Taiwan's Transit Bonanza
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Vol. 22 No. 1 February 2015 orientaviation.com TAIWAN’S TRANSIT BONANZA Ban to go on Mainland onward travel predicts China Airlines chairman, Huang-Hsiang Sun Fuel fall fires Skymark enters Haneda airport welcomes up profits bankruptcy protection first LCC – Peach Aviation SPECIALOEMs REPORT winning MROs’ business Yours. We took the direct approach to finding out what you want in Pratt & Whitney service. We asked. And here’s what you said: Drive down costs without compromising time on wing. Provide innovative repairs when they’re the best alternative to replacement. Offer a broad portfolio of services and make them easy to access. Just so we’re straight – your priorities are ours. Learn more about the Pratt & Whitney service you asked for, at pw.utc.com/DependableServices. Providing dependable services and customer-focused value. Dependable Services 29582_CE AftrmrktService_Orient Aviation.indd 2 1/23/15 1:29 PM Client: Pratt & Whitney Commercial Engines Ad Title: Getting Priorities Straight Publication: Orient Aviation - Feb Trim: 202 x 273 mm • Bleed: 212 x 283 mm • Live: 182 x 253 mm CONTENTS Volume 22, Issue 1 COVER STORY 22 PUBLISHED BY ORIENT AVIATION MEDIA GROUP Mailing address: GPO Box 11435 Hong Kong Office: 17/F Hang Wai Commercial Building, 231-233 Queen’s Road East, TAIWAN’S Wanchai, Hong Kong Tel: Editorial (852) 2865 1013 Fax: Editorial (852) 2865 3966 TRANSIT E-mail: [email protected] Website: www.orientaviation.com Publisher & Editor-in-Chief BONANZA Christine McGee E-mail: [email protected] Ban to go on Mainland onward travel predicts Chief Correspondent Tom Ballantyne China Airlines chairman, Tel: (612) 9638 6895 Huang-Hsiang Sun Fax: (612) 9684 2776 E-mail: [email protected] Greater China Correspondent Dominic Lalk Tel: (852) 2865 1013 COMMENT MAIN STORY Fax: (852) 2865 3966 5 How low will oil go? 16 Fuel fall fires up profits E-mail: [email protected] North Asia Correspondent NEWS Geoffrey Tudor Tel: (813) 3373 8368 6 AirAsia’s Tony Fernandes calls for single Asean E-mail: [email protected] safety regulator India Correspondent 6 LLCs win 50% of South Korean air passenger R. Thomas market Tel: (852) 2865 1013 E-mail: [email protected] Photographers Rob Finlayson, Colin Parker, Graham Uden NEWS BACKGROUNDERS Design & Production 8 Co-founder rescues his budget baby SpiceJet Chan Ping Kwan 10 Indonesia AirAsia crash prompts regulatory Printing 6 THAI to cut network by 10% as it restructures review Printing Station(2008) under new president 12 ICAO examines new tracking rules ADMINISTRATION 7 Korean Air’s debt to escalate 28 Japan Skymark enters bankruptcy protection General Manager Shirley Ho E-mail: [email protected] ADVERTISING South East Asia and Pacific Tan Kay Hui Tel: (65) 9790 6090 7 China tops chart for MRO growth 28 Government opens Tokyo’s Haneda airport to E-mail: [email protected] 7 Air New Zealand CEO, Christopher Luxon, was LCCs The Americas / Canada presented with the 2014 Orient Aviation Person Barnes Media Associates Ray Barnes of the Year award at a gala reception, sponsored SPECIAL REPORT Tel: (1 434) 770 4108 by Airbus, in Auckland last month 31 Manufacturers winning battle for MRO business Fax: (1 434) 927 5101 E-mail: [email protected] Europe & the Middle East REM International Stephane de Rémusat Tel: (33 5) 34 27 01 30 Fax: (33 5) 34 27 01 31 E-mail: [email protected] © All rights reserved Wilson Press HK Ltd., Hong Kong, 2014 34 Next generation aircraft reducing MRO demand FEBRUARY 2015 / ORIENT AVIATION / 3 253mm Live 273mm Trim 283mm Bleed Around here, every advantage counts. The Boeing Edge gives you all the tools to succeed in today’s competitive commercial aviation market. Offering the industry’s largest portfolio of services, support and solutions, the Boeing Edge adds value across your enterprise and for the life of your fleet. The Boeing Edge, when every advantage counts. www.boeing.com/boeingedge 182mm Live 202mm Trim 212mm Bleed Job Number: BOEG_BCAG_CAS_6128M_G Approved Client: Boeing Product: Commercial Airplane Company Date/Initials Date: 4/28/14 GCD: P. Serchuk File Name: BOEG_BCAG_CAS_6128M_G Creative Director: P. Serchuk Output Printed at: 100% Art Director: J. Alexander Fonts: Helvetica Neue 65 Copy Writer: P. Serchuk Media: Orient Aviation Print Producer: Account Executive: D. McAuliffe 3C Space/Color: Page — 4 Color — Bleed 50K Client: Boeing 50C Live: 182mm x 253mm 4C 41M Proof Reader: 41Y Trim: 202mm x 273mm Legal: Bleed: 212mm x 283mm Traffic Manager: Traci Brown Gutter: 0 25 50 75 100 Digital Artist: Production Artist: Bryan Freeny Art Buyer: Retoucher: Vendor: Garvey Group PUBLICATION NOTE: Guideline for general identification only. Do not use as insertion order. Material for this insertion is to be examined carefully upon receipt. If it is deficient or does not comply with your requirements, please contact: