VOL. 8 NO. 8 JUNE 2001 COVER STORY NEWS THAI will sell 13% but prefers local buyers 12 Chinese Beijing’s Air China plans listing 12 Japan Airlines announces profit record 15 Puzzle Page 30 SIA annual results – 33% profit 15 THAI half-yearly earnings hit by baht decline 15 Mergers in place, Qantas swallows no-frills rival 20 but still many Boeing Aerospace: a China chill? 29 questions to resolve Broadband Internet coming soon to airlines 47 Business digest 56 FEATURES Indonesia’s airlines: Boom or bust? 21 Merpati boss says political stability essential for airline 26 Old Bouraq hand starts new carrier 27 Boeing choses Chicago as its kind of corporate town 42 Winner: Spirit of Kai Tak in London-Sydney air race 46 SPECIAL REPORT:European investment in Asia Part 1 SR Technics on hunt for two MRO bases in Asia 49 Lufthansa Technik Philippines expands fast 52 LIDO AeroNet digs in for big business in Asia 54 COMMENT Turbulence by Tom Ballantyne 62 INFLIGHT ASIA o n t h e w e b The region’s new electronic inflight magazine dedicated to onboard services and technology. Check out www.orientaviation.com for the most informed news, trends and features on our industry. PUBLISHER Wilson Press Ltd Photographers South East Asia Association of Asia Pacific Airlines GPO Box 11435 Hong Kong Andrew Hunt (chief photographer), Tankayhui Media Secretariat Tel: Editorial (852) 2893 3676 Rob Finlayson, Hiro Murai Tan Kay Hui Suite 9.01, 9/F, Tel: (65) 9790 6090 Kompleks Antarabangsa, Fax: Editorial (852) 2892 2846 Design & Production Fax: (65) 299 2262 Jalan Sultan Ismail, E-mail: [email protected] Ü Design + Production Web Site: www.orientaviation.com E-mail: [email protected] 50250 Kuala Lumpur, Malaysia. Colour Separations Director General: Richard Stirland The Americas / Canada : Publisher and Managing Editor Twinstar Graphic Arts Co. Commercial Director: Carlos Chua Barnes Media Associates Barry Grindrod Technical Director: Leroy Keith Printing Ray Barnes E-mail: [email protected] Tel: (603) 2145 5600 Lammar Offset Tel: (1 203) 372 7738 Fax: (603) 2145 7500 Joint Publisher Printing Company Ltd Fax: (1 203) 372 8763 E-mail: [email protected] Christine McGee E-mail: [email protected] Distributed by E-mail: [email protected] Published 10 times a year Wilson Press Ltd Europe : February, March, April, May, June, Chief Correspondent REM International July/August, September, October, Tom Ballantyne Stephane de Remusat ADVERTISING November and December/January. Tel: (612) 9638 6895 Head Office: Tel: (33 5) 34 27 01 30 © All rights reserved Fax: (612) 9684 2776 Wilson Press Ltd Fax: (33 5) 34 27 01 31 Wilson Press Ltd, Hong Kong, 2001. E-mail: [email protected] Christine McGee E-mail: [email protected] Tel: (852) 2893 3676 Hong Kong & China: The views expressed in this Fax: (852) 2892 2846 New Media Manager Jonathan Sharp, Wellington Ng magazine are not necessarily E-mail: [email protected] Leona Wong Wing Lam Tel: (852) 2504 3995 those of the Association of Tel: (852) 2865 3966 E-mail: [email protected] Asia Pacific Airlines. June 01 | Orient Aviation | 3 PUBLISHER’S LETTER CHINA MERGERS – ALMOST THERE ergers and acquisitions are always painful – and However they add that senior management of China’s not always necessary. But in the case of the Chi airlines know they must reduce capacity, match purchases or Mnese airline industry, there will be more pain leasing of aircraft to their network needs and attempt to set – including job losses – if the master plan to slim down and orderly guidelines for ticket-pricing if they are to survive in a consolidate the nation’s airlines is to succeed. China that will eventually join the World Trade Organisation. Reading our cover story this month on the progress of the The smart operators among these elites also recognise they mergers, first formally announced by the Civil Aviation Ad- must take the hard decisions now. The CAAC has done its work ministration of China (CAAC) almost a year ago, the optimists by providing the blueprint for airline reform. Now it is up to the prevail. individual airlines to put that theory into practice. They believe there will be some brutal battles for control of the three major airline groups of Air China, China Eastern and China Southern respectively, and that it will take time for the power struggles to be resolved. Some of the present chief executives of the government controlled airlines might not be BARRY GRINDROD around in 18 months, analysts believe. Publisher/Managing Editor The Association of Asia Pacific Airlines members and contact list: Air New Zealand Dragonair Philippine Airlines Managing Director, Mr Gary Toomey Chief Executive Officer, Mr Stanley Hui Chairman, Mr Lucio Tan General Manager Group Corporate Communication Manager, VP Corporate Communications, Communications, Mr David Beatson Ms Laura Crampton Mr Rolando Estabilio Tel: (64 9) 336 2770 Fax: (64 9) 336 2759 Tel: (852) 3193 3193 Fax: (852) 3193 3194 Tel: (632) 817 1234 Fax: (632) 817 8689 All Nippon Airways EVA Air Qantas Airways President and CEO, Mr Kichisaburo Nomura President, Mr Frank Hsu Managing Director and CEO, Mr Geoff Dixon Director, Public Relations, Mr Koji Ohno Deputy Senior Vice President, Mr K. W. Nieh Group General Manager Public Affairs, Tel: (81 3) 5756 5675 Fax: (81 3) 5756 5679 Tel: (8862) 8500 2585 Fax: (8862) 2501 7599 Mr Michael Sharp Ansett Australia Tel: (612) 9691 3760 Fax: (612) 9691 4187 Garuda Indonesia General Manager International, Royal Brunei Airlines Mr Andrew Miller President, Mr Abdulgani Manager Group Public Affairs, VP Corporate Affairs, Mr Pujobroto Chairman, Dato Paduka Awang Haji Alimin Ms Heather Jefferey Tel: (6221) 380 0592 Fax: (6221) 368 031 Bin Haji Abdul Wahab Tel: (61 3) 9623 3540 Fax: (61 3) 9623 2887 Tel: (673 2) 343 368 Fax: (673 2) 343 335 Japan Airlines Asiana Airlines President, Mr Isao Kaneko Singapore Airlines President & Chief Executive, Mr Park Chan-bup Director, Public Relations, Mr Geoffrey Tudor Deputy Chairman and CEO, Managing Director, PR, Mr Hong Lae Kim Tel: (813) 5460 3109 Fax: (813) 5460 5910 Dr Cheong Choong Kong Tel: (822) 758 8161 Fax: (822) 758 8008 VP Public Affairs, Mr Rick Clements Korean Air Tel: (65) 541 4030 Fax: (65) 545 6083 Cathay Pacific Airways President and CEO, Mr Shim Yi Taek Chief Executive Officer, Mr David Turnbull VP Public Relations, Mr Seung Jae Noh Thai Airways International Corporate Communications General Manager, Tel: (822) 656 7092 Fax: (822) 656 7288/89 President, Mr Bhisit Kuslasayanon Mr Alan Wong Director, PR, Mrs Sunathee Isvarphornchai Tel: (852) 2747 8868 Fax: (852) 2810 6563 Malaysia Airlines Tel: (662) 513 3364 Fax: (662) 545 3891 China Airlines Chairman, Mr Azizan Zainal Abidin Vietnam Airlines President, Ms Christine Tsung Tsai-yi Head of Industry Affairs, Acting VP, Corp Comms, Mr Paul Wang Ms R. Nordiana Zainal Shah President and CEO, Mr Nguyen Xuan Hien Tel: (8862) 2514 5750 Fax: (8862) 2514 5754 Tel: (603) 2165 5154 Fax: (603) 2163 3178 Dep Director, Corp Affairs, Mr Nguyen Huy Hieu June 01 | Orient Aviation | DI A RY OMEBACK KIDS: He is never one to miss an opportunity to burnish his company’s image abroad, but BAE SYSTEMS’ executive vice-president Asia, Martin Craigs, Coutdid himself when he cornered Bill Clinton – post-prandially of course – at the fancy China Club in Hong Kong in May. After spotting Clinton at a nearby table, Craigs quickly acquired a bottle of Bushmill’s Irish whiskey and presented it to Clinton “in appreciation of his peace work in Ireland”. Flushed with presidential afterglow, Craigs now hopes to persuade Clinton to return to the region as a guest of the local Aerospace Forum, an avia- tion networking and lobby group that has raised more than US$200,000 for the flying eye hospital charity Orbis. Craigs, honorary chairman of the regional forum, said Clinton is a well-known supporter of Orbis. If Clinton says yes, he will join a galaxy of aviation heavy- weights who have addressed the forum since it began in the mid-eighties – including Airbus’ Jean Pierson, Boeing’s Phil Condit, British Airways’ Lord Marshall, Virgin Atlantic founder Sir Richard Branson, Cathay Pacific Airways chairman Peter Sutch, Continental Airlines’ Gordon BAE SYSTEMS’ executive vice-president Asia Bethune, Embraer’s Maurice Bothello, Moritz Suter of Crossair and Astronaut Pete Conrad. Martin Craigs with former U.S. president Bill It could happen, said Craigs. “ All we need are a few generous sponsors.” Clinton in Hong Kong. PERSPECTIVE PEOPLE PERSON: Only two weeks into his lost the job to Somchet – who was favoured ton and the U.S. Congress gave Hall’s NTSB chairmanship of Thai Airways International by the former government of Chuan Leek- responsibility for co-ordinating assistance (THAI), former academic and an architect of pai. Mongol Ampornpisit’s chairmanship of to families of accident victims, following Thailand’s democratic constitution, Chaianan the NBIA is also under threat since the new revelations worldwide of poor treatment of Samudavanij, invited labour representatives Thaksin government was elected. the families of victims of airplane accidents to the airline’s board meeting, reported Thai’s by some airlines. excited media. Why? “Because we have noth- PIONEER: Bryan Grey (71), the Austral- ing to hide,” he said. But he could have added ian who launched low-cost, no-frills flying APPROVED: Three airport bosses were because he needs their support to revive an in Australia, died in Melbourne in May elected for second two-year terms at the airline that has had 16% shaved of its share after a long illness. Grey launched Compass annual Airports Council International Pacific price this year and suffered from the drop in Airlines in 1990 with a fleet of A300s, when (ACI-Pacific) conference in San Francisco in value of the Thai baht.