Blitar or Surabaya in East Java. A network of new highways is in development including the important Semarang–Solo toll road as part of the Trans-Java toll way. A 50 km http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Population
The Yogyakarta Special Administrative Region has a total population of 3.54 million inhabitants with Yogyakarta city representing 10% of this gure. However, the population’s density on a rather small territory made it necessary to create a joint secretariat to administrate a conurbation including the city of Yogyakarta and the districts of Sleman and Bantul. This urban zone of 300 km2 is known as the Yogyakarta Urban Agglomeration and represents a population of 1 million individuals. The urbanisation and growth of the population within the city boundaries have been very rapid due to the multiplication of educational institutions that favoured the settlement of students and their families. It is estimated that 20% of Yogyakarta’s total population consists of students, the equivalent of 200,000 persons. In 2013, some 7,600 new students were enrolled in Yogyakarta’s three State universities ‘University Gaja Mahda’, ‘Sunan Kalijaga State Islamic University (UIN)’, and ‘Yogyakarta State University (UNY)’.
Tourism however is considered as the main driving force behind the economic development of Yogyakarta Special Region, and the local government has therefore invested resources in developing the tourism sector over the past few years. As a result, the region recorded tourism- related revenue of IDR 4.7 trillion (USD 470 million) in 2011, constituting 20.8% of the gross regional domestic product (GRDP). These revenues came mostly from hotel and restaurant business.
In Yogyakarta City itself, revenues from tourism and related businesses accounted for between 40% and 50% of the GRDP in 2011. The industry employed a total of 445,443 people in the same year, becoming the second-largest source of employment after the agriculture industry.
Yogyakarta has an airport within its territory, which is complemented by another international airport located in Solo (Surakarta), however air transport has dif culty coping with the potential growth of tourism due to limited air infrastructure.
Table 2.17 Human development index for selected Provinces, 2005 and 2010–2012 Province 2005 2010 2011 2012
Capital City Jakarta 76.07 77.60 77.97 78.33
Yogyakarta 73.50 75.77 76.32 76.75
North Sumatra 72.03 74.19 74.65 75.12
Indonesia 69.57 72.27 72.77 73.29
Bali 69.78 72.28 72.84 73.49
Central Java 69.78 72.49 72.94 73.36
West Java 69.93 72.29 72.73 73.11
East Java 68.42 71.62 72.18 72.83
South Sulawesi 68.06 71.62 72.14 72.70 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Note: North Sumatra, South Sulawesi and Bali are provided for comparison purposes only. Source: Badan Pusat Statistik, Statistics Indonesia (n.d.), Human Development Index 1996–2012 (online), available: www.bps.go.id/eng/tab_sub/view.php?tabel=1&daftar=1&id_subyek=26¬ab=2 (01-08-2014). Case study – Indonesia: Yogyakarta 67
Economic performance
According to Indonesia’s Of ce of Statistics, GDP per capita in 2010 for Yogyakarta was IDR 13,196.16 million, the equivalent of USD 1,435 (USD 1 = IDR 9,200 year average 2010). Yogyakarta therefore remains far behind Jakarta. Nevertheless according to a study on Indonesia’s regional and urban economic development funded by AusAID, the Swiss Economic Development Cooperation and the World Bank, Yogyakarta is one of the fastest growing cities in Indonesia in terms of its GDP per capita.
The Province’s compound annual growth rate (CAGR) was 3.6% between 1993 and 2007, although there was a marked slowdown between 2000 and 2007 (3.4%), especially when compared with the national CAGR (5.8% between 2000 and 2007).
Figure 2.9 Poor populations of Yogyakarta and selected Provinces, 2012 (%)
11.7 Indonesia 8.6
9.8 South Sulawesi 4.4
4.0 Bali 3.8
5.7 Banten 4.4
13.1 East Java 8.9
15.9 Yogyakarta 13.1
15.0 Central Java 13.1
9.9 West Java 8.7
3.7 Capital City Jakarta 3.7 ■ Total ■ Urban 10.4 North Sumatra 10.3
0 2 4 6 8 10 12 14 16 18 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
In 2012, Yogyakarta’s GRDP grew by 5.6% and is estimated to have reached over 5% in 2013, despite the pressure from a weakening Indonesian rupiah.
GDP per capita in Yogyakarta will continue to rise in the years to come as the city has one of the most dynamic service sectors in Indonesia, thanks to the growth of tourism, higher education and energy. A report from Indonesia’s Central Bank predicts that the Yogyakarta metropolitan area will also bene t from the autonomous status of the Province, which provides more opportunities for the provincial government to consider the city’s own economic and development model.
Indonesia’s central government of cially recognised the special status of Yogyakarta’s government on September 2012, by of cial law. The city earned plaudits from the World Bank’s investment arm – the International Finance Corporation – as one of the easiest cities in Indonesia to start a new business, thanks to a relatively ef cient bureaucracy.
Among the new business sectors with a bright future are small and medium enterprises (SMEs) active in fashion and design. According to the Indonesia Ministry for SMEs, the Province has about 78,000 small enterprises producing items ranging from traditional food and clothing to jewellery and crafts. Linked with its educational institutions, Yogyakarta is poised to become one of the centres of creativity and design for the Indonesian archipelago.
Table 2.18 Specific indicators for doing business in Yogyakarta and selected cities in Java, 2012 Measure Yogyakarta Jakarta Bandung Semarang Solo Surabaya
Ease of starting a business (rank)1 1 8 12 4 3 14
Number of procedures 8 8 9 9 8 9
Time (days) 29 45 30 28 29 32
Cost (income per capita, %) 18.5 17.9 24.3 19.7 20.5 23.5
Minimum capital 46.6 46.6 46.6 46.6 46.6 46.6 (income per capita, %)
Ease of dealing with 5 19 8 8 12 16 construction permits (rank)
Ease of registering property (rank) 6 1 1 19 17 11
1) The rank range: from 1 to 20 – the lower the rank the easier it is. Source: World Bank and International Finance Corporation (2012), Doing Buisness in Indonesia 2012 (online), available at: www.doingbusiness.org/indonesia (14-08-2014).
2.4.2 Transportation and tourism
Located in the central part of Java, Yogyakarta is an important transit point between west and east Indonesia. The city is served by an airport, train stations, the Giwangan bus terminal – dubbed http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
A ring road around Yogyakarta offers greater mobility for traf c and connects the city to East and Central Java. Among future toll ways being developed is the south toll way, which reduces transit time between Jakarta and East Java.
In the marine sector, there is the Yogyakarta international ship building port in the southern ocean headlands Adikarto. There are also expansion plans at the airport, but development has been slow due to the dif culty to secure land or move the airport to another area.
Tourism
Yogyakarta has developed into one of Indonesia’s most popular tourist destinations. For long-haul travellers, the city is a “must-do” stopover on a circuit between Jakarta and Bali. For regional markets, the wealth of cultural and historical attractions in the region makes it an increasingly popular destination.
In 2012, tourism to Yogyakarta brought 197,751 foreign visitors spending at least one night, according to an interview with Yogyakarta Tourism Head of Marketing, P. Kertiyasa, up by 16.2% over 2011 with European travellers representing over 35% of all international arrivals.
Table 2.19 Total number of foreign visitors to Yogyakarta, 2012 Origin Number of foreign visitors
Netherlands 32,023
Malaysia 20,729
France 19,618
Japan 16,074
Germany 10,314
Australia 9,226
United States of America 9,136
Source: Dinas Pariwisata Yogyakarta (Dinas Travel Agency), taken from an interview reproduced in “Bubblews.com”.
However, the total number of foreign travellers is probably underestimated as there are also travellers residing in Central Java – probably up to Solo – who visit Yogyakarta. This could also be the case for visitors residing around Borobudur Temple, of cially located in nearby Central Java. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.20 Foreign guests in hotel accommodation in Java Provinces, 2010 and 2011 (× 1,000) Province Classified hotels Non-classified hotels Total hotels
2010 2011 2010 2011 2010 2011
Jakarta 882.9 1,013.2 11.9 54.7 894.8 1,067.9
West Java 156.6 178.1 90.8 41.1 247.4 219.2
Central Java 55.9 59.5 17.2 54.7 73.1 114.4
Yogyakarta 95.6 107.0 11.6 12.3 107.2 119.3
East Java 411.2 200.4 65.0 344.8 476.2 545.2
Banten 54.3 77.6 0.6 0.5 54.9 78.1
Indonesia 5,175.5 5,313.4 1,736.9 2,352.4 6,912.4 7,665.8
Source: Badan Pusat Statistik, Statistics Indonesia (n.d.), General Data 2012 (online), available: www.bps.go.id/eng/index.php (04-08-2014).
Figure 2.10 Market share of foreign guests residing in hotels on Java Island and other Provinces, 2011 (%)
Banten (4)
East Java (25)
Jakarta (50)
Yogyakarta (6)
Central Java (5)
West Java (10)
Source: Badan Pusat Statistik, Statistics Indonesia (n.d.), General Data 2012 (online), available: www.bps.go.id/eng/index.php (04-08-2014).
The Yogyakarta tourism industry relies mostly on domestic travellers. According to data from 2012, the Java cultural capital receives over 3 million domestic tourists every year.
The drivers of domestic tourism are holidays at 53%, meetings, incentives, conferences and exhibitions (MICE) at about 18%, visits to friends and relatives at 13% and ‘other reasons’ at 12%. Among foreign tourists, 66% come for pure cultural and entertainment purposes, 20% for MICE activities and 7% to visit friends and relatives; another 7% come with other motivations.
In 2012, tourism contributed 20.8% to Yogyakarta’s economy (measured in total GDP), far greater than agriculture and manufacturing, which make up just 16.1% and 13.5% of the economy, respectively. The Trade Ministry is also trying to tap into the burgeoning tourism industry in http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.11 Domestic travellers in classified and non-classified accommodation for the Provinces of Yogyakarta and Central Java, 2005–2011 (million)
5.1 2011 3.4
3.8 2010 3.2
3.5 2009 3.3
3.6 2008 3.1
3.8 2007 2.5
1.9 2006 ■ Central Java 2.1 ■ Yogyakarta 2.4 2005 2.0
0 1 2 3 4 5 6
Note: Graph represents rounded figures. Source: Badan Pusat Statistik, Statistics Indonesia, Special Province of Yogyakarta (n.d.), Number of Accommodation, Rooms and Beds Available Hotels by Regency/City in Yogyakarta 2003–2012 (online), available: http://translate.google.com/translate?hl=id&langpair=id|en&u=http://yogyakarta.bps.go.id (04-08-2014).
Accommodation
In 2012, Yogyakarta had around 1,100 hotels offering a capacity of 18,459 rooms and close to 30,000 beds. However, from this total, only 28% of all rooms were in classi ed accommodation.
The growing popularity of the destination has prompted the development of new hotels, especially in the upper- and mid-range segments. Among chains now present in the city are Aston, Hyatt, M-Gallery, Melia, Novotel, Sahid, Santika and Sheraton. Between 2012 and 2014, some 17 new hotels will be opened by national and international chains including Metropolitan Golden Management (MGM), Zurich Group, Sido Muncul, Accor Group, Swiss-Bellhotels and, Holiday Inn, among others. Budget and mid-range hotels remain very attractive for many investors to cater for domestic tourism growth. Ciputra Group and Accor are among the most active chains in strengthening their own budget brands in Yogyakarta and nearby suburbs.
In 2011 and 2012 four- and ve-star hotels experienced average occupancy rates of 50.7 and http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.21 Accommodation capacity in Yogyakarta, 2012 Regency/city Classified hotels Non-classified hotels
Establishments Rooms Beds Establishments Rooms Beds
Kulonprogo – – – 26 434 506
Bantul 1 71 125 284 2,045 3,773
Gunungkidul 1 23 46 62 518 632
Sleman 20 2,025 3,028 374 4,116 6,276
Yogyakarta 32 3,032 4,993 354 6,196 10,533
Total 54 5,150 8,171 1,100 13,309 21,720
Source: Badan Pusat Statistik, Statistics Indonesia, Special Province of Yogyakarta (n.d.), Number of Accommodation, Rooms and Beds Available Hotels by Regency/City in Yogyakarta 2003–2012 (online), available: http://translate.google.com/translate?hl=id&langpair=id|en&u=http://yogyakarta.bps.go.id (04-08-2014).
Culture and spirituality as a tourism driver
Being considered as the cradle of Javanese culture, Yogyakarta is already one of the most attractive tourism destinations in Indonesia and has the potential to further capitalise on its tourism assets. Among them are the rituals, which continue to in uence life around the Royal Palace (Keraton) in the heart of the historic town. Around the town, Yogyakarta’s traditional way of life has been preserved with many craftsmen, batik makers and old style markets. Traditional handicrafts, textile weaving and authentic food are part of the market appeal for visitors. The annual Yogyakarta art fair, or Art Jog, is hosted in June/July and is turning into a major international event presenting contemporary young artists from Indonesia and surrounding countries.
Tourism interest is fostered by a wealth of cultural activities, including traditional court dances, Ramayana Ballet, Wayang Puppet Theatre and gamelan orchestras. As is the case with Indonesian Batik, Keris weapons, Wayang Puppet Theatre and Angklung music instruments are also now a part of the UNESCO list of ‘Intangible Cultural Heritage of Humanity’, and have added to the attractiveness of Yogyakarta as a destination.
Yogyakarta’s other primary tourism asset is the complex of temples of Borobudur and Prambanan. Located, respectively, 40 minutes and 30 minutes away from Yogyakarta, both temples were accepted into the UNESCO World Heritage Sites list in 1991. They are managed by PT Taman Wisata Candi Borobudur Prambanan Ratu Boko, a State entity entrusted with the care of Borobudur, Prambanan and Ratu Boko. These temples have been carefully restored with landscapes being redesigned to preserve the amazing features of thousand-year old structures, especially following a devastating volcano eruption in 2006 and an earthquake in 2010.
Borobudur is now Yogyakarta/Central Java’s number one attraction with 3 million visitors annually, including 300,000 foreigners. Prambanan receives 1 million visitors a year including http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
6 Purnomo Siswoprasetjo, President of PT Taman Wisata Candi, interviewed at Traveldailynews.asia 25 June 2012 (online) available: www.traveldailynews.asia/news/article/49815/strengthening-the-appeal-of-borobudur (04-08-2014). Case study – Indonesia: Yogyakarta 73
2.4.3 Key Issues Related to Air Transport and City Tourism
One of the key issues in Yogyakarta’s tourism during the past decade was closely related to Adisucipto International Airport. Before the airport opened in 2004, overseas tourists arrived in Yogyakarta via Bali or Jakarta. The relative inconvenience of reaching the city posed a major obstacle to attracting international tourists, triggering the move to promote the existing domestic airport to the level of an international airport.
That was a major challenge. Since it belonged to the Air Force, the local government persistently negotiated with both the Air Force and other relevant institutions to gain status as an international airport.
The city was nally successful and developed Adisucipto Airport into an international airport in 2004. The Indonesian ag carrier Garuda Indonesia provided direct international ight services between the city and Singapore and Kuala Lumpur, Malaysia. However, the airline suspended international routes in November 2006 because of natural disasters.
In 2008 AirAsia, Malaysia Airlines and Garuda Indonesia resumed ight services between Yogyakarta and Kuala Lumpur, but Garuda Indonesia and Malaysia Airlines ceased their operations in 2009 and 2011 respectively. Current international routes between the city and Singapore and Kuala Lumpur are operated by only one airline, AirAsia.
Adisucipto Airport is Yogyakarta Special Administration Province’s only air infrastructure. It is located in Sleman Regency, 6 km north-east of the city centre, on the way to the Prambanan temple site. Yogyakarta Airport is the third busiest on Java Island after Jakarta Soekarno Hatta and Surabaya Juanda airports and is ranked in sixth position in Indonesia in terms of total passenger numbers after Jakarta, Surabaya, Bali, Medan and Makassar.
The airport has a single runway measuring 2,200 m by 45 m. Adisucipto International Airport received close to 5 million passengers in 2012, an increase of 16.4% over 2011, however congestion is worsening year after year due to the increasing inability to cope with a further expansion of the runway or the terminal. A previous plan to expand the air terminal has so far failed to materialise. The military status is an additional dif culty adding to the physical constraint in the expansion of the airport.
The theoretical capacity of Adisucipto International Airport is set at 1.5 million passengers, however the current accommodated traf c is in excess of 5 million passengers annually. By 2015, Yogyakarta airport’s traf c is likely to pass the 6 million passenger mark and could reach 9 to 10 million passengers by the end of the decade.
Yogyakarta also accepted the challenge to simplify visa issuance processes in order to make it easier for international tourists to visit the city. Since, changing the visa policy is a national issue and can only be approved by the Ministry of Foreign Affairs it therefore lies beyond the jurisdiction http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The cultural appeal of Yogyakarta could be further strengthened internationally by increased air connectivity. However even now, the airport’s infrastructure is currently somewhat behind what is needed to accommodate the expected strong future demand.
Figure 2.12 Passenger traffic at Central Java and Yogyakarta International Airports, 2008–2012 (million)
6
5.0 5 4.3
4 3.7 3.4 ● Yogyakarta 3.0 2.8 3 ■ Semarang 2.4 2.0 ▲ Solo 2 1.7 1.4 1.4 1.2 1.0 1 0.7 0.8
0 2008 2009 2010 2011 2012
Note: Graph represents rounded figures. Source: Adiscipto International Airport (n.d.), Annual Report 2012 (online), available: www.angkasapura1.co.id/detail/laporan-tahunan/laporan-tahunan-2012 (04-08-2014).
With only one single runway, and one that cannot be used to its total length due to the presence of a nearby hill, the airport has no scope for further expansion. An alternative gateway could have been the Solo International Airport, but, the drive to the airport involves an extremely crowded highway linking Yogyakarta to Semarang via Solo. It takes on average, more than two hours to cover the 60 km distance. The airport operator Airports State Company Angkasa Pura 1 is planning to build a new airport in Yogyakarta, because Adisutjipto International Airport cannot accommodate surging passenger traf c, a senior of cial said in Jakarta recently.
Since 2010, Airports State Company Angkasa Pura 1 (AP 1), which manages Yogyakarta, Solo and Semarang airports in Central Java, has been looking to relocate the airport to a new site. A feasibility study – conducted by a Hyderabad-based company, GVK Power and Infrastructure, which operates Bangalore and the new Mumbai Passenger terminals in India – was completed in mid-2011 with a master plan still waiting to be approved by the Transportation Ministry.
The new airport could have an initial capacity of 10 million passengers and two runways on 700 hectares of land. If approved, it will be located in Kulonprogo Regency, south-west of Yogyakarta.
http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Work on the new facility started in the middle of 2013 with a potential opening date of 2016. Over 75% of the land necessary to build the green eld airport has already been acquired. The airport would be linked to Yogyakarta by a dedicated rail link. According to Airports State Company Angkasa Pura 1 (AP1) management, a new city would be developed around the future airport while the train station would offer complete inter-modality by being connected to most cities on Java Island, helping to expand the airport’s catchment area.
In March 2014 Yogyakarta became linked to 14 scheduled destinations – Palembang in South Sumatra was added in January 2014 – with an available monthly capacity of 357,436 seats on more than 2,000 monthly ights. Not surprisingly, Jakarta–Yogyakarta is the largest single market in seat capacity with a market share of 49.3% followed by Denpasar (12%) and Balikpapan on Borneo Island (7.5%). Between December 2013 and March 2014, the growth in capacity has been enormous, increasing by almost 25%. Capacity to Jakarta grew by over 27%, to Bali by 18% and to Bandung by an incredible 235%!
Low cost carriers currently dominate the market with Lion Air having the largest share in terms of available seats. With 173,136 seats available in March 2014 on Lion Air and Wings Air, the group has a seat share of 48.4%, far ahead of the AirAsia Group (13.9%) and the Tigerair Group (6.2%). Indonesian national carrier Garuda Indonesia and its af liate Citilink together have a total market share of 19.7% in Yogyakarta. In March 2014 budget carriers are offering a total capacity of 271,536 seats, equivalent to a market share of 76%.
Table 2.22 Market share of seats in Yogyakarta by carrier, March 2014 (%) Airline Market share (%)
Lion Airlines 45.3
Garuda Indonesia 18.3
Indonesia AirAsia 10.8
Sriwijaya Air 6.0
Mandala Airlines 4.7
Air Asia 3.1
Wings 3.1
Batik Air 2.6
Merpati 2.6
Tigerair 1.6
Citilink 1.4
Silkair 0.5
Source: Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
International connections remain extremely limited with only two cities served on a regular basis – Singapore and Kuala Lumpur – and as of March 2014, only four carriers were serving those destinations on an international basis. Indonesia AirAsia has a complete monopoly on services to Kuala Lumpur – Malaysia Airlines (MAS) used to y the route in 2008 but withdrew in 2011 – while 76 Air Connectivity and its Impact on Tourism in Asia and the Paci c
three airlines share capacity on the Yogyakarta–Singapore route. Indonesia AirAsia and Tigerair offer almost the same seat capacity with 5,549 and 5,580 seats per month respectively, while newcomer Silk Air has 1,859 seats on a monthly basis. AirAsia Bhd has the largest international seat capacity at 11,160.
