PUBLISHER Wilson Press Ltd VOL. 10 NO. 4 FEBRUARY 2003 GPO Box 11435 Hong Kong Tel: Editorial (852) 2893 3676 Fax: Editorial (852) 2892 2846 E-mail: [email protected] Web Site: www.orientaviation.com Chief Executive and Editor-in-Chief Barry Grindrod E-mail: [email protected] Publisher Christine McGee E-mail: [email protected] Chief Correspondent Tom Ballantyne COVER STORY Tel: (612) 9638 6895 Fax: (612) 9684 2776 E-mail: [email protected] China WELCOME Page 32 Melody Su Tel: (852) 2893 3676 E-mail: [email protected] HOME, ROD Japan Daniel Baron British Airways CEO and Tel: (813) 3203 7106 E-mail: [email protected] former Cathay Pacific boss, Philippines Rene Mallari Rod Eddington, talks optimistically Tel: (632) 413 8726 of Asia’s airline industry E-mail: [email protected] Photographers Patrick Dunne (chief photographer), Rob Finlayson, Andrew Hunt, Hiro Murai Design & Production ü Design + Production Colour Separations Twinstar Graphic Arts Co. Cover photo: Patrick Dunne Photo: Patrick Dunne Printing Hop Sze Printing Company Ltd NEWS ADVERTISING Malaysia Airlines orders six new A380s 10 South East Asia and Pacific THAI to make major investment in new Bangkok airport 10 Tankayhui Media, Tan Kay Hui Tel: (65) 9790 6090 EVA upgrades profit forecast for second time in 2002 12 Fax: (65) 6280 2823 THAI announces 427% rise in profit; better to come 12 E-mail: [email protected] Singapore, Malaysia expand China ties 14 The Americas/Canada Hainan Airlines launches freight subsidiary 14 Barnes Media Associates New airways mean big savings for Asia’s carriers 31 Ray Barnes Tel: (1) 434 927 5122 ‘Make or break’ for Air New Zealand 35 Fax: (1) 434 927 5101 Asia’s carriers to discuss new FAA fuel tank ruling 45 E-mail: [email protected] Europe MAIN STORY REM International Stephane de Remusat No-frills carriers: will they work in the Asia-Pacific? 18 Tel: (33 5) 34 27 01 30 Asia’s ‘Mr No-Frills’ 23 Fax: (33 5) 34 27 01 31 Can China support low cost carriers? 24 E-mail: [email protected] Many of Indonesia’s start-ups doomed to failure 26 New Media & Circulation Manager Japan’s minnows to be hit hard by landing fee hike 27 Leona Wong Wing Lam Tel: (852) 2865 1013 Indian Airlines under pressure from private operators 28 E-mail: [email protected] U.S. desert holds key for Australian carrier’s future 30 Association of Asia Pacific Airlines Secretariat SPECIAL REPORT – EnginEERING & MAINTENANCE IN THE ASIA-PACIFIC Suite 9.01, 9/F, All change at GAMECO 37 Kompleks Antarabangsa, Jalan Sultan Ismail, Lufthansa Technik Philippines achieves milestones 38 50250 Kuala Lumpur, Malaysia. Trent work underwrites HAESL success 39 Director General: Richard Stirland TAECO goes from strength to strength 40 Commercial Director: Carlos Chua Technical Director: Leroy Keith Ansett: the name lives on 42 Tel: (603) 2145 5600 New owners and new hope for SR Technics 43 Fax: (603) 2145 7500 More jobs for MTU Malaysia 43 E-mail: [email protected] Profit and expansion for ANZES 44 Published 10 times a year February, March, April, May, June, July/August, September, October, REGULAR FEATURES November and December/January. Comment 5 © All rights reserved Wilson Press Ltd, Hong Kong, 2003. Perspective 8 Inside Greater China 36 The views expressed in this magazine are not necessarily those of the Association of Asia Pacific Airlines. Business Digest 46 February 2003, Orient Aviation 3 COMMENT HERE TO STAY he potential for a boom in no-frills and low-cost troubles of Malaysia Airlines) and Virgin Blue in Australia airline operations in the Asia-Pacific has been the (its survival assured by the collapse of Ansett Australia) have subject of heated debate for several years. proven the point. That big airlines are nervous about low- Many analysts and industry observers doubt the cost upstarts cherry-picking their markets is evident by the phenomenal success of budget flying in Europe emergence of Qantas’ Australian Airlines and the proposed Tand the U.S. can be cloned in Asia’s skies ... and with good new no-frills carrier planned by Thai Airways International. reason. Asia is not Europe with its deregulated air market Whether forays by national flag carriers into no-frills or that allows airlines free cross-border operations between low-cost subsidiaries will ultimately be successful remains to a multitude of nations. Neither is it North America, where be seen. The record for this type of operation has not been the skies are open between the U.S. and Canada (as well as covered in glory in Europe. some South American nations). What is clear is that Asia-Pacific air passengers are no In this region, airline operations take place within a different from travellers elsewhere. They want safe, quality regulatory straightjacket, a plethora of individual air service service at the lowest price. For this reason, low-cost airlines agreements and on