AIRASIA GROUP CEO, TONY FERNANDES, IS TRANSFORMING THE AIRLINE GROUP INTO "THE AMAZON OF ASIAN AVIATION" - Orient Aviation
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Vol. 26 No. 10
December 2019-January 2020
orientaviation.com
ORIENT AVIATION
PERSON OF THE YEAR 2019
AND LIFETIME ACHIEVEMENT
AWARD WINNER
TONY FERNANDES
Co-founder and CEO
AirAsia Group
AIRASIA GROUP CEO,
TONY FERNANDES,
IS TRANSFORMING THE
AIRLINE GROUP INTO
“THE AMAZON OF
ASIAN AVIATION”
Crackdown necessary on More profitable days ahead Qantas postpones
transport of counterfeit for Asia-Pacific airlines reports Project Sunrise
lithium battery cargo global airline body decision to 2020
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CONTENTS Volume 26, Issue 10
COVER STORY
18
Orient Aviation 2019
Person of the Year and
ORIENT AVIATION MEDIA GROUP
17/F Hang Wai Commercial Building,
Lifetime achievement
231-233 Queen’s Road East, award recipient,
Wanchai, Hong Kong
Editorial (852) 2865 1013 Tony Fernandes.
E-mail: info@orientaviation.com
Website: www.orientaviation.com The AirAsia Group CEO
Mailing address:
GPO Box 11435 Hong Kong
is transforming the airline
company into “the Amazon
Publisher & Editor-in-Chief of aviation in Asia”
Christine McGee
E-mail: christine@orientaviation.com
Associate Editor &
Chief Correspondent
Tom Ballantyne
Tel: (612) 9638 6895
Fax: (612) 9684 2776
E-mail: tomball@ozemail.com.au
COMMENT 24 Association of Asia Pacific Airlines names SIA’s
Asia Editor
Will Horton
5 Increased profits for Asia-Pacific carriers ahead Subhas Menon as new director general
Tel: (852) 2865 1013 24 Getting to grips with unruly passengers
E-mail: willhhorton@gmail.com ADDENDUM 25 Emirates president demands 777X be put
North Asia Correspondent
6 Cathay Pacific to cut capacity as civil unrest through “hell on earth” in certification process
Geoffrey Tudor continues in its home hub 25 Airbus topped order table at Dubai Airshow, but
Tel: (813) 3373 8368 7 Citation for Orient Aviation’s 2019 Person of the Boeing signed new customers for the MAX
E-mail: tudorgeoffrey47@gmail.com Year, AirAsia’s Tony Fernandes
Photographers 2019 YEAR IN REVIEW
Rob Finlayson, Graham Uden, NEWS BACKGROUNDERS 12 Major leadership shifts at region’s carriers
Ryan Peters 8 Air passenger and cargo markets will improve in
Chief Designer 2020 forecasts the International Air Transport
Chan Ping Kwan Association
Printing
Printing Station(2008)
ADMINISTRATION
General Manager 14 Significant Asia-Pacific airline decisions of the
Shirley Ho year
E-mail: shirley@orientaviation.com 15 Mixed fortunes in Asia’s fastest growing airline
9 Global airline lobby group urges a crackdown markets
ADVERTISING on air transport of counterfeit or undeclared 16 Breathtaking changes confront MRO
Lithium batteries
Asia-Pacific, Europe & Middle East
9 Airline industry’s gender balance campaign INDUSTRY ADDENDUM
Christine McGee
attracts 59 airline members in three months 26 SITA 2019 China IT Insights reports fast take
Tel: (852) 6438 3379
E-mail: christine@orientaviation.com 10 Qantas selects A350-1000 as preferred Project up of Artificial Intelligence and automation at
Sunrise aircraft Mainland airports
The Americas / Canada
26 Australia’s Perth Airport extends Amadeus
Barnes Media Associates
Ray Barnes
relationship with contract to upgrade automated
Tel: (1 434) 770 4108 passenger processing
Fax: (1 434) 927 5101 26 GKN Aerospace invests US$10 million in Pune that
E-mail: barnesrv@gmail.com will create 800 jobs in five years
ray@orientaviation.com
26 HAECO unit and GA Telesis forge aircraft
teardown partnership
Follow us on Twitter @orientaviation 26 Aircraft seat manufacturer MRO, Ipeco, expands
23 Wanted: Asian airport and ATM building binge to Beijing
DECEMBER 2019-JANUARY 2020 / ORIENT AVIATION / 3
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COMMENT
Profits up for 2020 predicts IATA
The International Air Transport Association’s (IATA) somewhat of IATA’s almost 300 strong airline members.