Table 2.23 Seat capacity to and from Yogyakarta, December 2013 and March 2014 From Destination December 2013 March 2014 Yogyakarta Province/country Flights/month Air seat Flights/month Air seat to capacity/month capacity/month
Balikpapan East Kalimantan 180 30,720 155 26,691
Bandung West Java 30 2,160 62 7,254
Banjarmasin South Kalimantan 60 12,540 62 12,958
Batam Riau Archipelago 30 6,270 62 12,958
Denpasar Bali 210 37,980 247 44,771
Jakarta Jakarta Capital 780 138,660 992 176,173
Makassar South Sulawesi 60 10,410 62 10,881
Palembang South Sumatra n.a. n.a. 31 5,580
Pekanbaru Riau 60 11,670 62 12,059
Lombok West Nusa Tenggara 30 6,270 31 6,479
Surabaya East Java 150 12,870 155 13,206
Tarakan East Kalimantan 30 4,230 31 4,278
Kuala Lumpur Malaysia 60 10,800 62 11,160
Singapore Singapore 30 5,400 75 12,988
Total 1,710 289,980 2,089 357,436
Source: Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Opportunities related to international connections and domestic flights
Two decades ago Yogyakarta was only connected to six cities: Jakarta, Surabaya, Denpasar, Bandung, Balikpapan and Kuala Lumpur. Most international ights had to use Solo International Airport, of cially the only international gateway to Central Java. Decentralisation brought empowerment to the region and Yogyakarta succeeded in opening its airport to international ights.
Yogyakarta has so far failed to attract new destinations besides the usual international connections http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
With its wealth of cultural attractions, Yogyakarta is a must-see destination for any traveller interested in spiritual, religious, historical and cultural tourism. Despite this unique positioning in Indonesia, no airline has so far seized the opportunity to further establish connections.
Although purchasing power per capita remains relatively low in Yogyakarta, compared with Jakarta, Bandung or Surabaya, the presence of students and of an emerging middle-class should generate a growing share of outbound travellers.
To date, travellers interested in visiting Yogyakarta must transfer in Kuala Lumpur, Singapore, Jakarta or eventually Bali and Surabaya. Although the degree of acceptance for a transfer is higher for intercontinental travellers, it appears to be less tolerated by regional travellers. There is then an urgency to open routes to at least North-East Asia (Seoul; Hong Kong, China; or Guangzhou) and to Bangkok and potentially New Delhi or Mumbai – both India and Thailand being good source markets for religious and spiritual tourism to the Borobudur/Prambanan temples complex.
With connections to a dozen European cities, Bangkok is probably the city with the biggest potential for a viable route. Bangkok can act not only as a transfer gateway to Yogyakarta but could also generate important point-to-point traf c, both out of Indonesia and Thailand.
In the longer term, secondary hubs such as Bandar Sri Begawan in Brunei, Manila or Penang could offer further development potential.
As the ASEAN tourism strategy increasingly favours intra-connectivity within the coming ASEAN Economic Community, there have been discussions to link together major religious and historical ASEAN sites, especially the ones earmarked or listed as UNESCO World Heritage sites at the end of 2015. Discussions were conducted a few years ago with Cambodia for a Siem Reap– Yogyakarta route and although the prospective route looks attractive from a tourism point of view, its nancial and economic sustainability is in doubt. The best alternative will still be multiple choices for a transit gateway within ASEAN.
In Indonesia itself, there is certainly potential for a non-stop direct ight to Medan in North Sumatra Province. With 2.5 million inhabitants, Medan is Sumatra’s most populated city and is increasingly serving as an economic gateway to the entire island. In the longer term, there is the potential to connect Manado in North Sulawesi to Yogyakarta for a combined tourism product linking diving/ eco-tourism with culture/history.
Future air links will depend on Yogyakarta’s ability to expand its infrastructure. The new airport appears to be the solution for improved connectivity, as it will create new synergies for the Yogyakarta tourism authorities to open or strengthen regional markets such as Thailand, the Republic of Korea, Japan, China and India. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.24 Flying times showing potential opportunities in regional air connectivity Route Airline Stop-over Departure Arrival Total flying time
Bangkok Garuda Jakarta 02:10 pm 08:50 pm 6h40 –Yogyakarta Tigerair Singapore 09:05 am 05:30 pm 8h25
AirAsia Kuala Lumpur 09:25 am 04:50 pm 7h10
Hong Kong, China Garuda Jakarta 09:00 am 05:30 pm 9h30 –Yogyakarta Hong Kong Airlines/Garuda Denpasar 12:00 pm 07:45 pm 8h45
Note: Potential itinerary via various gateways for a trip starting on 1 March 2014. Sources: Travel booking websites Expedia.com, Tigerair.com and AirAsia.com.
2.4.4 Results and lessons learned
After the international airport opened in Yogyakarta City, the number of international tourists increased, and thus revenues from tourism also grew signigicantly. The number of Malaysian tourists in particular, arriving by air to the city directly from Kuala Lumpur has increased sharply. Currently, Malaysian tourists are ranked the third largest group of foreigners visiting the city. The establishment of the international airport has also brought a signi cant rise in the volume of exports by local companies.
Table 2.25 Tourist arrivals to Yogyakarta, 2003–2012 Year International tourists Domestic tourists Total of tourists Notes
2003 95,629 1,095,661 1,095,757
2004 103,401 1,076,268 1,179,669 International status
2005 103,488 967,449 1,070,937
2006 78,145 836,682 914,827 Earthquake
2007 103,224 1,146,197 1,249,421
2008 128,660 1,156,097 1,284,757
2009 139,492 1,286,565 1,426,057
2010 152,843 1,304,137 1,456,980
2011 169,565 1,438,129 1,607,694
2012 156,025 1,576,635 1,732,660
Note: Based on the numbers of tourists who stayed in formal accommodation. Source: Badan Pusat Statistik, Statistics Indonesia, Special Province of Yogyakarta (n.d.), Number of Accommodation, Rooms and Beds Available Hotels by Regency/City in Yogyakarta 2003–2012 (online), available: http://translate.google.com/translate?hl=id&langpair=id|en&u=http://yogyakarta.bps.go.id (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.13 Total number of passengers at Adisucipto International Airport, 2002–2011 (million)
5 4.29
4 3.69 3.37
2.79 3 2.60 2.44 2.56 2.56
2 1.48
0.92 1
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Note: Graph represents rounded figures. Source: Adiscipto International Airport (n.d.), Annual Report 2012 (online), available: www.angkasapura1.co.id/detail/laporan-tahunan/laporan-tahunan-2012 (04-08-2014).
The case of Yogyakarta presents two lessons: the importance of air connectivity as a tourism stimulant and the importance of effective negotiation and cooperation. As seen in the case above, an international airport provides a competitive advantage to a destination. It can attract more tourists by improving accessibility to a destination. However, building an international airport is a daunting task. It requires not only a great amount of investment but also cooperation from many relevant parties including airlines and community.
The government of Yogyakarta continually negotiated with the Air Force to gain the latter’s approval and cooperation in lifting Adisucipto Airport to an international level. Even after the airport opened however, the government still had to deal with, and elicit cooperation from airlines, travel agencies and many other institutions, in order to maintain international ight routes and operate the airport effectively. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.5 Japan: Kagoshima
Source: Tourism Promotion Organization for Asia Pacific Cities.
Kagoshima, the capital of Kagoshima Prefecture, is located in the southernmost of the Kyushu Island of Japan and has a population of approximately 600,000. Blessed with many tourist attractions, it has constantly evolved its tourism industry especially with the introduction of the Kyushu Shinkansen Bullet Train, which has greatly improved accessibility to the city.
The city boasts many attractions including Japan’s most active volcanoes, Sakurajima, the Japanese garden of Senganen, Siroyama Observatory, Ohara Festival, Summer Night Firework Festival, amongst others.
As a popular tourist destination, Kagoshima received a total of 9.555 million tourists in 2011, including 51,890 international tourists. Of these, approximately 3.261 million stayed one night or more in the city. In that same year, the city’s tourism sector saw a 7.7% growth in numbers and recorded revenue of about JPY 99 billion.
2.5.1 Key tourism issues
Currently, the city is carrying out twelve tourism-related projects including a village development project. It is enhancing its original tourist attractions in order to provide tourists with memorable and exciting experiences. It is also working to create an effective information channel for tourists http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Challenges for attracting international tourists to Kagoshima
Although Kagoshima is a famous destination visited by a large number of Japanese, it was not very popular among international tourists primarily because the accessibility to the city was not easy. There were only two international routes operating between Kagoshima and cities in other nations until 2012 – Seoul in the Republic of Korea and Shanghai in China. In addition, since the airlines operating those two routes had no competitors – each route being operated by one airline – the airfares were relatively expensive.
In order to attract more international tourists, Kagoshima conducted active tourism promotions targeting the Republic of Korea; China; Taiwan Province of China and Hong Kong, China. The city also conducted aggressive destination marketing in cooperation with tourism businesses including airlines and travel agencies. As a result, the Kagoshima–Taipei international route and the charter ight route between Kagoshima and Hong Kong, China; were newly opened in 2012.
2.5.2 Results and lessons learned
Due largely to the expansion of ight services and the city’s aggressive marketing, the number of international tourists has steadily increased. The number of Korean tourists who stayed more than a day in the city stood at about 5,000 in 1995, but the gure increased to 37,000 in 2010. Direct ights operating between the city and the Republic of Korea also helped the city sell more golf tour package products and attract Korean baseball teams for training during the winter months.
The Shanghai route has also helped the city in attracting Mainland tourists. The number of Chinese tourists who stayed more than one day in the city stood at about 1,700 in 2002, but rose to 7,800 in 2010. Travel agencies launched package tour products for Chinese tourists, which enabled them to enter Japan through the airport of Kagoshima and to leave through the airport of Fukuoka. As the products gained popularity among the Chinese people, the number staying at least one night in the city increased.
Cooperation between the local government and tourism businesses is perhaps more important than anything else in attracting more tourists. If these two groups had not cooperated, opening new ight routes and creating package products with different arrival and departure airports may not have succeeded.
Kagoshima was also well aware that it should do something special to maintain the stability of international ight occupancy rates. The city therefore encouraged Japanese tourists to use its airport to venture overseas. By encouraging not only inbound but also outbound tourists to use its airport, the city helped the airlines maintain their international ight loads, and therefore continue to operate the international routes. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.6 Japan: Osaka
Osaka: Japan’s new hub for leisure air connectivity?
Osaka is the third largest metropolitan area and metropolis in Japan, the city being well known as an economic engine not only for the Kansai region but also for the entire country. As such, Osaka is an important transportation centre, with rail networks, highways, seaports and air routes linking the metropolis to the rest of Japan and the world.
At the centre of the Kansai region, Osaka is an important outbound market to the rest of the world and at the same time one of the most important destinations for inbound tourism given that it is in the immediate vicinity of historical cities such as Kyoto and Nara. With its sophisticated lifestyle, Osaka is also an attractive urban destination and has been named as one of the greenest Asian cities in the Green City Index.
Despite these assets, Osaka suffered in recent years from a relative decline in its air connectivity while Tokyo airports were gaining ground. Of late however, Osaka has been somewhat of a pioneer in being one of the rst Japanese cities to give space to LCCs. This recent arrival of low cost carriers to Osaka is likely to reverse that declining trend in air connectivity.
2.6.1 General profile
Osaka is one of the most prosperous conurbations in Japan and is located in the Kansai region, south-west of the main island of Honshu. It is the largest city of the Keihanshin Metropolis Area, which comprises the three urban cities of Osaka, Kobe and Kyoto. It is often considered as second only to Tokyo, despite the fact it is only the third largest metropolis in the country, after Tokyo and Yokohama. It is located at the mouth of the Yodo River, west of Osaka Bay and has a surface area of 223 km2, the result of the extension of three successive municipal territories. The current Osaka municipality was created in 1889 and is headed by the Osaka City Council, which bene ts from large decision-making powers under the Local Autonomy Law.
Osaka has been at the forefront of the development of trade and industry. A well-known trading centre since the Edo period, starting at the beginning of the 17th century when the capital of Japan was relocated into Edo, (the future Tokyo) Osaka has taken over the role of the main distribution hub for goods, particularly agricultural products. It became known as “Japan’s kitchen”, because essential consumer goods such as rice were shipped from Osaka to the rest of Japan and even to overseas destinations. In the mid-19th century, the nation began to move out of isolation and Osaka turned into the centre of Japan’s industrialisation, earning the nickname of the “Manchester of the Orient”, during the Meiji era. Economic af uence helped Osaka develop its own particular style and a lively cultural life.
The city was also instrumental in the development of Japanese education. Schools established in http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The Kansai region is comparable to a major industrialised nation with a population of 22.5 million inhabitants and a Gross Regional Product of USD 860 billion.7 If it were independent, its nominal GDP would make Kansai the 13th largest world economy, just behind Australia and ahead of Turkey and Indonesia. Osaka Prefecture would be the 18th largest world economy by nominal GDP. Osaka City itself has a higher GDP than Singapore and would rank 21st in the world. In 2010, the Kansai region represented 15.8% of Japan’s total nominal GDP while occupying a mere 11.8% of Japan’s land area.8
Kansai is home to top global companies from the electrical equipment, chemical, food, pharmaceutical, and nance industries. Of the 68 Japanese companies on Fortune magazine’s 2011 list of top 500 companies by revenue, ten companies are based in the Kansai region and eight in Osaka City. Among the most famous companies based in Osaka are Panasonic, Sharp, and Sanyo.
Table 2.26 Major Fortune 500 companies based in Osaka and Kansai region, 2011 Rank in Company Global 500 Rank City Revenues Japan (USD million)
7 Panasonic 50 Osaka 101,491
10 Nippon Life Insurance 81 Osaka 78,571
24 Sumitomo Life Insurance 200 Osaka 42,832
25 Itochu 201 Osaka 42,612
37 Sharp 253 Osaka 35,283
41 Kansai Electric Power 295 Osaka 32,339
54 Maruhan 407 Kyoto 23,806
55 Sumitomo Electric Industries 409 Osaka 23,746
61 Kobe Steel 447 Kobe 21,700
67 Daiwa House Industry 495 Osaka 19,733
Note: Table represents rounded figures. Source: ‘Fortune 500 Top Global Companies in Japan’ (2011), CNN Money – A Time Warner Company (online), available: http://money.cnn.com/magazines/fortune/global500/2011/countries/Japan.html (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
7 Invest Osaka (2013), Advantages of Osaka (online), available: www.investosaka.jp/en/invest/ (04-08-2014). 8 Ibid. 84 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Figure 2.14 Gross regional product, by country/region, 2010 (USD billion)
Singapore 222.7
Osaka City 223.9
Hong Kong, China 224.5
Malaysia 237.8
Thailand 318.9
Osaka Prefecture 408.1
Taiwan Province of China 429.9
Indonesia 706.7
Turkey 734.4
Kansai 862.4
Australia 992.8
Republic of Korea 1,014.3
Mexico 1,034.8
Russian Federation 1,465.1
Canada 1,577.0
India 1,692.7
Brazil 2,089.8
France 2,559.8
Germany 3,309.5
Japan 5,458.9
China 5,878.4
United States of America 14,526.5
0 3,000 6,000 9,000 12,000 15,000
Source: Invest Osaka (2012) (online), available: www.investosaka.jp/en/invest/ (04-08-2014).
Osaka is also an important world nance centre. Osaka houses one of Japan’s most important http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Near to Osaka, Kobe is another important trading centre and was among the rst ports in the country to open to foreign merchants. Until the Great Hanshin Earthquake of 1995, which devastated the city, the Port of Kobe was Japan’s busiest port. In 2012 it was the fourth largest container port in Japan and the 49th largest in the world. In 2010, 236 foreign companies were present in the Kansai region, with Osaka welcoming 126 foreign companies. The region attracted 7.6% of all foreign companies present in Japan.
Population
The Osaka conurbation has 8.9 million inhabitants according to Japan’s of cial population data while Osaka City has a population of 2.7 million people.
While the Prefectural income per capita at factor cost was slightly below the national average for Osaka Prefecture in 2010 (1% below Japanese income per capita), Invest Osaka indicates that the GDP per capita in the city is approximately 10% higher than in Osaka Prefecture at USD 35,000.
Osaka and the Kansai region are one of the most prosperous areas in Asia, despite negative GDP growth due to a decade of Japanese economic stagnation.
Table 2.27 Osaka/Kansai total population and prefectural income per capita, 2005 and 2008–2010 Region Population Prefectural income per capita at factor cost
2012 JPY USD2 (× 1,000) (× 1,000)
2005 2008 2009 2010 2010
Japan 127,515 3,127 2,966 2,841 2,877 31,511
Tokyo 13,230 5,175 4,784 4,395 4,306 47,163
Aichi1 7,427 3,553 3,170 3,070 3,035 33,242
Mie 1,840 3,102 2,872 2,700 2,863 31,358
Shiga 1,415 3,374 3,176 3,111 3,269 35,805
Kyoto 2,625 2,954 2,793 2,699 2,726 29,858
Osaka 8,856 3,078 2,999 2,858 2,821 30,898
Hyogo1 5,571 2,916 2,807 2,654 2,687 29,430
Nara 1,390 2,775 2,588 2,404 2,486 27,229
Wakayama 988 2,695 2,563 2,411 2,548 27,908
Kansai 22,685 2,985 2,828 2,691 2,771 30,350
Hiroshima 2,848 3,190 3,008 2,800 2,850 31,215
http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Okinawa 1,409 2,066 2,009 2,039 2,025 22,180
1) Aichi is the Prefecture to Nagoya, Hyogo is the Prefecture to Kobe. 2) USD 1 = JPY 91.3, average value in 2010. Note: Grey areas represent all the Prefectures of the Kansai region. Source Statistics Japan (n.d.), Japan Statistical Yearbook 2013 (online), available: www.stat.go.jp/english/data/nenkan/ (04-08-2014). 86 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Environmentally friendly city
In the Economist Intelligence Unit Asian Green City Index, Osaka is praised as one of the most environmentally ef cient places to live, in Asia. From 22 cities surveyed, only six are above average (Hong Kong, China; Tokyo; Osaka; Yokohama; Seoul and Taipei) for their green credentials and one is “well above average” (Singapore).
Osaka performs best in the transport category, bene ting from the second-longest transport network in the Index. It generally performs well, ranking above average in the remaining seven environment categories. Particular strengths include a robust waste collection and sanitation infrastructure and some of the strongest water sustainability policies.
“Growth strategy hub” to revamp Osaka image
Osaka’s economy has lost out to competition since the 2000s. The ‘Growth Strategy Hub’ is the latest plan proposed by Osaka City to the national government aiming to strengthen the city’s hub function and take advantage of a series of privileges in infrastructure development provided in 2010 by the national government to strengthen economic growth.
Osaka City has been designated the Osaka Station District and the Yumeshima and Sakishima Districts as “Strategic Growth Special Zones,” in the hope that these districts will turn into the new engine of economic growth for the region and also for the Japanese archipelago. Policy measures for “Strategic Growth Special Zones” include deregulated laws and preferential taxation rates.
The aim is to make Osaka City the heart of a new “knowledge-based industry creation centre” (Osaka wants to be perceived as the ‘Japan Knowledge-Capital’) developed to accommodate next generation industries, integrating cutting-edge knowledge in human resources, technologies, information and intellectual property. The ambition to turn Osaka into a ‘Knowledge-Capital’ is proceeding with concerted efforts being made to create and integrate new industries, technologies and cultures.
The ‘Knowledge-Capital’ is already taking shape. In 2013 the revamped Osaka City Station was opened in an area designated as “Grand Front Osaka”, some 2.5 million passengers a day-pass through the district.
The Yumeshima Island District will be home to environmental and energy-related industries. Across Yumeshima Island, Osaka is developing its third “Strategic Growth Special Zone” since 2010. “Sakishima Cosmosquare District” is a mixed-use area developed around a waterfront landscape and expansive green area.
Seen as a new business district for the whole of Asia on Osaka Bay, the Sakashima Island area has hotels, convention facilities, of ces for precision equipment, information and telecommunication http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.6.2 Tourism
For many foreigners Osaka has been eclipsed by the historical city of Kyoto. However, it remains an important destination for business travellers and is also a prime gateway to Japan as Kansai International Airport (KIX) is one of the top air gateways to the country. Although the city needs to undertake more promotion in overseas markets to strengthen its image, Osaka is already a popular destination for travellers from neighbouring countries.
According to the Osaka Government Tourism Bureau, Osaka received 2.1 million foreign visitors in 2012 and 2.6 million in 2013. Osaka’s goal is to attract 4.5 million foreign visitors by 2016, and 6.5 million by 2020.
Data from Japan Tourism Marketing points to 1.8 million foreign arrivals, but these are only direct arrivals to Kansai international airport.
Table 2.28 Direct foreign arrivals by air to KIX, Osaka, 2009–2012 Year Total foreign arrivals
2009 1,349,099
2010 1,745,355
2011 1,338,783
2012 1,791,646
Source: Japan Tourism Marketing (2009–2013), Tokyo, limited data (online), available: www.tourism.jp/ (04-08-2014).
City of entertainment
The city government is now repositioning Osaka into an entertainment destination, which could perfectly complement the more traditional cultural oriented destinations of Kyoto and Nara.
Interactive experiences will include the promotion of festivals such as the brand new Osaka Pop International Cool Japan Awards, scheduled to take place in March, and the International Jazz Day, a ve-day series of concerts and workshops in April. The Osaka Pop International Cool Japan Awards could become a major event around the world for any J-Pop fans as it includes events around manga, anime, food, music and other Japanese cultural pop icons. Thematic walking tours emphasise Osaka’s unique gastronomy. Another venture “Osaka, The Museum” project, operated by citizens of the city, also links major cultural and iconic monuments and areas which de ne Osaka’s identity.
According to the “Consumption Trend Survey for Foreigners Visiting Japan” conducted by the Japan Tourism Agency in 2012 with a sample of 28,903 respondents, Kansai International Airport http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.15 Market share of foreign arrivals to KIX by country of residence, 2012 (%)
China 27.8
Malaysia 27.1
Thailand 24.0
Republic of Korea 22.4
Taiwan Province of China 22.2
Hong Kong, China 19.6
Germany 14.6
India 14.3
Australia 13.1
Singapore 11.1
United States of America 11.0
France 8.2
United Kingdom 6.0
Canada 4.0
Russian Federation 0.7
Others 3.5
0 5 10 15 20 25 30
Source: Japan Ministry of Land, Infrastructure, Transport and Tourism, Japan Tourism Agency (JTM) (2013/2014), Consumption Trend Survey for Foreigners Visiting Japan 2012 (online), available: www.mlit.go.jp/kankocho/en/siryou/toukei/syouhityousa.html (04-08-2014).
