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DECEMBER 2017

Year in Review

Airlines deliver strong performance in a challenging year

Airports swarming with passengers. Packed aircraft arriving at their destinations as airways clog up. Alliances of the past edged aside by joint ventures of the future and annual airline budgets are restructured to fund the digitalization of passenger and air cargo management. Welcome to the world of Asia-Pacific aviation in 2017. Orient Aviation reports on a better than expected 12 months for many of the region’s carriers.

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December 1st 2017

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In the last 12 months in Asia-Pacific aviation, North American carriers have lost their supremacy on Trans-Pacific routes to predatory Mainland carriers. Read More » In the Middle East, the all-devouring Gulf carriers have been flatlined to an extent by the Trump travel bans that have depressed sales in markets important to them, including the Asia-Pacific.

At the heart of the region, airline alliances are losing the force they once held with their members and technological advances have provoked Qantas into challenging manufacturers to build a plane that can fly non-stop to Europe from Australia’s eastern seaboard.

Rapid response is the name of the game from implementation of new technology in every part of an airline’s operations – from analyzing possible new routes to cyber security defences, MRO practices and management of passengers bred to expect the best in cabin design and connectivity – yesterday.

Some airlines are doing it better than others. In Auckland, Air New Zealand continued to punch well above its weight, producing sequential healthy profits as it continued to build its reputation for innovation and excellent service.

The Qantas Group, which was in loss four years ago is on target for a third year of record profits, while All Nippon Airways and Japan Airlines are keeping their shareholders happy with their outstanding performances.

For some legacy carriers, 2017 was a year to endure. Cathay Pacific Airlines and Singapore Airlines responded to their recent losses with a restructuring of their operations. Job losses, job restructuring and re-drawn contracts are part of the process. Cathay also acquired a shareholder that did not quite fit the mould of its past investors. Fellow oneworld member, Qatar Airways, bought 9.61% of the Hong Kong-based carrier near year end from Kingboard Chemical Holdings. Cathay CEO, Rupert Hogg, said he was looking forward to “continued constructive relationship” with the Gulf airline.

Issues dominating discussions during the year were rising jet fuel costs, over capacity that was maintaining downward pressure on yields, the threat of slot allocations being taken by China and other nations, unsatisfactory levels of dialogue between airlines and governments on standardization of global security and safety and the impact of “Big Data” on airline operations, manufacturing and post delivery services. “We’re carrying more passengers but making less money,” was the familiar cry from many airline chief executives.

China’s inexorable rise to influence was demonstrated when Boeing had an order confirmed for 300 jets during President Trump’s visit to China in November. Chinese airlines were not the only high growth sector in the region. Leasing companies are forming at an unprecedented rate as Chinese banks and investment companies surge into the business. There are now more than 70 leasing companies in China. While many are small, several are now amongst the world’s top ten lessors. A shake out in the sector is expected.

A sign of things to come will be the launch of Qantas’s direct B787 Dreamliner flights from Perth in Western Australia to London in March, the first direct scheduled commercial airline link between Australia and the UK. As new generation, highly efficient long-haul aircraft come into service it became clear the time is not far away when every point on the planet can be connected by non-stop services. Roll on 2018.

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