unexpected prediction, announced at press time, that the “There is a long tail of airlines barely breaking even and a
world’s airlines will collectively make more money in 2020 group making significant losses. For this long tail of airlines,
than in 2019 was certainly welcome. IATA forecasts a net performance has not improved in the past decade. This is the
profit of US$29.3 billion for the global airline industry next reason we have seen a series of airline failures in the last two
year, up from $25.9 billion in 2019. years, despite relatively good financial results at the aggregate
For the Asia-Pacific specifically, the news was even better. industry level,” said IATA’s chief economist, Brian Pearce.
The region’s airlines will report a net profit of $6 billion for the “There is work to be done to move the industry to a more
full 2020 year against a profit of $4.9 billion in 2019. Given broadly financially sustainable position.”
global economies remain fragile, social unrest is rife in many Pearce is right. The vast majority of the world’s airlines
countries, trade disputes abound and severe and extreme need to make their operations financially sustainable.
weather events are on the increase, forecasts are extremely Observers of the Asia-Pacific industry would have no problem
difficult to make. identifying carriers that are part of that long tail.
So the optimism engendered by IATA’s projections for next For some of the region’s airlines, obstacles to greater
year should be considered in context and tempered by several profitability will be temporary. A case in point is Cathay Pacific
factors. Firstly, the forecast is supported by a belief there will Airways. Its declining passenger demand is a result of civil
be a “truce” in the U.S./Sino trade war in the run up to the U.S. unrest in its home hub in Hong Kong, a situation that is out of
presidential election next November. its control. Several airlines in China and elsewhere in the region
Given the roller-coaster nature of the disagreement, there have been hit by the grounding of the 737 MAX, country-to-
is no guarantee of a temporary slowdown in the tit-for-tat tariff country political disputes and foreign currency fluctuations.
war. It also is expected the price of oil will be stable and even In the coming year, it is expected the volatile operating
drop. Again, hardly a sure bet. conditions for Asia-Pacific airlines will continue, whatever
And then there are ramifications to consider following the forecasts may be. Longer-term, the future of the region’s
IATA’s news that profits collectively produced by the airline carriers is bright, but they would do well to prepare for another
industry in the last ten years were generated by only about 30 tough 12 months despite IATA’s positive predictions. ■
TOM BALLANTYNE
Associate editor and chief correspondent
Orient Aviation Media Group
The most trusted source of Asia-Pacific commercial aviation news and analysis
ORIENT AVIATION ORIENT AVIATION CHINA
“It has established itself as the primary source of information on industry topics in the Asia-Pacific region”
DECEMBER 2019-JANUARY 2020 / ORIENT AVIATION / 5
ADDENDUM
Cathay Pacific cuts capacity as passenger traffic tumbles
Cathay Pacific Airways has competition, has meant overall
revised downwards its planned Looking forward, we continue to see yield has remained under
capacity increase for 2020 as a significant shortfall in inbound Hong Kong significant pressure,” he said.
passenger numbers declined for advance bookings, particularly from The group’s regional routes,
the fourth month in November. mainland China and other regional markets, in particular mainland China and
At press time, Hong Kong had Northeast Asia, were continuing
compared with the same snapshot last year
entered its seventh month of civil to experience weak demand for
protests and unrest, a situation Ronald Lam travel into Hong Kong. Travel
that particularly has impacted the Cathay Pacific Group chief customer and commercial officer sentiment also “was soft” on
travel and hospitality industries of routes to and from the U.S.