Next step: a casino?
Japan is considering to build the country’s rst casino resort depending on parliamentary approval, and Osaka will possibly be the venue for this venture. If gaming is allowed, Osaka aims to become a major destination for casino-lovers, in its bid to be turned into Japan’s entertainment capital.
In January 2014 the Bloomberg News Agency reported that discussions have already been held between the Osaka government and casino operators Caesars and Genting on plans for a JPY 500 billion (USD 4.8 billion) casino resort. Discussions will also be held with MGM. The future gaming complex would be built on reclaimed land on Yumeshima Island on Osaka Bay, just 2 km http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
According to experts, a resort could potentially reap annual gross gaming revenue of as much as USD 5 billion. The resort should be ready before the Tokyo Olympics of 2020. Union Gaming Group estimates Japan could turn into the world’s second-largest gaming hub with USD 10 billion in annual revenue. Case study – Japan: Osaka 89
The opportunity to play host to a casino resort would certainly be a major catalyst to tourism development for Osaka. It would also help boost air transport from the region to all Kansai located airports (Kansai International Airport, Itami in Osaka and Kobe).
Air connectivity would then become of utmost importance to turn the entertainment area on Osaka Bay into an attractive new entertainment and leisure destination in North-East Asia with the possible development of new air routes to Asia’s secondary destinations.
Table 2.29 Kansai foreign travellers for all regions visited, 2012 Region Share (%)
Kanto 59.2
Kansai 32.6
Chubu 13.9
Kyushu 11.0
Hokkaido 7.8
Hokuriku-Shinetsu 4.7
Chugoku 4.0
Okinawa 3.1
Tohoku 2.6
Shikoku 0.8
Note: Multiple answers possible for: Kanto, Tokyo and surroundings; Tohuku, Sendai and surroundings; Chubu, Nagoya and surroundings; Chugoku, Hiroshima and surroundings. Source: Japan Ministry of Land, Infrastructure, Transport and Tourism, Japan Tourism Agency (JTM) (2013/2014), Consumption Trend Survey for Foreigners Visiting Japan 2012 (online), available: www.mlit.go.jp/kankocho/en/siryou/toukei/syouhityousa.html (04-08-2014).
Table 2.30 Share of foreign visitors for selected Prefectures, 2012 Prefecture Share (%)
Tokyo 51.3
Osaka 24.0
Kyoto 17.3
Fukuoka 9.4
Hyogo (Kobe) 5.7
Nara 3.4
Hiroshima 3.1
Nagasaki 2.4
http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Source: Japan Ministry of Land, Infrastructure, Transport and Tourism, Japan Tourism Agency (JTM) (2013/2014), Consumption Trend Survey for Foreigners Visiting Japan 2012 (online), available: www.mlit.go.jp/kankocho/en/siryou/toukei/syouhityousa.html (04-08-2014). 90 Air Connectivity and its Impact on Tourism in Asia and the Paci c
2.6.3 Transportation
Located along Osaka Bay in a relatively central position on Honshu Island, Osaka is a natural transportation hub for the country. Over the past 20 years, gigantic infrastructure projects have been initiated with the ambition to turn Osaka into the leading Japanese gateway to the rest of Asia.
Osaka is less than three hours away by high-speed train (Shinkansen) from other large Japanese metropolises including Tokyo, Fukuoka, Hiroshima, Kumamoto and Nagoya. Regionally, Osaka is less than one hour away by train from Kobe, Kyoto, Nara and 90 minutes from Wakayama.
Shinkansen or ‘bullet trains’
Osaka is part of Japan’s High-Speed Train network, Shinkansen, which is the largest means of domestic transportation. The Tokaido Line was the rst high-speed rail line not only in Japan but also in the world when it opened in 1964, the year of the Tokyo Olympic Games. Osaka is the terminus station for the Tokaido Line which puts the Japanese capital only two and a half hours from Osaka via Nagoya and Kyoto. From 1964 to 2012, the Tokaido Shinkansen line alone has carried some 5.3 billion passengers on the 553 km long line.
The Tokaido Shinkansen is operated by Central Japan Railway Co., which offers up to 333 arrivals and departures between Tokyo and Osaka each day. This represents the equivalent of up to 13 trains per hour, each offering 16 cars and a capacity of 1,323 seats in each direction. Ridership increased from 61,000 per day in 1964 to 391,000 per day in 2012. In 2012, the Tokaido Shinkansen had a total ridership of 143 million. The service capacity of 320,000 was 11 times larger than the total number of air seats on the Tokyo–Osaka route in nancial year 2012/2013.9
Opened between 1972 and 1975, the Sanyo Line links Shin-Osaka Station to Hakata-ku, a district of Fukuoka, on Kyushu Island in the south. The line stops in important cities such as Kobe and Hiroshima on its way to Fukuoka. In 2012 the 644 km long Sanyo Shinkansen lines transported 64.34 million passengers. It represents 40% of the revenues of JR West, the train line operator.
Osaka Umeda Station, linked with Osaka City Station, is located in the middle of the city. According to a Japanese newspaper, it seems that the complex is among the top 10 busiest stations in the world with a ridership of approximately 820 million travellers each year. It is estimated that over 90 million passengers a year also use Osaka Namba Station while some 70 million pass through Shin Osaka, which serves as the main Shinkansen rail station in the city. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
9 Central Japan Railway Company (2012), Annual Report Financial Year ended March 31, 2012 (online), available: http://english.jrcentral.co.jp/company/ir/annualreport/_pdf/annualreport2012.pdf (04-08-2014). Case study – Japan: Osaka 91
Figure 2.16 Osaka high-speed train Shinkansen connections, winter 2013/2014
Source: Osaka Convention and Tourism Bureau (n.d.), Transportation map 2014 (online), available: www.osaka-info.jp/en/access/ (04-08-2014).
Air transport
Air transport also plays an important role for both passenger and goods movements, not only internationally but also domestically. Domestic traf c has been stagnant for over a decade but still generates over 85 million passengers a year. This high number on domestic routes is unusual for a country, which offers excellent land connection alternatives such as an ef cient road and rail network. Total roads in Japan stretch over 1.22 million km including over 7,900 km of national expressways. Train services are second to none with over 27,268 km of rail.
However, some of the world’s busiest air routes are to be found within Japan’s domestic air services. From the top 10 busiest air routes in passenger numbers, Tokyo–Sapporo is the second busiest route with 8.21 million passengers recorded in 2012, while Tokyo–Osaka is the 6th busiest with 6.74 million passengers, followed by Tokyo–Fukuoka (6.64 million) and Tokyo–Okinawa (4.58 million passengers). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.31 Passenger traffic on Japanese air carriers, domestic and international, 2002–2012 Year Domestic International
Passenger carried Load factor Passenger carried Load factor (× 1,000) (%) (× 1,000) (%)
2002 96,663 64.9 17,891 69.4
2003 95,487 62.8 14,454 65.5
2004 93,739 63.7 18,274 70.6
2005 94,490 64.3 17,676 70.1
2006 96,971 64.4 17,410 72.0
2007 94,849 64.2 17,681 71.9
2008 90,662 64.1 15,886 66.3
2009 83,872 61.7 15,400 72.6
2010 82,211 63.7 13,707 74.5
2011 79,052 63.1 12,594 71.9
2012 85,996 63.7 14,209 75.6
Source: Japan Ministry of Land, Infrastructure, Transport and Tourism (n.d.),Travel Statistics 2012 (online), available: www.mlit.go.jp/index_e.html (04-08-2014).
Figure 2.17 Market share of international passenger traffic through Japanese airports, FY 2012 (%)
Others (12)
Nagoya Chubu (7)
Tokyo HND/NRT (62) Osaka KIX (19)
Source: Japan Ministry of Land, Infrastructure, Transport and Tourism (n.d.), Travel Statistics 2012 (online), available: www.mlit.go.jp/index_e.html (04-08-2014).
International passenger traf c reached 60.69 million passengers at all Japanese airports in nancial year 2012. The largest number of international passengers ies out of both the airports of Haneda and Narita (37.74 million in FY 2012) in Tokyo. Osaka Kansai is the country’s second largest international airport with 11.43 million international passengers recorded in nancial year 2012, almost three times as many as Nagoya Chubu International Airport. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Osaka Itami airport was converted into the city’s main international airport after World War II with the rst international ight launched to Hong Kong in 1960. The airport remained the main gateway to the Kansai region until 1994, when the opening of the new Kansai International airport took place. Early planning for the construction of a new airport in Osaka dated back to 1968. Case study – Japan: Osaka 93
However, it was only in 1985 that the general construction plan was approved for the Kansai International Airport Company, Ltd. (KIAC). The new airport was inaugurated in September 1994 with a 24-hour operational 3,500 m long runway. In 2007, a second 4,000 m long runway was inaugurated followed by a dedicated terminal for Low Cost Carriers in 2012.
Also in 2012, both Itami and Kansai International Airports were regrouped into a single managing company, the New Kansai International Airport Company, Ltd.
Figure 2.18 Passenger traffic through Osaka airports, FY 2003–2012 (million)
40 34.8 35 32.6 30.0 28.1 30 26.8 Osaka total
25
18.9 18.5 20 16.8 13.7 14.2 13.9 KIX total 15 13.1 16.3 Itami 14.2 12.9 10 8.5 KIX International 11.1 11.4 10.4 10.1 5 KIX domestic 5.2 5.3 5.4 3.8 3.7 0 2003 2005 2010 2011 2012
Note: Graph represents rounded figures. Source: New Kansai International Airport Company, Ltd. (n.d.), Statistics 2012 (online), available: www.nkiac.co.jp/en/data/index.html (04-08-2014).
Reversing declines in air traffic
Kansai airport was designed to become a major hub for Japan, especially as it was the rst air facility in Japan to be operational 24 hours a day. So far, the aim of becoming the alternative hub to Tokyo airports has not been achieved. Passenger traf c has been declining although the Kansai region remains the second largest air transport market in Japan with a total output of 32.16 million passengers in nancial year 2012 – including 29.95 million for Osaka airports and 2.21 million for Kobe airport. In nancial year 2005, the airports of Itami and Kansai together generated a total of 34.85 million passengers.
The reason for the strong decline in Osaka is the economic stagnation in Japan with weak growth in total outbound passengers over the past decade (+9.85% from 2004 to 2012 – 2003 being not representative as outbound travel declined by 19.5% due to the SARS epidemic). In 2012, total Japanese outbound numbers reached 18.5 million travellers compared with 16.8 million in 2004 while estimates for 2013 suggest an outbound volume of around 17.5 million. Total outbound http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Japan is one of the few countries in the world that recorded negative growth in domestic passenger output in a decade, down by 9.9% between 2003 and 2012. During the same period, 94 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Osaka airports experienced a drop of 22.9% in total domestic passengers, down from 24.04 to 18.52 million. If Kobe airport is included in 2012 results – the airport opened only in 2006 – the drop in total passengers still stands at around 16.1%.
Besides economic stagnation in Japan, Japanese air transport suffered from the SARS epidemic of 2003, which depressed demand for travel. In 2011 the massive earthquake/tsunami also played havoc with passenger numbers.
Table 2.32 Outbound departures from Osaka (KIX), 2009–2012 Year Total outbound departures from KIX Share of total outbound departures from Japan (%)
2009 3,184,158 20.6
2010 3,349,189 20.1
2011 3,388,890 19.9
2012 3,622,965 19.6
Source: Japan Ministry of Land, Infrastructure, Transport and Tourism, Japan Tourism Agency (JTM) (2013/2014), Consumption Trend Survey for Foreigners Visiting Japan 2012 (online), available: www.mlit.go.jp/kankocho/en/siryou/toukei/syouhityousa.html (04-08-2014).
Osaka airports also face increased competition from other airports, such as the new Chubu Centrair airport in Nagoya, as well as renewed strength from both Narita and Haneda airports. The reopening of Haneda airport to overseas traf c has resulted in additional capacity from both Japanese and foreign carriers to Tokyo city airport. Haneda offers a higher number of domestic connections than Kansai or Itami put together. In a bid to rationalise their costs, both Japanese giant air carriers All Nippon Airways and JAL relocated many international connections to Tokyo during the past three years.
This movement is also complicated by the fact that passenger traf c in Osaka is split between Itami and Kansai, which generates a negative impact on the development of proper hub activity in the Kansai metropolis. Kansai International Airport also experienced a drop in international connections as Narita lowered its landing fees for aircraft by an average of 20% below those of Kansai airport. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.19 Network out of Osaka (KIX) by seat capacity and region/country, April 2014
Europe China Japan United States (52,438 seats) (203,488 seats) (365,010 seats) of America Amsterdam Beijing Fukuoka (47,933 seats) Francfort Dalian Osaka Hakodate Honolulu Helsinki South-East Asia Fuzhou Ishigaki Los Angeles Istambul (121,884 seats) Guangzhou Kagoshima New York Paris Hangzhou Matsuyama Bangkok San Francisco Rome Harbin Nagasaki Denpasar Hong Kong Republic of Okinawa Hanoi Jinan Korea Sapporo Ho Chi Minh City Kunming (143,830 seats) Sendai Kuala Lumpur Macao Busan Tokyo Manila Middle East Nanjing Jeju Singapore (18,840 seats) Qingdao Seoul Pacific Doha Shanghai (33,264 seats) Dubai Shenyang Taiwan Province Cairns Shenzhen of China Gold Coast India Tianjin (102,957 seats) Guam (7,826 seats) Wuxi Kaoshiung Noumea Delhi Yantai Taichung Saipan Mumbai Zhengzhou Taipei Sydney
Source: Adapted from Flightmap Innovata (January 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
In nancial year 2012, 63 carriers operated ights to and from Kansai International Airport, serving some 60 cities in 25 countries and regions around the world, including nine domestic cities. In addition to the main terminal, on 28 October 2012 Terminal 2 at Kansai International Airport came into service as the rst low cost carrier terminal in Japan.
Some 55 destinations, domestic and international, are linked in the 2014 summer timetable to Osaka Kansai international airport. The number is slightly down on previous years ( ights have, for example, been suspended to London), indicating that there is still room to improve air connectivity both on long-haul and short-haul services.
In the timetable for Summer 2014, there are no scheduled ights from Kansai to London or to Canada, as well as potentially to other points in the United States of America (Atlanta, Chicago or Houston). The Airport management is now looking to ll these gaps. In Europe, Moscow could also be welcomed as an addition to the Osaka network.
There are a number of other gaps remaining in the Osaka network to South-East Asia, such as Cebu, Phnom Penh, Phuket and Yangon while more cities could be connected from China, the Republic of Korea and potentially, Siberia. For North-East Asia, the opening of casinos could foster a new era of growth in inbound travellers. All these destinations could easily be served by low cost carriers, turning Osaka into a very competitive destination. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
A need for flights between western China and Osaka
Although Osaka is linked by an impressive number of destinations in China (19 with Hong Kong, China; and Macao, China), there is still the potential to link more Chinese cities: Osaka lacks 96 Air Connectivity and its Impact on Tourism in Asia and the Paci c
connections to Sichuan and Guangxi–Guilin, while there is also tourist and business potential for air links to Wuhan and Xian. Sanya on Hainan Island could turn into a resort destination for Osaka travellers, all depending on the substantial improvement in political relations between Japan and China.
Figure 2.20 Current and potential connections between Osaka and China, April 2014
Note: Potential routes marked in orange. Source: Flightmaps Innovata. Design: Luc Citrinot.
Capitalising on the low cost factor
Osaka–Kansai was the rst airport to embrace the low cost revolution in Japan. It was, for example, the rst gateway in the country to welcome low cost carriers with Cebu Paci c (Philippines) being among the rst to land at the airport from Manila in 2008. Since then, low cost traf c has developed steadily with eight budget/hybrid carriers currently ying to Kansai airport. Among the Japanese budget operators are Peach, the low cost af liate of All Nippon Airways, Jetstar Japan and Star yer, a hybrid carrier, previously known as Kobe Airlines.
The new Vanilla Air, formerly AirAsia Japan, does not plan to y to Kansai while independent low- cost carrier AirDo ies to Kobe Airport. International airlines include AirAsia X (Malaysia), Air Busan and Jeju Air (Republic of Korea), Cebu Paci c (Philippines), Jetstar Air (Australia) and Jetstar Asia (Singapore). Together, they y to 18 destinations offering a capacity of 280,000 seats. Peach is the largest LCC operator with a market share of 57% followed by the Jetstar Group (Jetstar Air/Jetstar http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.33 Available seat capacity and flight frequency by LCC, April 2014 Low cost carrier Flights Available seats
Air Busan 60 9,150
AirAsia X 30 10,830
Cebu Pacific 30 5,220
Jeju Air 30 5,670
Jetstar Air 37 11,211
Jetstar Asia 140 25,200
Jetstar Japan 210 32,970
Peach Aviation 887 159,660
Star Flyer 270 40,500
Total 1,604 280,431
Source: Flightmaps Innovata (January 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
In an interview given in December 2013 to the Japan Times, New Kansai International Airport Company President Keiichi Ando said that the airport was looking at luring China’s Spring Airlines, Singapore Airlines’ Scoot and Indonesian Lion Air. With the lifting of visas for Thais on a 15- day stay basis, the future Thai AirAsia X, or Nok Scoot, a joint venture between Nok Air and Scoot, seem to be potential candidates. There is also potential for a low cost carrier out of Taiwan Province of China.
As previously mentioned, in October 2012, Kansai airport became the second airport to open a dedicated low cost carrier terminal. The terminal is a very simple single-story structure. Offering 30,000 m2, the terminal was built at a record cost of USD 106 million with nine positions that passengers can access by foot. The low cost carrier terminal is on average 40% cheaper: international passengers pay only an airport charge of JPY 1,500 (USD 14) compared with JPY 2,650 (USD 25) per international passenger in the main terminal. The low cost carrier terminal is used exclusively by Osaka-based Peach Aviation.
The New Kansai International Airport Company is looking to boost the total number of international ights offered by LCCs to reach a relative share of 25% in 2014. For April 2014, the share in available seats already looks to be at 25% out of a total seat capacity of 1.1 million. LCC share has improved by 10 percentage points between 2012 and 2014.
A new LCC terminal will be built to accommodate all current and future budget carriers by the second half of 2016. This facility will be able to accommodate six wide-body or 11 narrow-body aircraft. Together with adjacent Terminal 2, there will be a total of 20 positions for narrow-body aircraft and a capacity to handle 8 million passengers per year, twice the capacity of Terminal 2 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
LCCs have helped to turn around domestic air transport. It seems LCCs have been able to lure back passengers currently travelling by high-speed trains, forcing railway companies to launch discounts on routes where LCCs also operate. 98 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Table 2.34 Air capacity for top destinations served by LCCs, April 2014 Destination Total flights Total available seats
Tokyo 360 57,540
Fukuoka 270 44,310
Sapporo 180 31,710
Seoul 120 21,870
Taipei 114 20,520
Okinawa 115 20,010
Singapore 70 12,600
Kuala Lumpur 30 10,830
Hong Kong, China 60 10,800
Kagoshima 60 10,800
Sendai 60 10,800
Source: Flightmaps Innovata (January 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
A bright future in Japan
Better air connectivity through innovative and attractive programmes towards airlines and a strong marketing strategy will rmly establish Osaka as Japan’s entertainment capital – especially with the potential of casinos. All the elements are now in place for Osaka to develop a new inbound and outbound travel dynamic. Much is expected to change within the next ve years, with Osaka likely to emerge as one of the new tourism capitals of the Japanese archipelago, especially by complimenting the Kansai region and historical cities of Kyoto and Nara, as well as the port city of Kobe. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.7 Malaysia: Kota Bharu
Kota Bharu is located in the north-east part of Peninsular Malaysia and close to the Thai border. As a popular tourist destination, the city has a number of cultural tourist attractions including many mosques, various museums, unique architecture of the old royal palaces, traditional markets, and former royal buildings.
It received 5.2 million visitors in 2012 with double-digit growth of 30% from a year earlier, and earned tourism revenue of MYR 2.3 billion.
The destination marketing of Kota Bharu was jointly conducted by the government organization Tourism Malaysia Kelantan and non-government organizations, Kelantan Tourist Association and Kelantan Tourist Guide Association.
2.7.1 Key tourism issues
One of the main tourism issues in Kota Bharu concerns the promotion of Sultan Ismail Pertra Airport to an international airport. In order to properly handle an increasing number of passengers, the airport was expanded in 2008 and ight services increased. However, the airport handled only domestic ights.
Kota Bharu has set a goal to receive 6 million tourists in 2014 in line with the Visit Malaysia Year 2014 campaign. In order to achieve the goal, the city is carrying out various projects including the cleanliness project meant to keep all the tourist attractions in clean conditions.
Challenges for city tourism development
One of major challenges for Kota Bharu’s tourism development is to promote the current domestic airport to an international airport. Sultan Ismail Pertra Airport has a 12,000 square meter airport terminal with three aircraft stands and three aerobridges that can handle 1.4 million passengers. In 2012, the airport handled 1.132 million passengers with 64,114 aircraft movements, becoming the busiest airport in the east coast and the third nationwide in terms on the total of aircraft movements (take-off and landing).
The airport has emerged as a new hub to major airlines like AirAisa and Fire y. Currently, the airport has routes only to domestic cities – Kuala Lumpur, Penang, Johore Bahru, Kuching and Kota Kinabalu. Therefore, aggressive efforts at both national and local levels have been made to turn the airport into an international one.