Print Production at 310-601-1485. Frontline Communications Partners 1880 Century Park East, Suite 1011, Los Angeles, CA 90067 Client - FRONTLINE COMMUNICATIONS Job # - 135142 Ver. - AD01 Cyan Magenta Yellow Black COMMENT How low can oil go? The travelling public is expecting the dramatic decrease in in a sweet spot that AirAsia group boss, Tony Fernandes, the oil price should quickly be passed onto them in the form described as “massive”. of lower airfares, as cautiously predicted by the International To illustrate how risk laden hedging can be, the region Air Transport Association. needs to look no further than the experience of some of its But buying jet fuel, and managing its volatility over the best run airlines. It was not so long ago that big operators annual operating cycle is more complex than it appears. like Cathay Pacific Airways, Singapore Airlines and the major These swings, of which the most recent is the 50% collapse Chinese carriers suffered serious paper losses after making in oil prices since last June, has confronted airlines with a wrong way bets on oil hedging. It is more than likely that for Catch 22 situation. some airlines, 2015 will repeat that bitter experience. Do you hedge? At what price? For how much and for Generally, there is no doubt the drastically lower cost of how long? There is no simple answer to these questions. oil is a huge bonus for the industry. Last month, the average Ultimately, for airline senior management, it comes down to price for jet fuel was around $1.71 per gallon, some 18.1% a gamble, no matter how informed the process was that lead lower than a month earlier and down a phenomenal 43.2%, to the decision. year on year. In the Asia-Pacific, different airlines are taking different But IATA is right in reminding everyone that several approaches to managing fuel volatility. With jet fuel at risks remain for airlines in the global environment, its lowest level in more than six years, carriers with less including political unrest, conflicts, and some weak regional hedging in place and buying at spot prices will be the economies that will influence the oil price. biggest beneficiaries of the current price, at US$50 per The short term landscape for oil remains positive. barrel. Some forecast the price will go as low as $43 a barrel. Other Those who have locked in their fuel requirements at industry analysts insist producers will adjust their output higher prices will suffer, as long as the price remains low. and prices will rise. Those who take a hedging position at today’s price will At the 2014 IATA AGM last June, airline bosses said they benefit significantly when fuel goes up. have found they could manage the high price of oil, but oil’s Whatever happens, the fuel bill of low-cost carriers, price volatility was a challenge to operations. How right they who pay up to 50% of their operating costs for jet fuel, is were. ■ TOM BALLANTYNE Chief Correspondent Orient Aviation Media Group The voice of Asia-Pacific aviation ORIENT AVIATION ORIENT AVIATION ORIENT AVIATION CHINA INDIA “It has established itself as the primary source of information on industry topics in the Asia-Pacific region” FEBRUARY 2015 / ORIENT AVIATION / 5 REGIONAL ROUND-UP AirAsia’s Fernandes wants single Asean regulator As news becomes available “Asean is not just open about the contents of skies. It is about having some Indonesia AirAsia QZ8501’s Asean standardization and flight and voice recorders, institutions to advance the AirAsia Group boss, Tony Asean aviation industry,” he Fernandes, has joined in calls said. for changes to the region’s Asean is pushing ahead air safety systems. “It’s time with plans for a single aviation for Asean institutions to step market, or “open skies” forward, for commonality, for in 2015, that will allow its standardization and for quality,” members’ airlines unlimited he said. “We should have one access to the markets of each Asean regulator for air traffic, other. However, execution of one Asean safety standard and Asean open skies in terms of one pilot training qualification adopting uniform technical and so there will be mobility of the safety standards have been low workforce.” priorities to date. ■ Korean LCCs control 50% of local air traffic For the first time in their Korean low-cost carriers: Jeju Jin Air (9.2%), T’Way Air (9%) since budget carriers began operating history, South Korean Air (13.9%), Air Busan (11.7%), and Eastar Jet (7.4%). KAC said flying in South Korea in 2005, budget carriers held more they earned a reputation as safe, than 50% of the country’s but with competitive fares. The domestic market last year, airport group said it expected attracting 51.25%, or 24.4 the budget sector to increase million, domestic travelers in its market share on short and 2014, said the Korean Airports medium haul international flights Corporation (KAC) in a January to Southeast Asia and Japan as report.