the Special Administrative Region. company statement. weak. Our inbound Hong Kong before Thanksgiving week, a
“In light of the immediate In November, Cathay Pacific traffic dropped 46% compared traditionally strong period for
commercial challenges we are and Cathay Dragon carried with the same period in 2018 – a premium class travel, Lam said.
facing, we have reluctantly 2,623,764 passengers, 9% fewer further slowdown from the 35% “There were a few bright
made the decision to reduce our than in the same month a year drop in October.” spots in the network such as our
seat capacity in 2020 by 1.4% ago. Passenger load factor was Outbound traffic was down India routes, which remained
year-on-year as opposed to our 80.1% for the month, a drop 8% against the same time last robust and generated good
original plan of 3.1% growth, of 3.2 percentage points over year – a slight improvement over demand between India and
meaning that for the first time in a November 2018. previous months, Lam said. North America. Europe to
long while our airlines will reduce Lam said: “November “Our increasing reliance Southwest Pacific, an important
in size,” Cathay Pacific Group continued to be very challenging on transit traffic through Hong transit stream for the airline’s
chief customer and commercial for both Cathay Pacific and Hong Kong, which has been less network, also remained healthy,”
officer, Ronald Lam, said in a Kong with sentiment for travel still impacted, together with intense he said. ■
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6 / ORIENT AVIATION / DECEMBER 2019-JANUARY 2020
AirAsia Group CEO, Tony Fernandes, named Orient
Aviation’s 2019 Person of the Year and a recipient Person of the Year
of the media group’s lifetime achievement award roll of honour
2019 Tony Fernandes, CEO, AirAsia Group
Fernandes began his career as Mr. Fernandes is also the recipient of an
a university educated accountant Orient Aviation Lifetime Achievement award
who switched gears to the music for his services to the aviation industry.
business, working for both Virgin 2018 Goh Choon Phong, CEO, Singapore Airlines
Communications and Warner Music. 2017 Shinichiro Ito, Chairman, ANA HOLDINGS
In 2001, with his partner Kamarudin INC.
Meranun, he took on the Asia-Pacific 2016 Alan Joyce, CEO and Managing Director,
legacy airlines with the establishment Qantas Airways
of low-cost carrier, AirAsia, based 2015 Tony Tyler, Director General & CEO,
in Kuala Lumpur. The rest is aviation International Air Transport Association.
The Orient Aviation Media Group has history. Mr. Tyler is also the recipient of an Orient
named Tony Fernandes, the CEO of The awards will be presented to Aviation Lifetime Achievement award for his
the AirAsia Group, as its 2019 Person Fernandes in Kuala Lumpur before an services to the aviation industry.