Finally, the Malaysia Federal Government and Malaysia airports have decided to promote the airport to an international level in 2014. The rst international direct ight route of the airport will http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.7.2 Results and lessons learned
Since the airport of cially opened in 2002, the number of passengers has steadily increased over the past ten years. The city received around 5.2 million visitors in 2012 and earned a total of MYR 2.3 billion in tourism revenue.
Table 2.35 Number of flights and passengers at Sultan Ismail Pertra Airport, 2003–2012 Year Flights Passengers
2003 10,010 589,950
2004 11,869 639,871
2005 11,194 635,397
2006 38,352 678,306
2007 58,996 759,316
2008 57,102 836,060
2009 74,863 1,003,162
2010 75,906 1,047,755
2011 64,114 1,132,345
2012 50,991 1,259,205
Source: Malaysia Airport: Sultan Ismail Petra Airport (online), available: www.malaysiaairports.com.my/index.php (22-02-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.8 Malaysia: Kuala Lumpur
By turning Kuala Lumpur into a global low cost airline hub, the Malaysian authorities have helped establish Malaysia’s capital city as a major Asian urban destination in regional markets. It has become a key gateway for international travellers to the rest of Asia and a focal point for outbound travel by Malaysian citizens.
2.8.1 General profile
Malaysia’s capital city Kuala Lumpur has emerged over the past 25 years as a major urban centre in South-East Asia, competing with Singapore in the south and Bangkok in the north. The Malaysian government’s ambition to establish Kuala Lumpur as an important business centre in South-East Asia, as well as a sophisticated metropolis has paid off.
Kuala Lumpur is now one of the most visited cities in the world and in Asia. In the Mastercard Global Destination Cities Index released in the 2nd quarter of 2013, Kuala Lumpur ranked number eight worldwide and number three in Asia with 9.2 million international visits. Measured in international overnight visitors spending, Kuala Lumpur ranked 13 worldwide and sixth in Asia with receipts valued at USD 7.8 billion.
The Greater Kuala Lumpur/Klang Valley is the largest conurbation in Malaysia with a total population of 5.7 million inhabitants living in ten different municipalities. Kuala Lumpur itself has a population of 1.7 million inhabitants in an area of 243 km2.10 Population growth has been rapid over the decade: Kuala Lumpur city had only 1.29 million inhabitants in 2000.
In 2010, the population of Greater Kuala Lumpur/Klang Valley was approximately 6.1 million, representing 21.5% of Malaysia’s total population. The conurbation contributed about MYR 263 billion (or USD 83.8 billion at exchange rates current in December 2010) to the nation’s GDP. This translates to 30% of the nation’s GDP.
Greater Kuala Lumpur/Klang Valley is indeed the engine of the nation’s economic growth and hence has been designated as a New Key Economic Area with the goal to transform Greater Kuala Lumpur/Klang Valley into one of the top-20 most liveable metropolises globally and within the top 20 in terms of economic growth.
Economic strength
As the country’s key economic centre, Kuala Lumpur regional GDP per capita is the highest in Malaysia. In 2010, it represented USD 18,218 per capita compared with a Malaysian average of USD 7,998. GDP per capita in Kuala Lumpur has grown more rapidly than in the rest of Malaysia: it was up by 125.3% from 2000 to 2010 compared with 72.7% for the whole of Malaysia during http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
10 Malaysia Ministry of Federal Territories (2010) (online), available: www.kwp.gov.my/index.php?option=com_content&view=article&id=101&Itemid=368&lang=en (04-08-2014). 102 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Over the years, Malaysia has grown into a nation with a large middle class. Today, 60% of the Malaysian population can claim to belong to the middle class, with 20% being considered as upper middle class or above. Together, their income share of all Malaysian households reached 85.2% in 2012 while the 20% belonging to the upper middle class accounted for a 48.6% income share. The income share of the middle class was slightly lower in Malaysia’s urban areas, at 84.4%.
Kuala Lumpur’s wealth comes from its concentration of nancial and political institutions although most government ministries moved a decade ago to the new administrative capital of Putrajaya, 30 km south of Kuala Lumpur. The metropolitan area is home to the headquarters of many major Malaysian companies (Group AirAsia, Astro, Malaysia Airlines, Petronas, YTL Corp, among others), state of ces, nancial institutions (stock exchange, central bank and private banking institution Maybank), foreign embassies, chambers of commerce, as well as major medical and educational institutions.
According to the Global City Competitiveness Benchmarking Index from the Economist Intelligence Unit, Kuala Lumpur ranked 45th in overall competitiveness among the 120 cities evaluated. In Asia, Kuala Lumpur ranked 11th and in ASEAN, 2nd after Singapore.
Figure 2.21 Global City Competitiveness Benchmarking Index for Kuala Lumpur, 2012
Global appeal 18.1
Environment and natural hazards 79.2
Human capital 65.9
Social and cultural 57.5
Institutional effectiveness 57.1
Financial maturity 83.3
Physical capital 82.1
Economic strength 38.0
Global score 55.0
0 10 20 30 40 50 60 70 80 90
Note: Economist Intelligence Unit ranking, with 100 as a maximum. Source: Economist Intelligence Unit Limited (2013), Country Report Malaysia (online), available: http://country.eiu.com/Default.aspx?country=Malaysia (04-08-2014).
Although Kuala Lumpur is being praised for its nancial maturity, its physical capital and its good http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.8.2 Transportation and tourism
The city is also the transportation hub of Peninsular Malaysia (west Malaysia) with all rail lines and motorways converging into the capital. For air transport, the Kuala Lumpur International Airport (KLIA) is Malaysia’s intercontinental gateway.
With 25.03 million foreign travellers and a target of 32 million foreign arrivals by 2020, the travel and tourism industry is now Malaysia’s second largest revenue earner after manufacturing.
Tourism has turned into a major asset for the city. Following the 1997 Asian nancial crisis, the Malaysian government repositioned the country as a good price/quality alternative to more established destinations such as Bangkok or Singapore in South-East Asia, capitalising on shopping and the urban experience. Medical tourism, family tourism, post-graduate education – particularly towards Muslim travellers –, as well as art tourism have recently been added as niche activities to reinforce Kuala Lumpur’s appeal.
Kuala Lumpur welcomed 14.01 million tourists in commercial accommodation in 2012, an increase of 9.9% year on year. The gure includes 4.75 million domestic tourists, currently Kuala Lumpur’s fastest growing inbound market, up by 26.3% in 2012.
Table 2.36 Tourist arrivals at commercial accommodation, Kuala Lumpur, 2010–2012 Year Domestic Growth International Growth Total Growth (%) (%) (%)
2010 3,729,245 . . . 8,903,088 . . . 12,623,333 . . .
2011 3,760,325 0.8 8,990,338 1.0 12,750,663 1.0
2012 4,749,723 26.3 9,260,734 3.0 14,010,457 9.9
Source: Tourism Malaysia (n.d.), Facts and Figures 2013 (online), available: http://corporate.tourism.gov.my/research.asp?page=facts_figures (04-08-2014).
Air transport
Kuala Lumpur International Airport, which opened in 1998, is Malaysia’s main air gateway. The airport is located 57 km south of the city and 25 km away from Malaysia’s administrative capital Putrajaya and is linked by expressways and a high-speed train line to the city centre (travel time approximately 28 minutes).
Catchment area
The Kuala Lumpur International Airport primarily serves the Klang Valley, which encompasses http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
This catchment area is likely to grow further after completion of a high-speed rail link to the south of the country, linking Kuala Lumpur and KLIA to Malacca and Johor Bahru and further to Singapore. The opening date for the future train connection is envisioned for 2020.
Gateway for budget carriers
Over the past decade, the Kuala Lumpur International Airport has become rmly established as the largest hub for low-cost ights in South-East Asia and even in Asia, largely because of the success of the AirAsia Group.
The group includes ve carriers which currently serve the Kuala Lumpur International Airport: AirAsia Bhd – the original airline, AirAsia X, Indonesia AirAsia, Thai AirAsia and AirAsia Zest from the Philippines. In the short-term, newly established AirAsia India is likely to also serve Kuala Lumpur. Together, the AirAsia Group airlines offer a network of 77 destinations out of the Kuala Lumpur International Airport, including six intercontinental destinations (Australia and Saudi Arabia) served by AirAsia X.
Besides the AirAsia Group, six other low cost carriers y to the Kuala Lumpur International Airport: Cebu Paci c (Philippines), Jetstar Asia, Tiger Airways (Singapore) and its subsidiary Mandala Tiger Air (Indonesia), Lion Air (Indonesia) and its subsidiary Malindo Air, and PAL Express (Philippines).
With more than 18.5 million passengers in 2012 (17 million in 2011), the AirAsia Group had a market share of 46.6% at the Kuala Lumpur International Airport in 2012 (45.5% in 2011), while Malaysia Airlines had a market share of 31.9% with 12.7 million passengers in 2012.
Total LCC passenger market share reached 49% in 2012. In terms of air seat capacity, LCC market share reached 49.4% in 2013, up seven points in ve years. In 2013, low cost carriers in Kuala Lumpur passed the 50% mark in market share of total seat capacity.
Table 2.37 LCCs’ monthly seat capacity at KLIA, 2009–2013 2009 2010 2011 2012 2013
LCC seat capacity 782,471 888,838 992,139 1,096,721 1,304,816
Total market share (%) 41.6 44.0 44.3 46.9 49.4
Note: Data for June of each year. Source: Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
The strong development of low cost carriers has had a very positive effect on arrivals from neighbouring countries, particularly from ASEAN and Greater China. Although some countries including Thailand, India and Indonesia recorded slight decreases in total arrivals – mostly due http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.38 LCCs’ monthly seat capacity, June 2013 Low cost carrier Market share (%)
AirAsia Group 89.2
Lion Air Group 4.5
Tiger Air Group 2.5
Jetstar 2.4
Cebu Pacific 0.9
Others 0.5
Source: Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
New terminal will further boost low cost carrier attractiveness
Traf c from budget airlines will continue to grow at a faster pace than legacy carrier traf c. Kuala Lumpur International Airport has now embarked on a massive expansion project involving the construction of a brand new terminal exclusively dedicated to low cost airlines. KLIA 2 will be the world’s largest purpose-built terminal dedicated to low cost airlines.
With oor space of 257,000 m2, 68 contact stands, a shopping gallery, a fully automated baggage handling system, KLIA 2 will be one of the most sophisticated airports for budget travellers. Due to open by the middle of 2014, it will be able to serve up to 45 million passengers annually, 10 million more than KLIA’s main terminal building, used by legacy carriers. KLIA 2 will be linked by rail to KLIA 1, providing seamless connectivity for passengers. The new facility will replace the current low cost terminal, which was opened as a temporary facility in the cargo area, 10 km away from the main terminal. The low cost carrier terminal has a capacity of 15 million passengers a year.
Tourism grows with aviation
Tourism is considered a major asset for the Malaysian economy and features prominently in the government’s ve-year development plan. The shift to a systematic development of tourism came after Malaysia’s economic crisis of 1997–1998. Year 1999 was symbolically marked with the rebranding of Malaysia tourism under the slogan “Malaysia, Truly Asia” with promotional funds dedicated to tourism being tripled. Since 2001, Tourism Malaysia has received an average of USD 65 million a year, one of South-East Asia’s most proli c budgets from a government. In 2011 however, Malaysia Tourism funding was reduced to USD 50 million as part of the government drive to cut state spending.
None the less, as Malaysia is organising its third “Visit Malaysia Year” in 2014, the government has unlocked MYR 1.2 billion (USD 365 million) for marketing promotions, advertising and investment http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.22 Growth of international tourist arrivals and international passengers at Malaysian airports, 2003–2012 (million)
60 ■ Total outbound trips ● Total passengers 49.2 50 45.2 ▲ Total inbound arrivals 39.6 40 32.2 32.5 32.5 30.4 30.8 30.5 27.6 29.1 30 27.7 22.7 23.6 17.7 20.9 16.6 23.6 24.6 24.7 20 11.7 15.7 20.7 13.2 17.4 19.7 14.8 16.4 10 10.5 12.8
0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: Malaysia Airports Corporation Berhad (n.d.), Annual Reports 2011 and 2012 (online), available: http://ir.chartnexus.com/malaysiaairports/report.ph (04-08-2014).
Over the past decade, international passenger traf c has grown by 137.5% compared with 87.1%for international arrivals, showing the positive stimulus provided by the government to strengthen the air transport sector.
Low fares also stimulated Malaysia’s outbound markets. It is dif cult to assess exactly how many air trips were taken by Malaysian outbound travellers, however according to Tourism Economics/ Tourism Decision Metrics which works with Tourism Australia, the estimated volume of outbound trips in 2012 was over 49 million. Since 2003, it has grown by 52.8%.
Since 2009, growth in air transport has continued unabated while international tourist arrivals experienced weak growth, if not actual stagnation.
The lack of European non-stop connections can to some degree at least, explain the relatively weaker share of European arrivals to Malaysia. In 2012, Malaysia welcomed 1,046,000 European travellers, a market share of 4.2% of all foreign arrivals. By comparison, 25.3% of all foreign arrivals to Thailand came from Europe in 2012 while Europeans represented 10.6% of all arrivals to Singapore.
Malaysia would do well to continually assess the changing expectations of European travellers towards the destination. Nature, local culture and heritage, as well as seaside tourism are the best assets of the destination for Europeans.
Malaysia has successfully positioned itself as an attractive destination for Muslim travellers. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The recent launch of a special Muslim fashion festival and the creation of hotels following Muslim customs are also proving attractive for Muslim travellers. Besides the Indonesian market, in 2013 Case study – Malaysia: Kuala Lumpur 107
there were signi cant visitor arrivals from the Gulf region and an increasingly large number of travellers from Bangladesh (134,700) and Pakistan (81,400).
In addition, the launch of low cost ights by AirAsia helped increase the number of Bengali travellers by 32% between 2011 and 2012.
Malaysia Tourism is now targeting niche markets with speci c activities. Besides Muslim-related tourism, Malaysia continues to promote itself as an eco-tourism paradise, a heritage destination (especially since Melaka and Penang became UNESCO World Heritage sites), art tourism with art events, festivals, art trade fairs and special exhibitions taking place particularly in Kuala Lumpur and Penang.
A dynamic tourism policy to attract retired people (MM2H or Malaysia My Second Home), medical and post-educational tourism, luxury tourism programmes, and MICE are some of the themes and activities developed in recent years to diversify tourism sources.
Table 2.39 Foreign arrivals to Malaysia by nationality, 2012 and 2013 Nationality 2012 2013 Change (%)
Australia 507,948 526,342 3.6
Bangladesh 86,465 134,663 55.7
Belgium 17,151 18,502 7.9
Brunei 1,258,070 1,238,871 -1.5
Cambodia 50,179 64,534 28.6
Canada 86,931 88,904 2.3
China 1,558,785 1,791,423 14.9
Denmark 24,408 25,312 3.7
Egypt 16,804 21,053 25.3
France 136,172 145,108 6.6
Germany 131,277 136,749 4.2
India 691,271 650,989 -5.8
Indonesia 2,382,606 2,548,021 6.9
Iran 127,404 78,316 -38.5
Iraq 21,939 27,869 27.0
Ireland 21,639 24,459 13.0
Italy 44,330 45,253 2.1 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Kazakhstan 20,188 19,840 -1.7
Lao PDR 38,364 35,676 -7.0
Myanmar 83,473 90,740 8.7 108 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Nationality 2012 2013 Change (%)
Nepal 123,173 132,148 7.3
Netherlands 88,404 83,955 -5.0
New Zealand 65,726 63,175 -3.9
Norway 19,996 22,325 11.6
Oman 24,977 26,601 6.5
Others 327,153 354,068 8.2
Pakistan 79,989 81,397 1.8
Philippines 508,744 557,147 9.5
Republic of Korea 283,977 274,622 -3.3
Russian Federation 44,765 53,203 18.8
Saudi Arabia 102,365 94,986 -7.2
Singapore 13,014,268 13,178,774 1.3
South Africa 23,635 22,473 -4.9
Spain 23,594 26,162 10.9
Sri Lanka 62,821 64,051 2.0
Sweden 38,418 43,460 13.1
Switzerland 27,360 28,191 3.0
Taiwan Province of China 242,519 286,266 18.0
Thailand 1,263,024 1,156,452 -8.4
Turkey 9,909 12,775 28.9
United Arab Emirates 18,233 19,830 8.8
United Kingdom 402,207 413,472 2.8
United States of America 240,134 246,936 2.8
Uzbekistan 10,897 11,591 6.4
Viet Nam 211,008 235,700 11.7
Total 25,032,708 25,715,460 2.7
Source: Tourism Malaysia (n.d.), Facts and Figures 2013 (online), available: http://corporate.tourism.gov.my/research.asp?page=facts_figures (04-08-2014).
2.8.3 Strategy
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immediate competitor to Bangkok and Singapore as South-East Asia’s gateways to the world. The 1997 nancial crisis also depressed travel demand within Asia.
Then in late 2001 came the transformed AirAsia, which moved from a domestic legacy carrier into a low cost airline with the support of the Malaysian government. AirAsia’s resurgence as a budget airline also marked the renaissance of the airport, which was consequently repositioned as a major regional gateway, particularly towards low cost carriers.
The consolidation of regional destinations served from Kuala Lumpur was a rst step to lure back legacy carriers, and particularly overseas airlines. Today, Kuala Lumpur is positioned as the largest hub for international low cost ights within South-East Asia and probably in the whole Asian continent. Another successful strategy has been to lure airlines from the Middle East and the Gulf to make Kuala Lumpur a major gateway to Asia. There are currently 12 airlines from Arabic- speaking countries serving 18 destinations to and from Kuala Lumpur.
Over the past two years, many overseas carriers have made a comeback or started ying to Kuala Lumpur, acknowledging both the economic and tourism potential of the destination. This comes as a boost for the Kuala Lumpur International Airport which has since its inception, been ghting to gain more intercontinental carriers. This trend especially follows the MAS rationalisation exercise in the early 2000s, which saw the cancellation of routes to Rome, Stockholm and Zurich, among others.
Generous subsidies and discounts are provided for new airlines or routes. Since 2010 nancial incentives have helped secure ights from Royal Jordanian, Oman Air, Egypt Air, Transaero, Turkish Airlines, Air France and Uzbekistan Airlines.
Turkish Airlines launched four-weekly services to Istanbul in April 2013 in parallel with Air France, which operates thrice-weekly non-stop services from Paris. Lufthansa has also announced it will offer ve non-stop weekly services from the summer of 2014 out of Frankfurt. These ights will continue on to serve Jakarta.
Following the integration of Malaysia Airlines as a member of the global air alliance Oneworld, persistent rumours hint at a possible return of British Airways to Kuala Lumpur after a hiatus of over a decade. The airline is mulling its options, especially as Kuala Lumpur could ll the void left by Qantas on the lucrative United Kingdom–Australia Kangaroo route. Finnair, another Oneworld partner, used to y to Kuala Lumpur in 2007 via Bangkok, while a comeback on the Helsinki–Kuala Lumpur route is also currently under study.
By the end of 2012, Kuala Lumpur International Airport was served by 61 scheduled passenger airlines offering ights to 125 destinations. National carrier Malaysia Airlines remains the largest carrier for international ights, ahead of AirAsia.
The national carrier offered 518 weekly passenger services in 2012 to 46 international and http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Total passenger traf c at the Kuala Lumpur International Airport reached almost 40 million passengers in 2012, an increase of 5.8% over 2011 and is likely to reach 50 million passengers by 2016/2017. 110 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Table 2.40 Passenger movements at KLIA, 2003–2012 Year Total aircraft movements Total passengers International passengers
2003 139,101 17,454,564 9,889,695
2004 164,483 21,058,572 12,483,849
2005 181,341 23,213,926 14,337,991
2006 182,548 24,129,748 15,097,126
2007 192,304 26,453,379 16,965,296
2008 209,681 27,529,355 17,836,667
2009 225,251 29,682,093 19,401,672
2010 244,179 34,087,636 23,402,427
2011 268,265 37,704,510 25,915,723
2012 282,290 39,887,866 27,612,088
Growth 2012/2003 (%) 102.9 128.5 179.2
Note: Table represents rounded percentages. Source: Malaysia Airports Corporation Berhad (n.d.), Annual Report 2012 (online), available: http://ir.chartnexus.com/malaysiaairports/report.ph (04-08-2014).
Table 2.41 Monthly seat capacity on selected international sectors from KLIA by region, 2008–2012 From KLIA to 2008 2009 2010 2011 2012 Change 2012/2008 (× 1,000) (× 1,000) (× 1,000) (× 1,000) (× 1,000) (%)
Month of June
Asia 1,462 1,526 1,623 1,843 1,966 34.4
Middle East 68 81 95 118 121 77.9
Europe 74 76 78 84 65 -8.7
Australasia1 82 90 118 122 126 54.4
Month of October
Asia 1,524 1,610 1,715 1,912 2,066 35.6
Middle East 62 75 98 113 116 84.8
Europe 74 80 83 85 71 -9.6
Australasia 70 96 124 120 139 99.4
1) Australasia includes Australia, New Zealand and other Pacific islands countries. Notes: Table represents rounded figures. Source: Flightmaps Innovata (2013/2014), SRS Analyser (online), available: www.flightmapsanalytics.com/ (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Malaysia Airlines as an international air hub
As the main hub for national carrier Malaysia Airlines, Kuala Lumpur has always had a high number of international connections. However, MAS’s nancial dif culties in recent years forced Case study – Malaysia: Kuala Lumpur 111
the national carrier to streamline its network. Prior to its restructuration in 2005, Malaysia Airlines had a network of over 90 destinations around the world. In 2011, it further cut unpro table routes abandoning services to Buenos Aires, Johannesburg, Dubai, Karachi and Rome, among others.