intra-regional routes. These routes are will become a permanent part of the fabric of aviation in already dominated by major national flag carriers whose the region. rights and profit-making ability are jealously protected by However, they are unlikely to reach the size or maturity of their government guardians. a Ryanair, easyJet or Southwest Airlines until intra-regional There is airport slot congestion and, in many cases, a lack air routes are liberalised. Initially, that will probably happen of sufficient infrastructure at secondary airports to facilitate on a sub-regional basis (such as within Asean). opportunity for the secondary point-to-point services on It will be many years before the Asia-Pacific offers the which low-cost carriers thrive. Some countries, such as Sin- European Union-style access new low-cost carriers require gapore, have little or no domestic traffic, meaning a budget to survive and prosper on a large scale. airline must necessarily be an international airline to have any hope of survival. Despite this, there is clearly a place in the region for TOM BALLANTYNE these brash newcomers. AirAsia in Malaysia (helped by the Chief correspondent THE ASSOCIatION OF ASIA PACIFIC AIRLINES MEMBERS AND CONtaCT LIST: Air New Zealand Dragonair Philippine Airlines Chief Executive, Mr Ralph Norris Chief Executive Officer, Mr Stanley Hui President, Mr Avelino Zapanta General Manager Group Communications, Corporate Communication Manager, VP Corporate Communications, Mr David Beatson Ms Laura Crampton Mr Rolando Estabilio Tel: (632) 817 1234 Fax: (632) 817 8689 Tel: (64 9) 336 2770 Fax: (64 9) 336 2759 Tel: (852) 3193 3193 Fax: (852) 3193 3194 Qantas Airways All Nippon Airways EVA Air Managing Director and CEO, President and CEO, Mr Yoji Ohashi President, Ms Kitty Yen Mr Geoff Dixon Senior VP, Public Relations, Mr Koji Ohno Deputy Senior Vice President, Group General Manager Public Affairs, Tel: (81 3) 5756 5675 Fax: (81 3) 5756 5679 Mr K. W. Nieh Mr Michael Sharp Tel: (8862) 8500 2585 Fax: (8862) 2501 7599 Tel: (612) 9691 3760 Fax: (612) 9691 4187 Asiana Airlines President & Chief Executive, Garuda Indonesia Royal Brunei Airlines Chairman, Pehin Dato Haji Yahya Mr Park Chan-bup President, Mr Indra Setiawan Chief Executive, Mr Peter Foster Managing Director, PR, VP Corporate Affairs, Mr Pujobroto Tel: (673 2) 229 799 Fax: (673 2) 221 230 Mr Hong Lae Kim Tel: (6221) 380 0592 Fax: (6221) 368 031 Tel: (822) 758 8161 Fax: (822) 758 8008 Singapore Airlines Japan Airlines Deputy Chairman and CEO, Cathay Pacific Airways President, Mr Isao Kaneko Dr Cheong Choong Kong Chief Executive Officer, Mr David Turnbull Director, Public Relations, VP Public Affairs, Mr Rick Clements Corporate Communications General Mr Geoffrey Tudor Tel: (65) 6541 5880 Fax: (65) 6545 6083 Manager, Mr Alan Wong Tel: (813) 5460 3109 Fax: (813) 5460 5910 Tel: (852) 2747 8868 Fax: (852) 2810 6563 Thai Airways International President, Mr Kanok Abhiradee Korean Air Director, PR, China Airlines Chairman and CEO, Mr Yang Ho Cho Mrs Sunathee Isvarphornchai President, Mr Philip Hsing-Hsiung Wei Managing VP, Corporate Communications, Tel: (662) 513 3364 Fax: (662) 545 3891 VP, Corp Comms, Mr Roger Han Mr Jun Jip Choi Tel: (8862) 2514 5750 Fax: (8862) 2514 5754 Tel: (822) 656 7065 Fax: (822) 656 7288/89 Vietnam Airlines President and CEO, Malaysia Airlines Mr Nguyen Xuan Hien Chairman, Tan Sri Azizan Zainul Abidin Dep Director, Corp Affairs, Mr Nguyen Huy Hieu Tel: (603) 2165 5154 Fax: (603) 2163 3178 Tel: (84-4) 873 0928 Fax: (84-4) 827 2291 February 2003, Orient Aviation 5 DIARY PERSPECTIVE LASSY: Oh, to have been a fly on the next day the Boeing team returned for a personal guided tour C wall. It was a couple of months before of the A380 mock-up. It must have been quite an eye opener Christmas when what many might have for the Airbus staff. thought “unthinkable” occurred. Orient Aviation understands the dinner included some The place was Toulouse, France and Alan “vigorous debate” between senior engineers from the two Mulally, president and chief executive of the airplane manufacturers about the Sonic Cruiser. Boeing Commercial Airplane Group By the way, before Mulally arrived, it suddenly occurred was coming to the hometown of archrival to Airbus staff that the soiree might raise Airbus to deliver a speech at the local univer- Boeing’s chief some eyebrows amongst government of- sity. Mullaly’s office called Airbus to inquire Mulally ficials on both sides of the Atlantic. They if a visit might be arranged. “Why not?” was quickly called the local U.S. Consulate and the answer. So Mulally and his small team, including Boeing had one of Washington’s diplomats attend vice-president and programme manager for the now shelved and take notes to show nothing underhand Sonic Cruiser, Walt Gillette, visited Airbus and met with was going on.