of the Year and a recipient of an Orient invitation-only audience of his industry 2014 Christopher Luxon, CEO, Air New Zealand
Aviation Lifetime Achievement award. peers. 2013 Yoshiharu Ueki, President, Japan Airlines
2012 John Borghetti, Chief Executive Officer,
Citation Virgin Australia
“No one has done more to of technology and providing flights 2011 Shinichiro Ito, President & CEO, All Nippon
transform the Asia-Pacific aviation for passengers overlooked by legacy Airways
landscape in the last 18 years than carriers fueled the LCC’s growth and 2010 Emirsyah Satar, President & CEO, Garuda
AirAsia Group CEO, Tony Fernandes. set the operating template rival budget Indonesia
On September 1, 2001, he and his carriers emulated. 2009 Tony Fernandes, Chief Executive, AirAsia
partner, Kamarudin Meranun, acquired The airline group established 2008 Idris Jala, Managing Director, Malaysia
a small government-owned Malaysian joint venture LCCs in India, Indonesia, Airlines
airline, saddled with a US$11 million Japan, Thailand and the Philippines 2007 Jaime Bautista, President, Philippine
debt, for the princely sum of one and set up AirAsia X, a long-haul LCC. Airlines
ringgit, or US$0.25. In the process, Fernandes and his 2006 Chew Choon Seng, Chief Executive,
Within a year, the failing airline had team built AirAsia into one of the most Singapore Airlines
been transformed into low-cost carrier recognizable brands in the Asia-Pacific. 2005 Geoff Dixon, Managing Director & CEO,
AirAsia. It was in profit and spreading The airline group also forced Qantas Airways
its fast growing wings across Malaysia significant changes in strategy at the 2004 Kanok Abhiradee, President, Thai Airways
with plans to fly to Southeast Asia and full-service end of the market. Several International
the regional Asia-Pacific. full-service airlines now operate their 2003 Ralph Norris, Managing Director & CEO, Air
Initially, full-service carriers were own LCC subsidiaries as budget carriers New Zealand
dismissive of the newcomer, but they usurped legacy carrier demand for 2002 Isao Kaneko, President, Japan Airlines
soon learned, as had airlines in Europe cheap, back-of-the-plane economy fares. 2001 No Award
and the U.S., that low-cost airlines were As the group enters its third 2000 David Turnbull, Deputy Chairman & CEO,
a threat to their operating model and decade of operations, Fernandes, Cathay Pacific Airways
budget flying was being embraced by his partners and his employees are 1999 James Strong, Chief Executive, Qantas
the expanding middle classes of the transforming the AirAsia Group into Airways
region’s emerging economies. a travel and lifestyle brand intended 1998 Dr. Cheong Choong Kong, Deputy
Fernandes has been relentless in to be the “Amazon of Aviation” in the Chairman & CEO, Singapore Airlines
his drive to bring affordable travel to Asia-Pacific. 1997 Fu Chan Fan, President, China Airlines
the region, a passion he ascribed in his The AirAsia Group operates an
autobiography, “Flying High”, to making all-Airbus fleet of 200 jets with another In 2012, Orient Aviation awarded its second
sure “Now Everyone Can Fly”. 353 on order. ■ Lifetime Achievement award in its 18-year history of
His perceptive application of social the Person of the Year. The recipient was Air New
Christine McGee
media to reach and build the AirAsia Publisher and editor-in-chief
Zealand CEO, Rob Fyfe.
Group audience was unprecedented in Orient Aviation Media Group In 1998, Cathay Pacific Airways chairman,
the industry as was the LCC’s strategy Tom Ballantyne Peter Sutch, was awarded Orient Aviation’s Lifetime
of opening under-served routes Associate editor and chief correspondent Achievement award.
across the region. The combination Orient Aviation Media Group
DECEMBER 2019-JANUARY 2020 / ORIENT AVIATION / 7
MAIN STORY
BETTER DAYS
AHEAD FOR
REGION’S AIRLINES
The last 12 months have not been the best of times for
Asia-Pacific airlines, but the International Air Transport Association
(IATA) believes 2020 will be better. Despite higher forecast profits
for the world’s carriers, the devil could be in the detail with some
problematic global issues a long way from resolution. Associate editor
and chief correspondent, Tom Ballantyne, reports from Geneva.
D
espite trade wars, fragile
global economic conditions
and political unrest in several
cities across the globe, the
International Air Transport
Association (IATA) has forecast airlines
worldwide will turn in a collective net profit of
US$29.3 billion in 2020, up from $25.9
billion in 2019.
If correct, it will be the industry’s 11th
consecutive year in the black. IATA also
forecast the struggling air freight sector would 2.2% net
grow by 2% in the next 12 months. margin for the coming year.
IATA said airlines were expected to earn a Asia remains the manufacturing centre of the world
return on invested capital of 6%, up from 5.7% last year and and revenues from transporting much of those goods are a
also report a lift in net profit margins to 3.4%, from 3.1%. significant proportion of sales for many of the region’s airlines,
Average net profit per passenger was predicted to increase to IATA said.