MAS today serves 59 destinations including 43 overseas. The airline’s membership of air alliance Oneworld (February 2013) is likely to boost international connectivity to Kuala Lumpur. In January 2013 the alliance represented 35.2% of all seats capacity at the Kuala Lumpur International Airport and will further gain market share once the integration of Sri Lankan becomes of cial in March 2014 (35.7% of all seat capacity, based on data for January 2014)11. Besides Malaysia Airlines, Oneworld carriers present in Kuala Lumpur are Cathay Paci c, Japan Airlines, Qatar Airways, Royal Jordanian and, from March 2014, Sri Lankan.
With many code-share agreements to take place, MAS will have the opportunity to become more pro table on former loss-making routes. The airline, for example, recently signed a code-share agreement with Japan Airlines for ights to Vancouver. Another code-share agreement, thanks to Oneworld, was signed in March 2013 with American Airlines, providing easier connections to 14 cities in the United States of America via Los Angeles or Europe.
The introduction of the Airbus A380 on high-volume routes such as London Heathrow (double- daily), Paris CDG (daily) and Hong Kong, China, is helping rationalise capacity. Oneworld membership gives MAS the chance to be connected to some 850 destinations in 150 countries.
In 2013, MAS started to strengthen its network under the combined effect of demand from local markets and a common growth strategy with Oneworld partners. Capacities received a signi cant boost to Australia at the end of 2013 with triple daily ights to both Melbourne and Sydney and the reopening of the Kuala Lumpur–Darwin route. Malaysia Airlines now ies to six cities in Australia and will y daily to Auckland, New Zealand from March 2014. Depending on a British Airways and MAS agreement on the “Kangaroo Route”, Kuala Lumpur has the opportunity to become a major transfer hub between Europe and Australia.
In 2012, the Kuala Lumpur International Airport recorded 2.02 million passengers on Australian routes (all airlines). Since winter 2013/2014, MAS is also ying once again to Dubai and Kochi. Besides Oneworld, the national carrier has code-share agreements with 19 other airlines, the latest being Ethiopian Airlines. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
11 Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014). 112 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Figure 2.23 Alliances’ monthly seat capacity at KLIA, January 2014 (market share, %)
Oneworld (35.2)
Non aligned carriers (57.6)
Star Alliance (2.9) Skyteam (4.3)
Source: Flightmaps Innovata (January 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Middle East promise
An open-skies policy also supports the Malaysian government’s concept of establishing Kuala Lumpur as South-East Asia’s gateway to and from the Middle East. The Kuala Lumpur International Airport is currently (2013) served by 12 Middle East carriers (Egypt Air, Iran Air, Emirates, Gulf Air, Saudi Arabian Airlines, Etihad Airways, Qatar Airways, Kuwait Airways, Yemenia Yemen Airways, Mahan Air, Oman Air and Royal Jordanian). Between Kuala Lumpur and the Middle East, carriers offer 559 monthly services offering a capacity of 169,236 seats.
With 2.23 million passengers (+11.1% over 2011) to 17 cities, the Middle East region had a market share of 8.1% of all passenger movements at the Kuala Lumpur International Airport in 2012. It represents twice as many passengers as Europe and is approximately at the same volume as passenger traf c to and from the Paci c. Over the past three years, passenger movements to and from the Middle East grew on average by over 10% per year.
Traf c is dominated by the three Gulf giants: Emirates offers four daily ights with a Boeing 777- 300 and Qatar Airways ies three times daily using an Airbus A330-200 or Boeing 777-300. Etihad offers two daily ights, also with an Airbus A330-200 or Boeing 777-300.
Combined with an extremely liberal visa policy towards countries in the region (nationals can all enter Malaysia without a visa including countries such as Iraq, Libya or Yemen), it generates an in ux to Malaysia of 350,000 travellers on an annual basis. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.24 Monthly seat capacity to the Middle East and North Africa from the Kuala Lumpur Airport by airline, January 2014
Kuwait Airways (KU) 3,536
Royal Jordanian (RJ) 3,679
EgyptAir (MS) 4,312
Yemen Airways (IY) 4,986
Mahan Airlines (W5) 5,562
AirAsia X (D7) 6,137
Iran Air (IR) 7,291
Oman Air (WY) 8,672
Etihad Airways (EY) 16,058
Malaysia Airlines (MH) 17,360
Saudi Airlines (SV) 19,492
Qatar Airways (QR) 26,381
Emirates (EK) 45,770
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
Source: Flightmaps Innovata (January 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Targeting China, India and Indonesia
The presence of three major ethnic groups in Malaysia (54.5% are Malays, 24.6% are of Chinese origin and 7.3% are of Indian origin) has been a positive factor in the development of air transport links with China, India and Indonesia as it stimulates inbound and outbound traf c ows. Kuala Lumpur offers one of the highest numbers of connections to Mainland China, with 16 cities being connected – 20 if Hong Kong, China; Macao, China; and Taiwan Province of China are integrated – while eight Indian destinations bene t from direct ights to Kuala Lumpur.
However, Indonesia is turning into Kuala Lumpur International Airport’s biggest market, both in terms of passengers and the number of destinations served. The rise of Indonesia is supported by reciprocal travel ows between both countries. Total visitor arrivals from Indonesia to Malaysia reached 2.38 million in 2012 while Malaysian travellers visiting Indonesia in 2012 reached 1.13 million (through Indonesia’s 19 main entry points.12
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12 Tourism Malaysia and Indonesia Ministry of Tourism and Creative Economy (2013) (online), available: www.parekraf.go.id/ asp/index.asp (04-08-2014). 114 Air Connectivity and its Impact on Tourism in Asia and the Paci c
destinations was still the same, available seat capacity was 379,119. Indonesia has developed into Kuala Lumpur International Airport’s most important market with over 4.5 million passengers, representing 17.5% of total passengers.
Regarding China, the fact that a quarter of Malaysian citizens are ethnic Chinese has helped in developing a strong interest from both sides to visit each other. The 7 million Chinese in Malaysia originated from the south (Fujian and Guangdong Provinces). This translates into high numbers of passengers to southern destinations. Guangzhou is the leading destination in passenger traf c to Mainland China with over 600,000 passengers a year while nearby Shenzhen attracts well over 200,000 passengers a year.
Looking at Greater China, the highest passenger numbers are all recorded to the south with Hong Kong, China, generating close to 1.5 million passengers in 2012 followed by Taiwan Province of China with close to 700,000 passengers. Both cities, however, are popular shopping and entertainment destinations, also attracting other Malaysian ethnic groups. In 2012 Malaysia attracted 1.56 million Mainland Chinese while Malaysians going to China reached 1.24 million.
Similar patterns can be observed with India. Most Malaysian Indians come originally from Tamil Nadu or Sri Lanka with Chennai (ex Madras) attracting the largest number of passengers at 480,000. The number of Indians visiting Malaysia is now approaching 700,000 travellers a year (691,271 in 2012). Malaysia is also among India’s largest inbound markets, ranking 10th in 2012 with total arrivals reaching 196,000.
Figure 2.25 Passenger traffic and destinations out of Kuala Lumpur to China, India and Indonesia, 2012
India 1,471,248 Kuala Lumpur Greater China 2,250,222
Bangalare 153,519 Beijing 389,567 Chennai 478,506 Chengdu 134,500 Delhi 285,683 Fuzhou 27,042 Hyderabad 87,543 Guangzhou 608,533 Kochi 99,217 Indonesia 4,780,140 2,311,488 Guilin 59,995 Kolkata 42,646 Haikou 1,253 Balikpapan 41,875 Hong Kong 1,309,000 Mumbai 198,135 Hangzhou 217,951 Banda Aceh 58,802 Kaohsiung 16,974 Tiruchirapally 125,999 Harbin 1,098 Bandung 310,709 Macao 290,230 Kunming 41,091 Denpasar 782,861 Taipei 695,284 Nanning 13,238 Jakarta 1,843,397 Shangai 381,174 Lombok 10,873 Shantou 337 Makassar 57,158 Shenzhen 200,167 Medan 585,430 Tianjin 72,972 Padang 142,879 Xiamen 87,141 Palembang 82,341 Zhenzhou 14,163 Pekanbaru 97,336 Semarang 79,685 Solo City 54,688 Surabaya 521,061 Yogyakarta 111,045
Source: Malaysia Airports Corporation Berhad (n.d.), Annual Reports 2011 and 2012 (online), http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Due to the high penetration of low cost airlines, Kuala Lumpur is in a better position to be an Asia and the Paci c gateway and will boost connections to destinations in Europe, America and Africa. There is certainly potential for adding ights to the United Kingdom, to Moscow and Southern Europe, as well to one or two additional destinations in the United States of America and/or Canada. Attractive incentive schemes are provided for new ights including rebates on each passenger own.
Most of the ights from and to Kuala Lumpur are in the range of one to six hours, stretching from India to Australia’s northern coast and from northern Japan to the Gulf.
Measured in passenger numbers, direct traf c from Europe, the Americas and Africa together represented 1.42 million in 2012, a mere 5.1% of all international passengers at the Kuala Lumpur International Airport. By comparison, the three continents still represented 6.6% of all international passengers in 2011. However, year 2013 data should look stronger as new oversees carriers launched ights or expanded operations. And the short term looks extremely promising.
Figure 2.26 Passenger market share for Kuala Lumpur, Bangkok and Singapore by region, 2012 (%)
78.8 80 77.0 70.7 70
60 ■ Kuala Lumpur 50 ■ Bangkok
40 ■ Singapore
30
20 10.7 12.6 8.0 8.1 8.6 8.4 10 4.8 3.7 2.2 0.1 0.3 0.1 0.2 0.2 0.5 0 Asia Pacific Middle East Europe North America Others
Source: Malaysia Airports Corporation Berhad (n.d.), Annual Reports 2011 and 2012 (online), available: http://ir.chartnexus.com/malaysiaairports/report.ph (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.42 International seat capacity from KLIA to selected destinations, June 2013 From Kuala Lumpur to Seats Frequency
Singapore 214,000 1,471
Bangkok 121,000 587
Jakarta CGK 119,000 648
Hong Kong, China 77,000 351
Medan 51,000 306
Phuket 49,000 274
Denpasar 48,000 240
Ho Chi Minh City 47,000 274
Dubai 45,000 124
Taipei 45,000 172
Melbourne 41,000 128
Guangzhou 39,000 244
Surabaya 38,000 210
Shanghai Pudong 33,000 137
London Heathrow 30,000 60
Source: Flightmaps Innovata (January 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
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2.9 Republic of Korea: Busan
Busan Metropolitan City is located on the south-eastern part of the Korean Peninsula. It boasts a number of popular attractions including the large Heaundae and Gwangalli beaches, the exquisite sceneries of Taejongdae, Beomeosa Buddhist temple, several cultural heritages and shopping centres. Currently, the city is investing a great amount of effort and resources in developing the cultural and medical tourism sectors. Busan International Film Festival is also a well-known cultural event that attracts many overseas, as well as local visitors.
Busan has seen a dramatic increase in tourist arrivals by air over the ve years since the emergence of LCCs. The total number of international tourists to Busan stood at 2.3 million in 2011, and 2.61 million in 2012. Tourism is not a main sector of the city economy, but still contributes substantially by creating a signi cant number of jobs and bringing in tourism-related revenue.
2.9.1 Key issues related to air transport and city tourism
Source: Tourism Promotion Organization for Asia Pacific Cities.
The government of Busan Metropolitan City has taken several measures to improve its air transport and boost the tourism sector. It sought for example, to turn the city into a destination for Chinese and Japanese tourists by improving access and travel convenience. It also encouraged airlines through incentives and bene ts to expand ight services and implemented a 72-hour visa-free policy.
In addition, the government of Busan Metropolitan City established the Busan Tourism Organization to promote its tourism industry more systematically and arranged regular meetings to discuss various tourism matters such as expanding ight routes connecting Busan and other cities.
Of all of these efforts, expanding ight services through the launch of a regional airline and international marketing were considered especially important. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Challenges for Busan Metropolitan City tourism development
Busan took up the challenge to improve its air connectivity with other cities across the nation and overseas. It expanded ight services by launching the regional airline Air Busan in 2008. Before the regional airline began operating, only two full service airlines (FSA), Korean Air and Asiana Airlines, offered domestic and international ight services to the city. Due to high airfares and a limited number of ight services per day, the majority of domestic tourists preferred to travel to Busan by car or train.
After the Korea Train Express (KTX) began operation in 2004, far more tourists used express trains, decreasing the number of air passengers signi cantly. However, the number of air travellers increased after 2009 when the regional airline carried out aggressive marketing. It took various measures to attract people who had normally used FSAs or KTX including a corporate advantage programme, more convenient ight time, easy road access, seat number reservation, automatic check-in service, and reducing the price of airfares. Furthermore, the airline has operated the early bird fare programme, which gives a 5% to 75% discount on online ticketing. The programme has appealed strongly to local tourists, and increased air passengers.
In terms of international ight services, only a limited number of ight services were provided to Busan until 2008, causing some inconvenience for international tourists visiting the city. Even short-haul international tourists from Japan or China had to disembark at Incheon International Airport and then take a bus or train for half an hour to get to Gimpo or Seoul, where they could take a domestic ight or a KTX heading for the city. This inconvenience discouraged international tourists from visiting the city.
The launch of Air Busan improved direct air accessibility between Busan and major cities in China and Japan. Furthermore, encouraged by nancial support from the city government, airlines opened new international routes. Currently Busan is connected to 43 cities in eleven countries including 26 cities in China and seven cities in Japan.
Busan has recently taken special measures to attract Chinese group tourists transferring at Gimhae International Airport en-route to Jeju, the most popular tourist destination in the nation, by allowing those entering Gimhae International Airport to stay a maximum of 72 hours in its territory and neighbouring cities without a visa. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.27 Routing map of Busan Air, 2014
Source: Adapted from Busan Air, Route map (online) available: www.airbusan.com/AB/airbusan/english/reservation/flightline.jsp (04-08-2014).
2.9.2 Results and lessons learned
The total number of international tourist has increased steadily since 2006. Although Japan still remains the major market, the overall number of Japanese arrivals has decreased, while the number of Chinese arrivals has increased steadily.
Table 2.43 International visitors to Busan, 2002–2011 Year Japan China United States Russian Canada Germany Others Total of America Federation
2002 892,418 224,218 120,781 105,061 16,269 23,381 618,311 2,000,439
2003 608,611 170,508 67,545 77,608 13,926 14,608 520,908 1,473,780
2004 779,314 211,214 73,728 50,337 14,837 16,364 511,698 1,660,492
2005 747,791 215,888 88,062 36,109 18,590 24,171 578,966 1,709,577
2006 573,147 243,907 92,265 36,644 21,230 25,185 538,661 1,531,039
2007 549,729 303,579 96,375 34,788 20,905 29,898 635,422 1,670,696
2008 539,833 297,320 112,054 43,380 24,306 34,377 765,853 1,817,123 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2010 571,436 461,957 130,186 49,404 34,335 43,939 931,345 2,222,602
2011 589,308 476,065 129,538 48,761 36,997 43,010 1,043,184 2,366,863
Source: Busan Metropolitan City (2013), 2012 Busan Tourism Research. 120 Air Connectivity and its Impact on Tourism in Asia and the Paci c
The number of passengers using Gimhae International Airport has steadily increased since 2009, a result largely attributed to the launch of Air Busan in 2008.
Table 2.44 Air passengers, 2003–2012 Year International Domestic
Arrival Departure Total Arrival Departure Total
2003 813,446 813,172 1,626,618 3,558,592 3,597,625 7,156,217
2004 982,456 970,778 1,953,234 2,853,486 2,867,433 5,720,919
2005 1,078,142 1,068,369 2,146,511 2,455,500 2,443,795 4,899,295
2006 1,157,963 1,152,105 2,310,068 2,390,574 2,370,395 4,760,969
2007 1,383,213 1,354,607 2,737,820 2,348,929 2,316,513 4,665,442
2008 1,403,497 1,361,764 2,765,261 2,230,047 2,206,809 4,436,856
2009 1,177,329 1,141,425 2,318,754 2,292,352 2,259,051 4,551,403
2010 1,556,969 1,535,151 3,092,120 2,550,964 2,517,462 5,068,426
2011 1,786,094 1,752,681 3,538,775 2,609,171 2,601,207 5,210,378
2012 2,037,795 1,995,776 4,033,571 2,591,985 2,570,534 5,162,519
Source: Korea Airports Corporation (n.d.), Traffic Statistics (online), available: www.airport.co.kr/mbs/kaceng/jsp/stats/airportStats.jsp?id=kaceng_040201000000 (04-08-2014).
The government of Busan Metropolitan City was well aware that, in order to attract tourists, especially international tourists, the government, airlines, travel agencies and other institutions needed to be cooperative. First, airlines needed to increase international and domestic ight services and reduce airfares. The government, therefore, launched a regional airline and encouraged airlines to operate new routes by giving them incentives and bene ts.
Next, travel agencies initiated aggressive marketing approaches to attract more tourists. And the city government changed its visa rules, allowing Chinese group tourists entering Gimhae International Airport to stay a maximum of 72-hours in its territory without a visa. All this has made Busan an interesting destination, one that is easy to access and convenient for travellers.
The case of Busan also shows that LCCs have to compete not only with Full Service Airlines (FSAs) but also express trains and road traf c. They therefore need to enhance their competitive advantage and conduct unique and speci c marketing. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.10 Republic of Korea: Jeju Island
Source: Jeju Tourism Organization.
Jeju Island, located at the southern part of the Korean peninsula, is the largest island in the nation. It is one of the representative tourist destinations that boasts a number of well-known natural attractions, including lava tubes designated as UNESCO World Natural Heritage sites, and a unique culture.
Tourism, along with agriculture, is the main economic activity of the island. The total number of tourists to the island stood at 8.74 million in 2011, and 9.69 million in 2012. Revenues from tourism reached USD 5,529.3 million (USD 1 = KRW 1,000) in 2011, which accounted for 49% of its gross regional domestic product (GRDP; USD 11,258.4 million). Even before low cost carriers began operating in the island, Jeju had made constant efforts to attract more visitors, developing its MICE business and introducing new tourist activities such as sports events and local festivals.
2.10.1 Key issues related to air transport and Jeju tourism
Given that up to 90% of local tourists visit Jeju by air, it was expected that improving air connectivity between the island and the mainland would attract more tourists to the island. Major issues regarding Jeju’s tourism over the last decade were closely related to low cost carriers and include the launch of a regional airline, a signi cant increase in domestic and international tourist arrivals by air, the expansion of international routes by LCCs, changes in consumer expenditure and http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Challenges to launch a regional airline
Until 2005, only two legacy airlines, Korean Air and Asiana Airlines, operated ight routes connecting the island and the mainland. In 2005, the total number of tourists to Jeju was around 5 million, and the average occupancy rate of accommodation facilities stood at approximately 61%. At that time, the island was not seen as being highly competitive as a domestic or international destination partly because the cost of reaching the island was relatively high.
The airfares of the two legacy airlines jumped in 2005 when they introduced fuel surcharges. In addition, though Hanseong Airline, the rst LCC in Korea, operated between the island and Cheongju, the city located in the centre of the nation, it was failing to give satisfactory service to passengers. Aware that this problem was adversely affecting the island’s tourism, the local government nally launched a regional airline, Jeju Air, in 2006 in cooperation with Aekyung Group.
The airline steadily grew and began ight services for international routes in 2009, currently providing ight services to several local cities and ten cities in other Asian nations. The local government, one of the major shareholders of Jeju Air, made some agreements with the other shareholders to boost the island’s tourism when the airline was launched. Following the agreements, the airline aggressively promoted the island as a tourist destination, consumed Jeju products (e.g.; airline food) and employed many of the island’s residents. Currently, more than 90% of Jeju Air employees working on the island are Jeju citizens.
Figure 2.28 Routing map of Jeju Air, 2014
Hong Kong, China http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Source: Adapted from Jeju Air (n.d.), Route map (online), available: www.jejuair.net/jejuair/com/jeju/ibe/company/route.do (04-08-2014). Case study – Republic of Korea: Jeju Island 123
According to an analysis on the world’s busiest air routes conducted by Amadeus, it was discovered – perhaps surprisingly to some – that the Jeju–Seoul air route was the busiest in the world in 2012. Figures are not yet available for 2013, however, the growth trend points to further consolidation.
Table 2.45 Top 10 global air travel busiest routes by passenger volume Rank 2012 Region Route Passengers 2012 Change 2012/2011 (× 1,000) (%)
1 Asia Jeju–Seoul 10,156 2
2 Asia Sapporo–Tokyo 8,211 8
3 Latin America Rio de Janeiro–Sao Paulo 7,716 -1
4 Asia Beijing–Shanghai 7,246 7
5 Pacific Melbourne–Sydney 6,943 -2
6 Asia Osaka–Tokyo 6,744 -11
7 Asia Fukuoka–Tokyo 6,640 -3
8 Asia Hong Kong, China–Taipei 5,513 2
9 Asia Okinawa–Tokyo 4,584 12
10 Africa Cape Town–Johannesburg 4,407 -1
Source: Garfors, G. (2013), ‘The World´s 10 Busiest Air Routes’, Media and Travel (online), available: www.garfors.com/2013/08/the-worlds-10-busiest-air-routes.html.
The geography of the island obviously stimulates a certain amount of that traf c, as it is hardly likely to be totally self-suf cient, but that only highlights the point that adequate and well-positioned and well-priced air routes can be a stimulus to travel for a variety of reasons from simply visiting friends and relatives, to business activities, education and of course, MICE and leisure.
2.10.2 Results and lessons learned
Jeju Air has generated positive impacts for the island’s tourism industry. First, it has stemmed the rising tide of airfares between the island and the capital city Seoul. It offered air services at far lower prices than the legacy airlines and gave local residents a 10% discount.
Second, the success of Jeju Air encouraged companies to enter the LCC business. Korean Air launched LCC Jin Air, and Asiana founded LCC Air Busan in cooperation with Busan Metropolitan City. Easter Jet and T’way Airline also began operating in 2007 and 2010 respectively. As a result, the number of ights to Jeju Airport dramatically increased from 39,269 in 2006 to 60,361 in 2012. The number of tourists also rose sharply between 2007 and 2012. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.46 Visitors to Jeju, 2003–2012 Year Domestic International Total
2003 4,692,373 221,017 4,913,390
2004 4,603,297 329,215 4,932,512
2005 4,641,552 378,723 5,020,275
2006 4,852,638 460,360 5,312,998
2007 4,887,949 541,274 5,429,223
2008 5,281,501 540,516 5,822,017
2009 5,891,584 623,354 6,523,938
2010 6,801,301 777,000 7,578,301
2011 7,695,339 1,045,637 8,740,976
2012 8,010,304 1,681,399 9,691,703
Source: Jeju Special Self-Governing Province (2013), Statistics of Jeju (online), available: www.jeju.go.kr/ (19-07-2013).
The total number of international tourists has increased sharply over the past ve years. In 2005, 380,000 international tourists visited the island, and the gure increased by more than four times to 1.7 million in 2012. China has surpassed Japan to become the largest market for the island’s tourism industry since 2009 when the island had Open Skies agreements with several big Chinese cities. In 2009, Jeju Island was connected to six Chinese cities by air transport, but the gure increased to 23 in 2013. Thanks to the rise in ight services between the island and Chinese cities, Chinese tourists increased signi cantly, accounting for approximately 64.5% of total international tourists to the island in 2012.
Table 2.47 International visitors to Jeju Island, 2003–2012 Year Japan China Hong Kong, Taiwan Singapore Malaysia United Others Total China Province States of of China America
2003 101,808 69,671 5,173 9,893 8,762 0 10,753 14,957 221,017
2004 140,351 101,236 7,609 21,435 13,472 0 17,518 27,594 329,215
2005 151,419 115,199 8,582 39,552 13,841 0 18,528 28,602 378,723
2006 183,168 142,912 8,376 57,358 18,167 0 19,329 31,050 460,360
2007 183,240 176,878 8,683 93,169 21,699 10,270 20,478 26857 541,274
2008 177,459 174,902 11,365 67,993 28,580 13,220 23,349 43,349 540,516
2009 183,168 258,414 15,079 41,480 32,727 14,806 23,712 62,968 623,354
2010 187,790 406,164 11,793 40,867 31,405 23,550 19,895 30,066 777,000 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2011 173,700 570,247 26,601 31,661 55,927 53,045 26,648 107,808 1,045,637
2012 180,357 1,084,094 38,980 51,012 63,818 76,192 25,143 161,803 1,681,399
Source: Jeju Special Self-Governing Province (2013), Statistics of Jeju (online), available: www.jeju.go.kr/ (19-07-2013). Case study – Republic of Korea: Jeju Island 125
The dramatic increase in the number of Chinese tourists to the island is attributed to the island’s tourist visa waiver programme, which allows citizens from 189 countries across the world to travel to the island without a visa for 30 days. The local government extended the number of nations listed in the visa waiver programme to 189 including China in February 2008, in order to attract more international tourists.
Tourism revenue and its proportion in gross regional domestic product (GRDP) increased steadily.
Table 2.48 Proportion of tourism revenue in GRDP, 2005–2011 (KRW billion) Measure 2005 2006 2007 2008 2009 2010 2011
Total GRDP 7,916.6 8,096.0 8,735.9 8,833.0 9,647.8 10,468.7 11,258.4
Tourism 1,720.2 1,846.4 2,214.4 2,373.6 2,828.3 3,386.7 4,505.3
Source: Jeju Special Self-Governing Province (2013), Statistics of Jeju (online), available: www.jeju.go.kr/ (19-07-2013).
Figure 2.29 Proportion of tourism revenue in GRDP, 2005–2011 (%)
45 40 40
35 32 29 30 26 25 25 22 21 20
15
10
5
0 2005 2006 2007 2008 2009 2010 2011
Source: Jeju Special Self-Governing Province (2013), Statistics of Jeju (online), available: www.jeju.go.kr/ (19-07-2013).
In terms of qualitative perspective, LCCs have signi cantly changed the landscape of Jeju tourism. Currently Jeju is receiving substantial visitors regardless of seasons, hence there is no off-peak season in the island. Tourist behaviours have also changed. Many of the tourists are revisiting the island. This has created demand for various new tourist activities, and accordingly the tourism industry is working together with the local government to meet such demand.
The government of Jeju Special Self-governing Province has launched environment friendly tourist products – walking trails and hiking hills. The government has also held various sport events and http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
The launch of LCCs on Jeju Island provides several important lessons for city tourism development. Firstly, introducing regional airlines can be a good way to promote the LCC industry where no LCC currently operates.
The local government’s active involvement in the establishment of a regional airline is an example to others in management that these ventures when successfully operated boosts the local economy, through destination marketing and employment of local people. It must also be borne in mind that the development of tour products for those arriving by LCCs, the improvement of tourism facilities and appropriate marketing activities for international tourists are complementary to expanding the ight routes. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.11 Thailand: Phuket
Phuket is one of Thailand’s favourite holiday destinations. The growth in air connections over the past decade has seen a major shift with more direct intercontinental ights operating to the southern resort island. This is of particular bene t to tourists from the Russian Federation, the fastest growing segment to Phuket.
2.11.1 General profile
Phuket emerged in the late seventies as Thailand’s new seaside resort destination, sharing with Pattaya increasing popularity rstly among western tourists and then with Asians. It all began in 1967 with the opening of Phuket’s rst link to the mainland, the Sarasin Bridge. However, it took another 15 years to see the emergence of a proper tourism infrastructure with large hotels along Patong beach, spreading thereafter to Kamala and Katu.
With the collapse of tin prices – Phuket’s former main economic resource – tourism became the largest employer in the Province. Agriculture remains important with principal crops being rubber, coconut, cashews and pineapples while shrimp farms are also prevalent.
The image of Phuket tourism has changed over the years. Marked as a backpacker destination in the early 1980s, it evolved into a mass tourism destination in the early 1990s until the middle of the 2000s. Following the devastating tsunami of 2004, Phuket has tried to seize the opportunity to rebuild its industry and rede ne itself.
The island has now become an upmarket destination with boutique hotels, luxury condominiums and hotel chain-managed residences, with luxury malls spreading all over the Island. Two new marinas have been opened over the past decade, bringing another 550 berths for private boats. A growing network of international schools shows the rising interest of expatriates in settling on the Island.
Over the past decade, some of the most renowned international chains established themselves on the Island. At the end of 2012, Phuket had over 45,000 registered accommodation units with 4,100 new rooms due to be added between 2013 and 2016.13
There are also long-term projects to further develop the MICE and cruise industries, taking advantage of improved infrastructure and air connectivity. History and heritage are also regarded as key tourism products with Phuket old town being marketed as a tourism area with numerous historical buildings and several museums.
As an island, air transport plays an increasingly vital role in tourism development. Phuket has enjoyed a high growth in the number of its international connections with charter and scheduled ights connecting the city to the rest of the world – with particular emphasis on China and the http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
13 C9 Hotelworks (2012/2013), Phuket Hotel Market Update (online), available: www.c9hotelworks.com/.../phuket-hotel-market-update-2013-01.pdf and www.c9hotelworks.com/.../phuket-hotel-market-update-july-2013.pdf (04-08-2014). 128 Air Connectivity and its Impact on Tourism in Asia and the Paci c
A new international terminal is set to open by the end of 2014 but some concerns are being raised about the ability of Phuket to effectively cope with further air traf c growth by the end of the decade.
Population
Phuket is Thailand’s largest island with a surface area of 540 km2, roughly the same size as Singapore. The population is, according to the 2010 of cial census, slightly over 300,000. But most experts estimate that with the non-registered population (there is also a large population of Thai migrants from other Provinces working on a temporary basis), Phuket’s population is closer to 525,000 inhabitants. Population density is about 1,042 people per km2.
The majority of Phuket’s population is Buddhist however there is a signi cant Muslim community living on the Island, estimated to represent 30% of the total population. They are mostly shermen, many being immigrants of Malay descent. Muang Phuket District (Phuket Town) also has a signi cant ethnic Chinese community, mainly descendants of tin miners and tin traders who mostly came from Melaka and Penang in the late 19th century.
Phuket has three urban districts, the largest being Muang Phuket (151,763 inhabitants) followed by Thalang (60,712 inhabitants) and Kathu (36,000 inhabitants).
In 2010 there were of cially some 116,000 foreigners living on the island, equivalent to 21% of the population. However, this foreign population is likely to be higher as it does not include a large number of economic migrants such as Burmese or Cambodians seeking work on the island. A fair indicator of Phuket’s rising foreign community comes from the number of international schools present on the island. According to C9 Hotelworks’ market research there were six international schools in December 2012 with a total of over 1,700 students.
Economic strength
Phuket’s GDP per capita in 2010, according to the Of ce of the National Economic and Social Development Board, was THB 324,385 (approximately USD 9,700). Phuket’s GDP per capita was 41% below Bangkok’s GDP per capita but 127% higher than Thailand’s average GDP per capita in 2010.
GDP per capita in Phuket is likely to rise over the coming decade as tourism earnings will continue to grow and a larger number of expatriates will settle on the island. In July 2005, Phuket was voted one of the world’s top ve retirement destinations by the Fortune magazine14.
Tourism has taken over from the tin industry as Phuket’s largest economic activity while the rubber industry is the second largest revenue generator on the island, helping to make Thailand the http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
14 ‘The World’s Top Five Retirement Destinations in 2005’ (2005), Fortune Magazine (online), available: www.aboutthailandretirement.com/retirement-phuket.htm (04-08-2014). Case study – Thailand: Phuket 129
Table 2.49 Phuket and surrounding Provinces, 2010 (GDP per capita) Destination THB USD
Thailand 142,474 4,746
Bangkok 456,911 15,220
Phuket 324,385 10,806
Phang Nga 162,111 5,400
Krabi 154,620 5,150
Note: USD 1 = THB 30.02, average value in 31 December 2010. Source: Thailand Office of the National Economic and Social Development Board (NESDB) (2012), National Income Account (online), available: http://eng.nesdb.go.th/Default.aspx?tabid=94 (04-08-2014).
2.11.2 Transportation and tourism
Phuket is a major sea and land transportation hub with a total of 38 ports, piers and jetties, including three international jetties, ve yacht marinas, 14 shing ports and 16 commercial ferry ports. It also has a signi cant land transportation component that developed after the 1967 bridge opening.
Phuket is planning to become a major port of call for regional and international cruise ships, part of the circuit that links Singapore, Malaysia, Thailand and Myanmar. ASEAN studies have revealed Phuket’s potential to be the key cruise attraction in the Andaman Sea but intensive infrastructure development is required if this potential is to be realised.
Phuket’s existing cruise facilities remain fairly rudimentary however, there is not yet a designated cruise terminal with proper landing facilities for passengers from large ships. Port access is also limited with a channel which is only 120 m wide and a turning basin measuring 360 m to the north of the main quay. The Port of Phuket has only two berths suitable for cruise ships, measuring 360 m and featuring a narrow apron, which is 30 m wide. The port is designed to cater for both passenger and cargo vessels, causing signi cant congestion and delays.
Cruise ships have to pay an additional fee to dock if a cargo vessel is currently tied up and needs to be moved in order to accommodate the passenger vessel. The berth is also too small to accommodate newer and larger cruise ships.
There is an urgent need to expand the infrastructure to further accommodate cruise ships and provide convenience and comfort to their high-spending passengers. A current plan envisages the extension of the berth by 50 m and the development of a dedicated passenger cruise terminal. However, discussions have dragged on for the past 15 years, meaning Phuket is losing out on the rapidly expanding regional cruise market, with Malaysia reaping the bene ts. Latest available data for 2000 indicates that there were 100 cruise liner calls per year with about http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
A driving force for regional tourism
Phuket is one of Thailand’s most popular holiday destinations. In 2012, tourism brought close to 11 million visitors to Phuket, including 10.2 million spending at least one night (tourists).
Phuket remains a predominantly international destination. Foreign tourist arrivals reached 7.22 million in 2012 across all types of accommodation, representing a market share of 70.7% of all tourist arrivals on the Island. The average length of stay was 4.46 days for all travellers to Phuket (5.06 days for foreign travellers). Between 2008 and 2012, total foreign arrivals recorded in commercial accommodation soared by 229% from 2.1 to 6.8 million.
Statistics from Thailand’s Ministry of Tourism and Sports show the huge increase in tourists recorded in commercial accommodation between 2009 and 2011 particularly from Chinese tourists and tourists from the Russian Federation where growth over that period was recorded as 1,002% and 471%, respectively. Both source markets took advantage of the development of new direct air routes into Phuket.
Total arrivals (both international and domestic) generated THB 228.98 billion in revenues in 2012, with International visitors contributing around 87% (THB 198.69 billion) of that amount.
Table 2.50 Number of visitors to Phuket, 2011 and 2012 2011 2012 Annual change (%)
Visitors 9,467,248 10,789,647 13.97
Thais 2,844,472 3,233,542 13.68
Foreigners 6,622,776 7,556,105 14.09
Tourists 8,891,039 10,211,885 14.86
Thais 2,600,462 2,994,910 15.17
Foreigners 6,290,577 7,216,975 14.73
Excursionists 576,209 577,762 0.27
Thais 244,010 238,632 -2.20
Foreigners 332,199 339,130 2.09
Source: Thailand Ministry of Tourism and Sports, Department of Tourism (2013) (online), available: www.tourism.go.th (04-08-2014).
The main motivation for visiting Phuket continues to be for a seaside holiday, but shopping and entertainment are taking an increasing share of total spending on the island, especially for travellers coming from emerging economies or countries with a new “middle class”.
http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.30 Phuket tourism attractions, 2012 (market share, %)
Others (6) Outdoor attraction (5)
Entertainment (16)
Shopping (73)
Source: C9 Hotelworks (2012/2013), Phuket Hotel Market Update (online), available: www.c9hotelworks.com/.../phuket-hotel-market-update-2013-01.pdf and www.c9hotelworks.com/.../phuket-hotel-market-update-july-2013.pdf (04-08-2014).
Shopping also represented the second highest source of spending on the island in 2012, accounting for 24% of the total spend, just behind accommodation, which accounted for 30% but ahead of food and beverage (19%) and entertainment (16%).15 In 2012, average tourist spending per capita per day amounted to USD 104.
Phuket has placed its focus on higher quality tourism, developing new themes to target niche markets. Among these are wellbeing and medical tourism, senior tourism, honeymoon and wedding travellers, as well as luxury shopping.
A crucial development to bring in higher quality travellers will be the construction of a proper convention centre to welcome large and prestigious business events. Discussed for many years, it has been marred in disputes about the location.
The planned project for the Phuket International Convention and Exhibition Centre located close to Mai Khao beach in Thalang District, north of Phuket International Airport, was cancelled by the Thai government in late 2012. A new project for a convention hall is taking shape at Central Festival near Phuket town.
The future convention hall will be integrated within a complex including the existing shopping centre and a deluxe hotel and will be nanced and managed by Central Group, Thailand’s largest real estate and retail company. Central Group also has a massive project including luxury condominiums, villas, a marina and shopping centre in northern Phuket.
Accommodation
http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
15 Thailand Ministry of Tourism and Sports, Department of Tourism (2013) (online), available: www.tourism.go.th (04-08-2014). 132 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Luxury and upscale accommodation represents 38% of total supply, including 9% for the luxury segment. Midscale accommodation accounts for 53% of total supply.16 If the neighbouring Provinces of Krabi and Phang Nga are included, the region has over 74,000 hotel rooms.
All major international chains are now represented in Phuket, including Starwoods, Hyatt, Marriott, Accor, Intercontinental and Mövenpick, while many hotels belong to Thailand’s largest international hotel chains such as Amari, Anantara, Centara and Dusit.
Air transport
Phuket International Airport is Thailand’s largest southern air gateway and the second busiest airport in the country after Bangkok. It is located 32 km from Phuket City and 40 km from the island’s major beaches, on the north-eastern coast.
The airport is equipped with a single runway measuring 3,050 m by 45 m (9,843 feet by 148 feet), which can accommodate up to 30 ights per hour.
It has two terminals: Terminal 1 for international ights and Terminal 2 for domestic ights. Construction has started on a brand new international terminal, which when operational, will take over traf c from Terminal 1. The new facility will have a capacity for 6 million passengers, boosting Phuket’s total capacity from 6.5 to 12.5 million passengers a year.
Catchment area
The catchment area of Phuket stretches right across Thailand’s south-western coast, from the southern part of Surat Thani Province and Phang Nga Province north of the Island to the Provinces of Krabi and Trang to the south of the island. Some 1.8 million people live in that catchment area.
Phuket international Airport is linked by road to the rest of Phuket Island and the neighbouring Province of Phang Nga by road. Public transport offers a limited but cheap transfer service. The Phuket Marine Of ce recently con rmed that a project for a ferry connection into Patong had been approved. A jetty for ferryboats and private boat companies will be constructed next to the airport, with the potential in the longer term to serve both Phang Nga and Krabi. Environmental studies are now being undertaken before a nal decision is made. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
16 C9 Hotelworks (2012/2013), Phuket Hotel Market Update (online) available: www.c9hotelworks.com/.../phuket-hotel-market-update-2013-01.pdf and www.c9hotelworks.com/.../phuket-hotel-market-update-july-2013.pdf (04-08-2014). Case study – Thailand: Phuket 133
Table 2.51 Passengers through Phuket International Airport, 2003–2012 Year Total passengers International passengers
2003 3,600,949 1,496,401
2005 3,169,034 922,311
2008 5,730,748 2,409,305
2009 5,779,918 2,290,906
2010 7,043,783 3,342,356
2011 8,467,995 4,370,719
2012 9,541,552 5,065,928
Growth 2012/2003 (%) 165.0 238.5
Notes: The sharp decline in passenger traffic between 2003 and 2005 was a consequence of the tsunami of December 2004. Table represents rounded percentages. Source: Airports of Thailand Public Company Limited (2004–2013), Summary Reports (online), available: http://aot.listedcompany.com/transport.html (04-08-2014).
2.11.3 Strategy
Phuket airport is fast becoming the Kingdom’s southern gateway. Over the past decade, Phuket has enjoyed two major developments: the emergence of low cost airlines and a steady increase in international ights. In 2012 Phuket was served by 20 international airlines with a network of 52 destinations in 23 countries. The airport is also a major gateway for charter ights, particularly from the Russian Federation, Scandinavia and China.
Table 2.52 Share of international passenger traffic by leading airlines Airline Total international Market share, 2012 Annual change, 2012/2011 passengers, 2012 (%) (%)
AirAsia Bhd 364,315 7.2 8.8
Silk Air 343,863 6.8 4.6
Transaero Airlines 319,198 6.3 26.7
Thai Airways Int’l 285,589 5.6 19.7
Nordwind Airlines 259,330 5.1 21.3
Thai Air Asia 248,266 4.9 2.8
Jetstar Asia Airways 234,387 4.6 24.0
Tiger Airways 209,714 4.1 1.6
Malaysian Airlines 183,307 3.6 15.6 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
China Eastern Airlines 176,635 3.5 10.5
Korean Airlines 173,726 3.4 14.1
Source: Airports of Thailand Public Company Limited (2004–2013), Summary Reports (online), available: http://aot.listedcompany.com/transport.html (04-08-2014). 134 Air Connectivity and its Impact on Tourism in Asia and the Paci c
In 2012, the airport welcomed 9.54 million passengers, including 5.1 million international passengers. Phuket airport had a market share of 10.6% of all international passengers into Thailand.17
International passengers mainly came from Asia and Europe, with shares of 69.6% and 22.9% respectively. Compared with 2011, the fastest growing source region for passengers in 2012 was the Middle East (+147.90%). Despite being mature markets however, Asia and Europe still recorded impressive growth rates.
Table 2.53 Air passenger traffic to Phuket International Airport by region, 2011–2012 Origin region 2011 2012 Annual change 2012/2011 (%)
International
Europe 1,034,196 1,156,266 11.8
Oceania 249,245 178,069 -28.6
Asia 2,971,224 3,518,382 18.4
Middle East 80,421 199,367 147.9
Africa 8 17 112.5
Total 4,335,094 5,052,101 16.5
Domestic
North 259,984 276,503 6.4
North-east 138,815 116,802 -15.9
East 29,609 32,050 8.2
Central 3,506,447 3,862,083 10.1
South 160,494 186,379 16.1
Total 4,095,349 4,473,817 9.2
Total, 8,430,443 9,525,918 13.0 international and domestic
Source: Airports of Thailand Public Company Limited (2004–2013), Summary Reports (online), available: http://aot.listedcompany.com/transport.html (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
17 Airports of Thailand Public Company Limited (2004–2013), Summary Reports (online), available: http://aot.listedcompany.com/transport.html (04-08-2014). Case study – Thailand: Phuket 135
Table 2.54 Seat capacity on all international sectors from Phuket, June 2013 Destination Seats/month Flights/month
Abu Dhabi (AUH) 9,300 30
Beijing (BJS) 4,147 26
Chengdu (CTU) 9,690 60
Chongqing (CKG) 7,015 35
Delhi (DEL) 1,344 8
Doha (DOH) 8,100 30
Dubai (DXB) 7,860 30
Guangzhou (CAN) 1,911 13
Hangzhou (HGH) 2,067 13
Hong Kong, China (HKG) 30,322 161
Jakarta (JKT) 2,340 13
Kuala Lumpur (KUL) 49,212 274
Kunming (KMG) 1,728 12
Melbourne (MEL) 1,818 6
Moscow (MOW) 3,285 9
Mumbai (BOM) 1,512 9
Penang (PEN) 1,020 17
Perth (PER) 5,332 28
Seoul (SEL) 31,067 124
Shanghai (SHA) 13,640 86
Siem Reap (REP) 4,560 30
Singapore (SIN) 51,300 320
Sydney (SYD) 3,636 12
Taipei (TPE) 9,060 30
Xian (SIA) 954 6
Source: Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Low cost carriers boost ASEAN traffic
Phuket has seen a steady increase of ights to and from South-East Asia due to increasingly liberalised skies in the region. Thailand has been one of the most liberal in terms of traf c rights http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
For Singapore and Kuala Lumpur, LCC market share reached, 61% and 63% respectively in 2012; there is certainly still scope to develop low cost traf c out of North-East Asia, particularly from the Republic of Korea, China and Japan.