$6.20, from $5.70, with overall performance boosted by a “But the trade war is assumed just to be on hold. Trade
decline in the average price of fuel. tariffs are not reversed. Consequently, the rise in trade and
“Slower than expected global economic growth in 2019 cargo volumes is moderate. The net profit per passenger is
contributed to lower energy demand, with crude oil prices anticipated at $3.34,” it said.
averaging around $65 per barrel (Brent), compared with IATA director general and CEO, Alexandre de Juniac,
$71.60 in 2018. Oil supply also is plentiful, which boosted said a combination of various global factors had created a
inventories. As a result, oil prices are expected to dip in 2020 tougher than anticipated business environment for airlines.
to $63 (Brent) per barrel,” said IATA’s chief economist Brian “Yet the industry managed to achieve a decade in the black, as
Pearce. “The forecast industry fuel bill of $182 billion will restructuring and cost-cutting continued to pay dividends. It
represent 22.1% of expenses, down from $188 billion, or appears 2019 will be the bottom of the current economic cycle
23.7% of expenses, in 2019.” and the forecast for 2020 is somewhat brighter,” he said.
Speaking at IATA’s Global Media Days in Geneva in early “The big question for 2020 is how capacity will develop,
December, Pearce said Asia-Pacific carriers would experience a particularly when, as expected, grounded 737 MAX aircraft
modest recovery in world trade and air cargo. The association return to service and delayed deliveries arrive.”
forecasts the region’s airlines would produce a $6 billion net Given the state of the market, the modest optimistic
profit in 2020, compared with $4.9 billion in 2019, and earn a projections for 2020 may come as a surprise to the industry,
8 / ORIENT AVIATION / DECEMBER 2019-JANUARY 2020
but Pearce said IATA’s working assumption for the forecast is
similar to those of the International Monetary Fund (IMF) Industry’s new gender balance
and the Word Trade Organization (WTO).
The prediction is that ahead of the U.S. elections in initiative attracts 59 airlines
November 2020, there will be “a truce” in the U.S./Sino trade IATA’s 25by2025 gender balance in aviation campaign,
war, with no reduction in existing tariffs but with no launched in September this year, has recruited 59 airlines
additional tariffs implemented. “If so, then stronger economic to its cause, representing 30.24% of passenger traffic. The
growth in 2020 will produce a modest rise in international 59 signatories are Europe (36), Asia-Pacific (10), the
trade growth, from 0.9% in 2019 to 3.3% in 2020,” said Americas (7) and Africa and the Middle East (6).
Pearce. This trend, he said, would be moderately supportive The goal of 25by2025 is to increase the number of
women in senior airline positions to a minimum of 25%
for the air cargo business.
against current metrics and to apply the same goals for
Pearce delivered other news that was not quite as welcome women in under-represented jobs at airlines, including
as the 2020 profit forecast. He said only a relatively small cockpit crew, operations and MRO.
number of airlines had driven an improvement in aggregate
industry level profitability. Remarkably, while IATA has
nearly 300 members, ranking carriers by economic profit Passenger numbers are expected to reach 4.72 billion in 2020,
showed only around 30 carriers had been responsible for up 4.0% or 4.54 billion, from 2019.
improvements in profits in the last ten years. Freight tonnes carried will recover to 62.4 million, a 2.0%
“There is a long tail of airlines barely breaking even and a increase over the 61.2 million tonnes carried in 2019 – the
group making significant losses,” he said. “For this long tail of lowest result in three years. Stronger economic growth should
airlines, performance has not improved in the past decade. support passenger traffic (RPKs) growth of 4.1%, similar to
This is why there has been a series of airline failures in the past 2019 at 4.2%, but below historical trends.
two years, despite relatively good financial results at the At the annual Global Media Days, it was clear IATA is
aggregate industry level. There is work to be done to move the putting a renewed focus on environmental issues. De Juniac
industry into a more financially sustainable position.” said airlines had done a good job with their sustainability
IATA did not identify individual airlines that are achievements but repeated his belief they had not done so well
struggling, but examples in the Asia-Pacific include Malaysia in getting the good news out to the general public.