There have however, been some noted failures in launching ights to Phuket by LCCs. Tiger Air recently withdrew from the Manila–Phuket route leaving only Cebu Paci c, while Thai Smile (an af liate of Thai Airways offering limited services) suspended its Delhi route last September. A few years ago, Thai AirAsia launched a service to Ho Chi Minh City but withdrew it after only a few months.
Table 2.55 LCC passenger market share for selected routes, 2012 Route All airlines LCCs LCC share (%)
Singapore 884,104 540,166 61.1
Kuala Lumpur 578,325 363,990 62.9
Hong Kong, China 567,534 100,524 17.7
Seoul 535,325 26,559 5.0
Sydney 87,100 87,100 100
Jakarta 40,998 40,897 99.8
Source: Airports of Thailand Public Company Limited ((2004–2013), Summary Reports (online), available: http://aot.listedcompany.com/transport.html (04-08-2014).
Table 2.56 Available seat capacity for selected LCCs, June 2013 Low cost carrier Number of seats
AirAsia Group1 116,380
Jetstar Group2 19,674
Nok Air 15,930
Tiger Airways 10,980
Orient Thai 9,660
Juneyao Airlines 4,680
Virgin Australia 3,520
Eaststar Jet 2,601
Firefly 1,020
1) AirAsia Group: AirAsia Bhd 21,600; Indonesia AirAsia 2,340; Thai AirAsia 1,440. 2) Jetstar Group: Jetstar Airways 5,454; Jetstar Asia: 14,220. Source: Flightmaps Innovata (January 2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Europe: from the Russian Federation, with volume
Europe remains one of Phuket’s most signi cant markets, particularly for Scandinavian visitors. Tour operator TUINordic, which serves the four Scandinavian countries (Denmark, Finland, Norway and Sweden) sells more than 120,000 packages to Thailand every year.
The Boeing 787-Dreamliner is seen as the ideal type of aircraft for long-haul destinations with signi cant passenger capacity, such as Phuket. The airline ies from November to March to/from Copenhagen, Helsinki, Gothenburg and Stockholm. Phuket airport has none the less, seen a reduction of capacity to traditional markets such as Germany and Scandinavia (Sweden, Finland, Norway and Denmark).
Air capacity is also down from Germany. Only leisure air carrier Condor offers regular scheduled ights from Frankfurt to Phuket. After being taken over by the United Arab Emirates carrier Etihad, AirBerlin also abandoned its non-stop ights from Berlin to Phuket to re-route them via Abu Dhabi. Meanwhile, Thomson Air launched a weekly frequency from London Gatwick to Phuket with a Boeing 787.
Alternatively, Middle East carriers are taking over the connectivity between Europe and Phuket. In just ve years, direct connections have been created from Doha (Qatar Airways), Dubai (Emirates) and Abu Dhabi (Airberlin, since it has become a subsidiary of Etihad). Together they offer a capacity of 25,260 seats, more than twice as much as total seat capacity to Australia.
While Emirates offers a non-stop daily frequency to Phuket, Qatar Airways ies with a short stopover in Kuala Lumpur.
Western European ights, however, are giving way to Eastern Europe, particularly the Russian Federation. Russian citizens can now enter Thailand without a visa up to 30 days. In Eastern/ Central Europe, citizens from the following countries can obtain a visa on arrival for a stay not exceeding 15 days: Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Romania, Ukraine and Uzbekistan. Thailand’s visa facilitation translates into a surge of travellers from the Russian Federation, who are keen to holiday in Phuket and on Thailand’s southern coast particularly over the Russian winter.
During the winter peak season, Phuket is linked by scheduled ights to six airports of the Russian Federation – including Moscow’s three airports. Many charter ights connect from Siberia (Novosibirk, Irkutsk and Krasnoiarsk). Even during the low season however, Phuket still bene ts from a scheduled service to Moscow.
In 2012, total passengers ying the Russian Federation–Phuket routes reached 496,365 compared with 394,500 passengers in 2011, an increase of over 25%.
The Russian Federation is now among the top 5 largest foreign markets in Phuket, representing http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.57 Seat capacity between Phuket and the Russian Federation by destination and airline, December 2013 Flights/month Seats/month
Destination
Moscow 50 21,774
Novosibirsk 7 1,784
St Petersburg 5 1,355
Yekaterinburg 9 2,455
Airline
Transaero Airlines 54 22,082
Aeroflot 14 4,602
S7 Airlines 3 684
Source: Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Chinese attraction
Another fast growing market for Phuket is Mainland China. The number of Chinese travellers to the southern Thailand Island grows yearly. Chinese travellers represent Phuket’s largest inbound market, generating 953,150 visits in 2012 and were in fact the rst inbound market to reach the 1-million-mark, which it did in 2013. Together with Hong Kong, China; Mainland China generates over 1 million visitors to commercial accommodation in Phuket in 2012 at 1.12 million. Chinese travellers had a market share of 22% of all international arrivals in 2012 and a market share of 46% of all arrivals from Asia.
Phuket is linked by direct scheduled ights to eight cities in China together with a number of charter ights. These together generated a ow of 654,337 air passengers in 2012. Shanghai is the largest single source market, attracting 176,234 passengers followed by the Province of Sichuan with Chengdu, the capital of the Province and Chongqing – an industrial city with 13 million inhabitants – generating the second and third largest source of passengers, 153,000 and 115,000, respectively. Beijing–Phuket ights recorded by comparison “only” 57,402 passengers in 2012.
In December 2013, 14 airlines ew between Phuket and China/Hong Kong, China; including eight Mainland China carriers, two Hong Kong-based carriers and four Thai-based airlines. Thai Airways International, Dragonair and Shanghai Airlines offer similar capacities within a range of 9,500 seats per month. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.58 Seat capacity between Phuket and Mainland China/Hong Kong, China, December 2013 Airline Flights/month Seats/month
Air China 27 4,569
Business Air 9 2,142
China Eastern Airlines 53 8,169
China Southern Airlines 48 7,392
City Airways 31 4,867
Dragonair 57 9,348
Hainan Airlines 13 2,106
Hong Kong Express 35 5,320
Juneyao Airlines 45 7,155
Shanghai Airlines 60 9,540
Sichuan Airlines 33 5,181
Spring Airlines 13 2,340
Thai AirAsia 31 5,580
Thai Airways International (TG) 31 9,362
Source: Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014).
Aviation and tourism growth in Phuket will spread into Krabi
Air transport continues to be the major growth engine for tourism to Phuket and neighbouring islands. With capacity constraints at Phuket airport – the gateway with its single runway will be totally saturated, probably between 2020 and 2022 – airlines will continue to develop by seeking out alternative airports.
Located 170 km south of Phuket, the Province of Krabi has a fully operational airport. In 2012, Krabi welcomed 1.19 million passengers including international ights from Kuala Lumpur and Singapore, as well as scheduled leisure ights during winter from Scandinavia. Since 2008, passenger volumes doubled. Krabi is the only other airport in the region to have a runway of 3,000 m, enabling large aircraft to land. In winter 2013, China Eastern Airlines launched a leisure ight between Krabi and Nachang in north-eastern China. Krabi’s total monthly air seat capacity reached 12,500 in December 2013.18
Phuket tourism will continue to grow as more hotel capacity and infrastructure are added on the island. Potential saturation will then spread further into neighbouring Provinces and turn the entire southern region into a supra-provincial tourism hub for Thailand. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
18 Flightmaps Innovata (2013/2014) (online), available: www.flightmapsanalytics.com/ (04-08-2014). 140 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Table 2.59 International arrivals at Phuket accommodations, by nationality/region, 2011 and 2012 Nationality/region 2011 2012 Annual change 2012/2011 (%)
Africa 68,503 58,971 -13.9
Australia 662,244 642,416 -3.0
Austria 77,145 94,689 22.7
Belgium 50,266 51,700 2.9
Brunei Darussalam 6,283 2,883 -54.1
Cambodia 4,558 2,487 -45.4
Canada 57,118 63,896 11.9
China 635,243 953,150 50.0
Denmark 181,718 164,871 -9.3
Eastern Europe 137,082 158,558 15.7
Finland 169,317 158,033 -6.7
France 170,090 174,792 2.8
Germany 356,144 400,124 12.4
Hong Kong, China 52,818 61,302 16.1
India 94,718 118,534 25.1
Indonesia 43,987 70,918 61.2
Israel 37,263 34,121 -8.4
Italy 92,020 88,331 -4.0
Japan 170,685 194,210 13.8
Lao PDR 8,872 8,773 -1.1
Malaysia 150,812 270,344 79.3
Middle East 148,688 142,230 -4.3
Myanmar 19,312 39,280 103.4
Netherlands 70,458 69,436 -1.5
New Zealand 204,651 282,584 38.1
Norway 110,380 94,638 -14.3
Philippines 14,533 20,879 43.7
Republic of Korea 186,798 218,114 16.8
Russian Federation 330,339 424,367 28.5
Singapore 137,363 164,318 19.6 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Sweden 275,513 174,781 -36.6
Switzerland 124,432 161,385 29.7 Case study – Thailand: Phuket 141
Nationality/region 2011 2012 Annual change 2012/2011 (%)
Taiwan Province of China 19,887 19,196 -3.5
United Kingdom 239,504 268,176 12.0
United States of America 137,176 174,253 27.0
Viet Nam 13,718 18,050 31.6
Others 516,006 538,663 4.4
Total foreigners 5,895,997 6,789,412 15.2
Thai visitors 2,375,725 2,780,374 17.0
Grand total 8,271,722 9,569,786 15.7
Note: Table represents rounded percentages. Source: Thailand Ministry of Tourism and Sports, Department of Tourism (2013) (online), available: www.tourism.go.th (04-08-2014). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
2.12 Viet Nam: Hai Phong
Hai Phong, a coastal city, is located in the eastern north of Viet Nam, 120 km away from Hanoi, the capital. Its total population stood at 1,837,302 in 2009, with about 46.1% living in the downtown area. Hai Phong is the third largest city in Viet Nam and the main gateway to northern Viet Nam from the East Sea. The city, therefore, is ideally suited as an air traf c hub in both the nation and its neighbouring regions.
In addition, the city is a well-known tourism destination, boasting of beautiful marine landscapes, abundant cultural and historical assets and interesting festivals. The city’s famous attractions, Do Son Peninsular and Cat Ba archipelago, are excellent destinations where one can enjoy leisure and marine eco-tourism activities, such as beach tourism, sightseeing, sailing, cruising water sports, trekking, diving, rock climbing, and exploring the ecosystem of the sea and rainforest. Furthermore, the city holds many exciting festivals every year.
2.12.1 Key issues related to tourism and air transport
Source: Tourism Promotion Organization for Asia Pacific Cities.
One of the key issues in Hai Phong’s tourism is closely related to air transport infrastructure, particularly the international airport. As part of the master plan, Cat Bi domestic airport, which had been used for military purposes, was promoted to an international airport in 2006. The number of ights operating between Hai Phong and two other large domestic cities, Ho Chi Minh City and Da Nang, increased, and the international air route connecting Hai Phong and Macao, China, was http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
In April 2013 the local government announced the Cat Bi International Airport expansion project in order to meet increased air transport demand in Hai Phong and its neighbouring regions. Case study – Viet Nam: Hai Phong 143
The city has created favourable policies and conditions for airlines operating between Hai Phong and other cities. It also established policies to attract foreign, as well as domestic investment in upgrading tourism infrastructure facilities.
Challenges to expand flight routes
Hai Phong’s challenge is to open new ight routes connecting Cat Bi International Airport and other cities. It recently opened the Hai Phong–Danang domestic route and the Haiphong–Macao, China, international route. The domestic route connecting Hai Phong and Da Nang, which had been previously used by Vietnam Airlines, was suspended for some time due to inef cient performance. However, after tourism demand in both cities increased signi cantly, the local tourism authorities and travel agencies requested Vietnam Airlines reopen the ight route. The airline therefore reinstated ight services in 2010, and now offers a daily ight service to handle the surging number of passengers.
Hai Phong also endeavoured to open an international route to Macao, China, in order to attract tourists from that market, from Hong Kong, China; and Mainland China. It also established the Macao Tourism Hub connecting Hong Kong, China, the Pearl River Delta (Guangzhou) and Hai Phong. Furthermore, Vietnamese travel agencies conducted aggressive marketing in Macao, China; Hong Kong, China; Guangzhou and Shenzhen in Mainland China. As a result, the number of international visitors to Hai Phong has increased signi cantly.
In order to open new international routes and promote its tourism industry, Hai Phong had to resolve the problems experienced by local tourism businesses, air ight operators and local enterprises. Airlines also suffered from problems including surging fuel prices and expensive landing fees, while travel agencies had dif culty in attracting international tourists because of the problems in getting a visa and high marketing costs.
The government handled these problems by changing its tourism policy in a way that would support local tourism businesses and make it convenient for visitors to travel to the city. First of all, the government enabled visa issuance at the border, then it subsidised the marketing costs of travel agencies and instructed airport authorities to reduce landing fees and the cost of ground handling services. Furthermore, it improved the airport facilities and access to the airport from other parts of the city.
2.12.2 Results and lessons learned
The establishment of Cat Bi International airport has substantially helped Hai Phong take a great leap forward in becoming an international tourist destination. The number of visitors to the city has steadily grown over the past ten years. In 2003, the city received 1.68 million visitors of which 350,000 were international, and its tourism revenues stood at VND 404 billion (USD 19,061,100). http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
In 2012, the total number of visitors surged to 4.5 million – approximately 570,000 international and 3.9 million domestic visitors – while tourism revenues increased to VND 1,829 billion (USD 60,816,230). In addition, Hai Phong diversi ed and improved the various tourism products and implemented an aggressive marketing campaign. Not surprisingly, this contributed to the 144 Air Connectivity and its Impact on Tourism in Asia and the Paci c
popularity of the city as a tourist destination and now its growing popularity has attracted additional investment in the tourism and related sectors. This has created many jobs and improved the natural and social environment of the city.
One of the important lessons from Hai Phong’s success is the importance of cooperation among tourism-related parties such as travel agencies, airlines, and state management agencies. When the local government and tourism-related parties carried out their roles effectively, it became much easier for the city to achieve its goal of boosting city tourism development.
The government also changed its tourism policies to attract investment and improved tourism infrastructure facilities and tourism products. Travel agencies and local tourism authorities on the other hand focused on tourism marketing.
They promoted the attractions of the city, formed partnerships with other regions and countries, and developed various cultural and sports events and festivals. In addition, the local government also carried out educational programmes to help the citizens acquire the skills and qualities required to get jobs in tourism. As all the stakeholders in the tourism sector played their roles ef ciently and in concert, the city developed into a popular destination.
http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Conclusion and recommendations
According to UNWTO estimates international tourist arrivals worldwide are expected to increase at an average of 3.3% a year over the period 2010 to 2030 while Asia and the Paci c will grow by 4.9%. The healthy trend in Asia and the Paci c tourism can be attributed to the rapid economic growth of the region, a rising middle-class and consequently larger disposable incomes and leisure time of the populace. The Asia and the Paci c market share of arrivals is expected to increase from the current 23% to 30% by 2030. It is no surprise therefore that the Asia and the Paci c revenue per km of airlines currently at 29% is scheduled to reach 34% in 2032, growing at 5.5% above the world annual average of 4.7%.
Of the 1.1 billion tourists who crossed international borders in 2013, over 50% travelled by air. Given the diversity and geography of the Asia and the Paci c region there is no doubt that air transport dominates travel and far exceeds this percentage.
The Airbus global market forecast report Future Journeys (2013–2032) identi ed 42 mega-cities in 2012 serving more than 10,000 long-haul passengers each day and it is projected that a further 47 cities will reach that benchmark by 2032. Of these, 13 will be located in Asia and the Paci c. Routes to, from and through mega-cities (including ights from airports in other smaller cities) will account for 99% of all long-haul traf c.
It is clear from the case studies included in the present report that an improvement in air connectivity, particularly when combined with appropriately targeted marketing, leads to positive developments for city tourism and the city economy, even spilling over to the wider province/ state/prefecture areas.
In contrast, inconvenient and insuf cient accessibility to a city reduces the number of travellers willing and indeed able to visit the destination. The ow-on effects of that stymie investment, SME development, resident population expansion and employment. Limitations on each of these in turn, impact the potential for improved public sector revenues, particularly from an expanded tax base perspective thus limiting the activity of that sector in improving the appeal and development of the city, its surroundings and the local community.
City-to-city air linkages stimulate regional tourism as they allow tourists to explore new areas in their search for that special experience, activity, culinary delight, adventure or cultural experience thus spreading the tourism bene ts across a much wider swathe of a destination’s economy. This http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
This is not to ignore the role of land and sea-based transport; indeed the emergence of multi- modal transport systems is certainly something that will become more signi cant in the future. In terms of rapid and signi cant bene ts through employment, investment and a long supply- 146 Air Connectivity and its Impact on Tourism in Asia and the Paci c
delivery chain however, airports seem to have the advantage which explains why many airports are seeing the emergence of cities around them as they themselves develop and expand because of the employment and business bene ts they offer.
For the time-sensitive traveller as well, air connectivity remains a key issue and the emerging Asian markets, while increasingly cash rich, are nevertheless, time poor with most not wanting to spend their limited time travelling to or from a point of interest. Other more traditional source markets will remain signi cant of course especially across dimensions of length of stay, spend and dispersion, but for the moment, the vanguard of activity is in developing Asia.
In addition, the aviation sector adapts more easily to what is today a very dynamic business environment, being able to move points of origin and departure in line with market demand much more easily, offering perhaps a greater degree of protection for those assets.
That, however, highlights what should be an essential component in any city development plan – the need to back up physical connectivity with appropriate marketing support and the political will to see it all work together cohesively and ef ciently.
The potential of future travel across and within the Asia and the Paci c is very bright. A number of aircraft manufacturers agree that the major source of air demand over the next two decades will come primarily from the Asia and the Paci c region. Boeing for example, in its Current Market Outlook predicts that almost half of the global air traf c growth over the next two decades will be driven by travel to, from and within the Asia and the Paci c region.
Other aircraft manufacturers also support that general prediction, the only difference being the aircraft types that will be more in demand.
Driving much of that demand is the rapid increase in the size of the middle-class across the region. According to a 2010 OECD report the Asia and the Paci c region accounted for some 28% of the global middle class population in 2009, and around 23% of global spend by that sector in that same year (in USD on a purchasing power parity basis).
By 2020 however, those Asia and the Paci c numbers will rise to represent more than half of the global middle-class population (54%) and 42% of this sector’s spend while by 2030 it will account for almost two-thirds of the global population (66%) and some 59% of global spend.
Along with that increased disposable income will come demand for international travel, intra- regional at rst but expanding thereafter to cover most of the globe. Residents within Asia and the Paci c are already well used to air travel, indeed of the world’s ten busiest air routes – by volume of passengers carried – all but one are on domestic routes, but even that route – Hong Kong, China–Taipei – is intra-Asian.
There is also a distinct opportunity for aviation developing within the Asia and the Paci c region as http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Political will is a critical notion as well, particularly since air liberalisation is generally regarded as the primary driver of value creation in the global air transport network. Air liberalisation or deregulation as it rst appeared in the United States and subsequently in Europe has made a late entry to Asia and the Paci c. However, its emergence and impact in the democratisation of travel in Asia and the Paci c in the form of low cost carriers (LCCs), budget and legacy carriers (subsidiary companies of national carriers), cannot be further undermined resistance to “opening up the skies” has met with both trade and consumer wrath.
LCCs entrepreneurs in Asia and the Paci c and their successful ventures such as Air Asia, Virgin Australia, Jetstar, Cebu Paci c, IndiGo, Spice Jet and Lion Air to name a few have become household names in the region. Air connectivity in Asia and the Paci c has been greatly facilitated by these initiatives and cities will count on their support for their future development. As Boeing points out “studies suggest that as the relative openness of a country’s bilateral air service rises from the 20th to the 70th percentile, the resulting increase in traf c can boost air travel demand by 30%”.1
It is clear that those cities and regions that have the political will to develop their aviation linkages, supported by the private sector through investment and marketing expertise, will have a competitive edge in attracting the traveller of the future.
The chain of cooperation is a long one but when it operates as an ef cient tourist system should, it offers substantial bene ts to the communities and stakeholders that both recognise and support it.
Recommendations
Visas and immigration/border procedures
Asia and the Paci c destinations have been in the forefront of travel facilitation especially in the eld of visas and immigration/border procedures both at a regional and country level. At a regional and associative level it should be noted that the UNWTO/WTTC report on The Impact of Visa Facilitation in APEC Economies concluded that APEC economies stand to gain between 38 and 57 million additional international tourist arrivals by 2016 from visa facilitation, with an additional in ow of international tourism receipts standing to reach between USD 62 and USD 89 billion. The total number of new jobs created as a result of this increase is estimated to range from 1.8 to 2.6 million.2
The common ASEAN visa is another noteworthy scheme where, contrary to the con icting disconnects, Asia and the Paci c leads by example. The country level initiatives of Australia, China, and the Republic of Korea highlighted in the study are worth emulating by other destinations. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
1 Boeing (2013), Current Market Outlook 2013–2032 Asia-Pacific (online), available: www.boeing.com/boeing/commercial/cmo/asia-pacific.page (04-08-2014). 2 World Tourism Organization and World Travel & Tourism Council (2013), The Impact of Visa Facilitation in APEC Economies, UNWTO, Madrid. 148 Air Connectivity and its Impact on Tourism in Asia and the Paci c
Simpli cation of administrative border procedures is another eld where progress can be made and the example of Malaysia that revoked the disembarkation card in June 2012 for foreign visitors to shorten processing time at arrivals/departures with the introduction of the biometric recording system, is an example that other Asia and the Paci c destinations can follow. Technological progress will no doubt lead to the greater usage of biometric and other forms of sophisticated methods in immigration/border procedures in the Asia and the Paci c region in the future, but the extension to all Asia and the Paci c destinations will depend on the cost factor.
Taxes and other levies
Taxes and levies are a rightful source of income for the treasury of any country. The tourism industry has been traditionally subject to diverse forms of direct and indirect taxation. Asia and the Paci c destinations have been vigilant in not allowing the industry to be over-burdened by taxes and levies, which could ultimately be penny wise, pound foolish. Airport or disembarkation taxes, though, continue to be prevalent in some Asia and the Paci c countries (Indonesia, Viet Nam) while others have integrated it into the airline ticket so that the consumer does not have to go through any hassles prior to departure, which is psychologically negative to the image of the destination.
Australia freezing the “Passenger Movement Charge” is a clear example of a country that undertook to forego a levy in the greater interest of the pro t accruing from the global tourism sector.
Reduction of greenhouse gas emissions
The role of tourism and aviation in the reduction of greenhouse gas emissions in Asia and the Paci c will have to be examined in the wider context of its impact on climate change that is having a drastic effect in the region. Efforts at mitigation are as important as reduction of GHGs. Sustainable tourism development in the region is therefore dependent on the measures taken at local, national and regional levels where Government policy in conjunction with tourism stakeholder support will play a key role. Awareness of the dangers of carbon emissions related to aviation and air connectivity will have to move away from an academic exercise and debate to a practical level with international consultation and dialogue.
Convergent rules on the protection of travellers and tourism service providers
Consumer protection has become both an ethical and a legal responsibility especially since its bearings are no longer con ned to destinations but to regions as a whole, with jurisdiction surpassing national boundaries. This is particularly the case with air transport where airlines y routes that are international and hence have to abide by rules and regulations that have a global impact. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Regional agreements (ASEAN, APEC) on the protection of travellers and tourism service providers have been implemented in Asia and the Paci c with many destinations including China, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam having their own national legislation. It is in the interest of all Asia and the Paci c destinations that all apply these measures, as it is dif cult to envisage future growth without paying attention to consumer protection. Conclusion and recommendations 149
Policies
Free-market policies have governed the aviation sector since deregulation spread from the United States of America after the Airline Deregulation Act of 1978. However, its advent and force in Asia and the Paci c can be traced to the last two decades. Trade liberalisation and globalisation have accentuated the process whereby ideological barriers have been broken down: both tourism and aviation are therefore the direct bene ciaries of the free-market economy that characterises the region. However, a close coordination between national, regional and local government bodies has been called for, as seen from the city case studies, in the development of air connectivity that encompasses airport development as well.
The city case studies under review exemplify motivating factors that have dominated decision and policy making that should provide a good guideline to other destinations wishing to pro t from the lessons learnt. In the case of Kuala Lumpur the “State will” associated with a desire to place the city on par with its neighbours Bangkok and Singapore, was the overriding factor while Chengdu had the full backing of the Chinese Government in its development plans.
Osaka and Yogyakarta were more in uenced by regional bodies and Phuket by the private sector stakeholders. Kagoshima and Yogyakarta catered essentially to the domestic market but the former was encouraged through international connections while the latter is still to take advantage of this despite being a very attractive tourist destination with vast cultural resources at its disposal. Jeju being an island destination owes its success to the introduction of a local carrier Jeju Air, on the initiative of the regional government. The empowerment of regions as a result of air connectivity is a sequel that will not fail to attract the attention of other Asia and the Paci c destinations.
Airlines
As explained under policies, deregulation has been the main cause in the transformation of aviation whereby state support and control of national airlines ceased to have a monopolistic position. The net result of increased competition has been vertical integration in the airline industry with mega carriers, bigger and more fuel-ef cient airplanes, and pools/alliances being formed with the primary aim of being economically viable.
Asia and the Paci c has not escaped this evolution. National and regional airlines have been forced to join the mergers and alliances to take advantage of market forces. However, the most remarkable change and growth has come from Low Cost Carriers that have been competing on small budgets by cutting down frills.
Though Asia and the Paci c, with a few exceptions, has been a late entrant into the eld, LLCs in the region have been extremely successful and pro table. The tourism sector has gained the most from the LCCs, as have the regions where air connectivity has become more exible. Some of the most successful LCCs in Asia and the Paci c are now known beyond their frontiers. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Airports
New regional airports have been built to facilitate air connectivity in Asia and the Paci c but most of them are either domestic or military airports, which have subsequently been upgraded to commercial status.
Indonesia, for example, has 237 airports, 16 of which are commercial airports in big cities and 62 new projects are in the pipeline bringing the total to 299 by 2019. “They are not [all] as big airports in major cities but they are essential to improve accessibility in our country” said Deputy Transport Minister, Bangban Susantono as reported in the Jakarta Post.3
The impact of policies and the evolution of the aviation industry should be closely monitored by all Asia and the Paci c countries. They could bene t from the lessons learnt from the destinations and cities reviewed in the present study.
A new perspective
Bringing all of this together, it is useful to consider travel and tourism as more of a functional system within which specialised industries operate. To complicate matters even further, this travel and tourism system operates within several other inter-connected systems that make up national, regional and global identities, especially those that relate to policies and standards procedures.
All systems require complete co-operation and compliance in order to run ef ciently and effectively and travel and tourism is no exception. Without access to a destination there is limited or no visitation. Without adequate facilities at the destination, there are little or no overnight tourists and without appropriate vistas and experiences there is no incentive to visit at all let alone spend money on accommodation, food, entertainment, tours and so on.
Each process in the travel and tourism system is therefore more or less contingent upon its neighbour, both upstream and downstream from it, in order for the entire system to work ef ciently and effectively. A positive national reputation connects well with simpli ed entry requirements for example and these connect well with diverse points of access that in turn lead to a variety of sub- national destinations with a variety of accommodation choices and activities and experiences. Such a linear progression suggests a much more positive potential experience than one where impediments are raised at each stage and which collectively add increasingly to the possibility of a ‘no go’ decision.
What this means of course is that each stakeholder within the tourism ‘system’ needs to recognise the upstream/downstream relevance of the other stakeholders and work with them to keep the whole system as uid as possible. That then entails a mutual respect of and by each stakeholder, as well as a recognition of the various agendas and associated metrics that de ne the success or otherwise of each stakeholder level. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
3 ‘Indonesia to have 299 airports by 2019’ (2014), The Jakarta Post, Jakarta, 04-04-2014 (online), available at: www.thejakartapost.com (28-07-2014). Conclusion and recommendations 151
Open cross-communication and a focus on the wider potential and deliverables inherent in a well managed tourism system can lead to a more ef cient and effective tourism development approach with better long-run pro tability (as measured by more than mere dollars, pesos or baht) for both suppliers to and consumers of a destination.
This is what we hope the case studies in this report showcase. http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
List of acronyms and abbreviations
AAPA Association of Asia Pacific Airlines ACCP Committee on Consumer Protection ACE ASEAN Economic Community ACI Airports Council International ANA All Nippon Airways AOT Airports of Thailand Public Company Limited APEC Asia Pacific Economic Cooperation ASEAN Association of Southeast Asian Nations CAGR Compound annual growth rate CAPA Centre for Asia Pacific Aviation
CO2 Carbon dioxide ECPAT End Child Prostitution, Child Pornography and Trafficking of Children for Sexual Purposes FDI Foreign direct investment FSA Full service airlines FY Financial year GDP Gross domestic product GHGs Greenhouse gases GLBT Gay, Lesbian, Bisexual and Transgender GRDP Gross regional domestic product IATA International Air Transport Association ICAO International Civil Aviation Organization IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change JAL Japan Airlines JR Japan Railway KIX Kansai International Airport KIXC Kansai International Airport Company, Ltd. KLIA Kuala Lumpur International Airport KTX Korea Train Express LCC Low cost carrier MAHB Malaysia Airports Holdings Berhad http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
NTO National Tourist Organization OAG Official Airline Guide OECD Organisation for Economic Co-operation and Development PATA Pacific Asia Travel Association PPP Purchasing power parity SARS Severe acute respiratory syndrome SME Small and medium enterprises TFAS Traffic Forecast Advisory Services TPO Tourism Promotion Organization for Asia Pacific Cities UNESCO United Nations Educational, Scientific and Cultural Organization UNWTO World Tourism Organization USA United States of America WTTC World Travel & Tourism Council http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
List of figures and tables
List of figures Figure 1.1 Evolution of GDP per capita, 2005 and 2010–2012 (USD) 22 Figure 1.2 Rise of Asia and the Pacific middle class, 2011, 2021 and 2031 (million) 24 Figure 1.3 Air passenger volumes, 2012 (approximate figures) 25 Figure 1.4 Air passenger volume in selected Asian countries, domestic and international routes, 2000–2012 (million) 26 Figure 1.5 Top 10 busiest global air travel routes by passenger volume, 2012 (million) 27 Figure 1.6 LCCs’ total seat capacity within Asia and the Pacific, 2003–2012 (share, %) 30 Figure 1.7 Passenger growth at selected Asian airports, 2005–2012 (%) 34 Figure 2.1 Airline market share between Australia and China/Hong Kong, China; April 2014 (%) 44 Figure 2.2 Number of foreign visitors to Chengdu, 2007–2012 (× 1,000) 46 Figure 2.3 Evolution of Chengdu GDP per capita, 2010–2015 (USD) 49 Figure 2.4 Chengdu Airport ranking in passenger traffic among the top Chinese airports, 2012 (million) 54 Figure 2.5 Chengdu’s airport air connections by monthly seat capacity, July 2014 58 Figure 2.6 Chongqing’s airport air connections by monthly seat capacity, July 2014 59 Figure 2.7 Passenger throughput at Dalian International Airport, 2003–2012 (million) 62 Figure 2.8 Number of travel agencies and hotels in Dalian, 2004–2012 64 Figure 2.9 Poor populations of Yogyakarta and selected Provinces, 2012 (%) 67 Figure 2.10 Market share of foreign guests residing in hotels on Java Island and other Provinces, 2011 (%) 70 Figure 2.11 Domestic travellers in classified and non-classified accommodation for the Provinces of Yogyakarta and Central Java, 2005–2011 (million) 71 Figure 2.12 Passenger traffic at Central Java and Yogyakarta International Airports, 2008–2012 (million) 74 Figure 2.13 Total number of passengers at Adisucipto International Airport, 2002–2011 (million) 79 Figure 2.14 Gross regional product, by country/region, 2010 (USD billion) 84 Figure 2.15 Market share of foreign arrivals to KIX by country of residence, 2012 (%) 88 Figure 2.16 Osaka high-speed train Shinkansen connections, winter 2013/2014 91 Figure 2.17 Market share of international passenger traffic through Japanese airports, FY 2012 (%) 92 Figure 2.18 Passenger traffic through Osaka airports, FY 2003–2012 (million) 93 Figure 2.19 Network out of Osaka (KIX) by seat capacity and region/country, April 2014 95 Figure 2.20 Current and potential connections between Osaka and China, April 2014 96 Figure 2.21 Global City Competitiveness Benchmarking Index for Kuala Lumpur, 2012 102 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Figure 2.25 Passenger traffic and destinations out of Kuala Lumpur to China, India and Indonesia, 2012 114 Figure 2.26 Passenger market share for Kuala Lumpur, Bangkok and Singapore by region, 2012 (%) 115 Figure 2.27 Routing map of Busan Air, 2014 119 Figure 2.28 Routing map of Jeju Air, 2014 122 Figure 2.29 Proportion of tourism revenue in GRDP, 2005–2011 (%) 125 Figure 2.30 Phuket tourism attractions, 2012 (market share, %) 131
List of tables Table 1.1 GDP per capita in PPP for selected economies, 2000, 2005, 2010 and 2012 23 Table 1.2 Top air passenger markets in Asia, 2012 (million) 27 Table 1.3 Medium-term air passenger forecasts for Asia and the Pacific, 2012–2017 29 Table 1.4 Annual scheduled air seat capacity between Asia and the world, 2012 and 2013 29 Table 1.5 LCC market in available seats by region, intra-regional traffic, 2005 and 2010–2012 (share, %) 33 Table 1.6 Passenger traffic at selected major Asian airports, 2000, 2005 and 2010–2012 35 Table 2.1 Top 10 domestic routes, by volume, 2012 and 2013 39 Table 2.2 Top 10 international routes to and from Australia, by passenger volume, 2012 and 2013 40 Table 2.3 International passengers traffic from all Australian airports, 2012 and 2013 41 Table 2.4 Airlines carrying over 1 million international passengers, FY 2012/2013 42 Table 2.5 Passenger traffic of Emirates Airlines, FY 2012/2013 43 Table 2.6 LCC passenger traffic, 2012 and 2013 45 Table 2.7 Sichuan Province in comparison to selected Provinces in China, 2010 47 Table 2.8 Provincial nominal GDP per capita for selected Provinces, 2012 49 Table 2.9 China regional area forecast international arrivals, 2010–2014 50 Table 2.10 Selected overseas arrivals to Sichuan, Chengdu and Chongqing, 2011 51 Table 2.11 International tourist arrivals to Sichuan, Chengdu and Chongqing, 2011 and 2012 52 Table 2.12 Top 5 busiest Provinces in terms of road passenger traffic 53 Table 2.13 Number of passengers and flights at Chengdu Airport, 2004–2013 54 Table 2.14 Top domestic destinations in western China from Chengdu by flight frequency and seat capacity, April 2014 55 Table 2.15 Top domestic destinations from Chengdu airport by frequency and seat capacity, April 2014 55 Table 2.16 Total tourism revenue of Dalian, 2006–2012 63 Table 2.17 Human development index for selected Provinces, 2005 and 2010–2012 66 Table 2.18 Specific indicators for doing business in Yogyakarta and selected cities in Java, 2012 68 Table 2.19 Total number of foreign visitors to Yogyakarta, 2012 69 Table 2.20 Foreign guests in hotel accommodation in Java Provinces, 2010 and 2011 (× 1,000) 70 Table 2.21 Accommodation capacity in Yogyakarta, 2012 72 Table 2.22 Market share of seats in Yogyakarta by carrier, March 2014 (%) 75 Table 2.23 Seat capacity to and from Yogyakarta, December 2013 and March 2014 76 Table 2.24 Flying times showing potential opportunities in regional air connectivity 78 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
Table 2.29 Kansai foreign travellers for all regions visited, 2012 89 Table 2.30 Share of foreign visitors for selected Prefectures, 2012 89 Table 2.31 Passenger traffic on Japanese air carriers, domestic and international, 2002–2012 92 Table 2.32 Outbound departures from Osaka (KIX), 2009–2012 94 Table 2.33 Available seat capacity and flight frequency by LCC, April 2014 97 Table 2.34 Air capacity for top destinations served by LCCs, April 2014 98 Table 2.35 Number of flights and passengers at Sultan Ismail Pertra Airport, 2003–2012 100 Table 2.36 Tourist arrivals at commercial accommodation, Kuala Lumpur, 2010–2012 103 Table 2.37 LCCs’ monthly seat capacity at KLIA, 2009–2013 104 Table 2.38 LCCs’ monthly seat capacity, June 2013 105 Table 2.39 Foreign arrivals to Malaysia by nationality, 2012 and 2013 107 Table 2.40 Passenger movements at KLIA, 2003–2012 110 Table 2.41 Monthly seat capacity on selected international sectors from KLIA by region, 2008–2012 110 Table 2.42 International seat capacity from KLIA to selected destinations, June 2013 116 Table 2.43 International visitors to Busan, 2002–2011 119 Table 2.44 Air passengers, 2003–2012 120 Table 2.45 Top 10 global air travel busiest routes by passenger volume 123 Table 2.46 Visitors to Jeju, 2003–2012 124 Table 2.47 International visitors to Jeju Island, 2003–2012 124 Table 2.48 Proportion of tourism revenue in GRDP, 2005–2011 (KRW billion) 125 Table 2.49 Phuket and surrounding Provinces, 2010 (GDP per capita) 129 Table 2.50 Number of visitors to Phuket, 2011 and 2012 130 Table 2.51 Passengers through Phuket International Airport, 2003–2012 133 Table 2.52 Share of international passenger traffic by leading airlines 133 Table 2.53 Air passenger traffic to Phuket International Airport by region, 2011–2012 134 Table 2.54 Seat capacity on all international sectors from Phuket, June 2013 135 Table 2.55 LCC passenger market share for selected routes, 2012 136 Table 2.56 Available seat capacity for selected LCCs, June 2013 136 Table 2.57 Seat capacity between Phuket and the Russian Federation by destination and airline, December 2013 138 Table 2.58 Seat capacity between Phuket and Mainland China/Hong Kong, China, December 2013 139 Table 2.59 International arrivals at Phuket accommodations, by nationality/region, 2011 and 2012 140 http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm
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Thailand Ministry of Tourism and Sports, Department of World Bank (n.d.), Ease of Doing Business Report East Asia Tourism (n.d.), International Tourist Arrivals to Thailand and Pacific 2013 (online), available: 2012 and 2013 (online), available: www.doingbusiness.org/rankings/ and www. http://tourism.go.th/index.php?mod=WebTourism&file=d doingbusiness.org/press (04-08-2014). etails&dID=7&cID=276&dcID=621 (04-08-2014). World Bank and International Finance Corporation (2012), Thailand Office of the National Economic and Social Doing Buisness in Indonesia 2012 (online), available at: Development Board (NESDB) (2012), www.doingbusiness.org/indonesia (14-08-2014). National Income Account (online), available: World Bank Database (2013), GDP per capita (current USD) http://eng.nesdb.go.th/Default.aspx?tabid=94 2005–2012 (online), available: (04-08-2014). http://data.worldbank.org/indicator/NY.GDP.PCAP.CD The Economist Intelligence Unit (2012), Benchmarking (04-08-2014). Global City Competitiveness (online) available: World Tourism Organization (2014), UNWTO World Tourism www.economistinsights.com/sites/default/files/.../ Barometer, January 2014, UNWTO, Madrid. Hot%20Spots.pdf (04-08-2014). World Tourism Organization (2013), UNWTO World Tourism ‘The World’s Top Five Retirement Destinations in 2005’ (2005), Barometer, January 2013, UNWTO, Madrid. Fortune Magazine (online), available: World Tourism Organization (2011), Towards Tourism 2030, www.aboutthailandretirement.com/retirement- UNWTO, Madrid. phuket.htm (04-08-2014). World Tourism Organization and World Travel & Tourism Tourism Australia (n.d.), Aviation Newsletter March 2013 Council (2013), The Impact of Visa Facilitation in APEC (online), available: www.tourism.australia.com/news/ Economies, UNWTO, Madrid. aviation/news-aviation-8920.aspx (04-08-2014). Yamaguchi, Y. and Mukai, A. (2014), ‘MGM Envisions Tourism Malaysia (n.d.), Facts and Figures 2013 (online), Spending Up to $10 Billion on Japanese Casino’, available: http://corporate.tourism.gov.my/research. Bloomberg News, 25-02-2014 (online), available: asp?page=facts_figures (04-08-2014). www.bloomberg.com/news/2014-02-25/mgm-resorts- Tourism Research Australia, Australian Trade Commission considers-spending-up-to-10-billion-in-japan-casino. (2013), Action Plans – China, India, Indonesia, Japan, html (04-08-2014). South Korea (online), available: www.tra.gov.au/ asiafocus/Action-plans.html (04-08-2014). Further travel booking websites: Tourism Research Australia, Australian Trade Commission (2013), Tourism Forecasts, Spring 2013 (online), Expedia.com: www.expedia.com. available: www.tra.gov.au/publications/forecasts- Tigerair.com: www.tigerair.com/sg/en/. Tourism_Forecasts_Spring_2013.html (04-08-2014). AirAsia.com: www.airasia.com/ot/en/home.page?cid=1. Turner, L. W. and Witt, S. F. (2012), Asia Pacific Regional forecasts 2012–2014, PATA Strategic Intelligence Centre, Bangkok. University of Michigan, China Data Center (2011), China 2010 Census Data (online), available: http://chinadatacenter.org/Announcement/ AnnouncementContent.aspx?id=470 (04-08-2014). Wikipedia (2014), Chengdu Shuangliu International Airport (online), available: http://en.wikipedia.org/wiki/Chengdu_ Shuangliu_International_Airport (04-08-2014). Wikipedia (2014), Phuket general information, statistics 2012 (online), available: http://en.wikipedia.org/wiki/Phuket_ Province (04-08-2014). Wikipedia (2014), World’s busiest airports by passenger traffic http://www.e-unwto.org/doi/book/10.18111/9789284416240 - Harmony Lamm