Airlines, Thai Airways International, Garuda Indonesia and IATA has asked the European Union to support aviation’s
Air India. energy transition to sustainable aviation fuels (SAF) as part of
IATA said air traffic growth would continue but at a the bloc’s recently launched Green Deal.
slower pace than the historical average in the short-term. “Aviation has high hopes for the European Commission’s
Green Deal. We want to be part of Europe’s building of a new
energy economy. We will do everything we can to make
IATA urges crackdown on sustainable aviation fuels a priority for aviation in Europe and
around the world,” said de Juniac, who recently took part in a
shippers illegally transporting Sustainable Innovation Forum that ran alongside the UN
counterfeit lithium batteries COP25 Climate Talks in Madrid.
Since SAF were certified for commercial use in 2009,
Consumer demand for lithium batteries is growing by
17% a year, with the number of incidents involving more than 215,000 flights have taken off using some blend
mis-declared or under-declared batteries transported as of this low carbon fuel. The industry believed achieving 2%
air cargo also rising as a result of demand, said IATA. of global jet fuel from non-fossil sources by 2025 could
“Dangerous goods, including Lithium batteries, are create a tipping point for production and cost of SAF. The 14
safe to transport if managed according to international production facilities operating, under construction or in the
regulations and standards,” IATA said. “but we are seeing final stages of financing and planning would take the
an increase in the number of incidents in which rogue industry a long way towards the 2% goal, IATA said.
shippers are not complying. “More progress is needed. Aviation should be a policy
“The industry is uniting, including the Global Shippers
priority because it does not have a near-term electrification
Forum and the International Federation of Freight
option. Traditional energy suppliers must prioritize
Forwarders Association, to raise awareness of the need to
comply. This includes the launching of an incident investment in SAF,” de Juniac said.
reporting tool so information about rogue shippers is IATA emphasised SAF were critical to the industry’s
shared. long-term efforts to cut its emissions to half 2005 levels by
“And we are asking governments to get much tougher 2050. The industry’s strategy to achieve this goal includes
with fines and penalities,” IATA said. significant investment in new technology aircraft, research
Currently, air cargo is scanned for items that pose a into electric and hybrid propulsion, programs to improve
risk to security such as explosives but not for safety such operational efficiency, and the world’s first global sectoral
as lithium batteries. climate mechanism, CORSIA (Carbon Offsetting
Reduction Scheme for International Aviation). ■
DECEMBER 2019-JANUARY 2020 / ORIENT AVIATION / 9
NEWS BACKGROUNDER
Qantas selects A350-1000
order without impacting on
our starting date, which means
we can spend more time on
as preferred aircraft for hopefully reaching a deal with
our pilots.”
Project Sunrise
Airbus and Boeing submitted
their aircraft proposals for
Project Sunrise last August. After
reviews of the offers, Qantas told
Toulouse and Seattle “to go back
to their drawing boards” with
the offers.
At a November investor
briefing in Sydney, new Qantas
International chief executive,
Tino La Spina, told his audience:
“We’ve asked them to re-look
at them, to sharpen their
pencils. There was a gap,” La
Spina said. Qantas wanted the
manufacturers to not only to
consider price, but guarantees
and conditions to deal with
“what if” scenarios, he said.
“This aircraft is going to
Q
be in the fleet for the next 20
antas announced The last of three research confidence in the market for years. We want to cover off
mid-month an flights, this time from New York direct services to New York and eventualities. Making sure it’s
Airbus aircraft to Sydney, was conducted on London from the east coast of future-proofed,” La Spina said.
was the preferred December 17. The crew data Australia,” Qantas Group CEO, At the December briefing
type for the airline collected from all three flights Alan Joyce, said. where it was revealed the
group’s ultra-long-haul non-stop will be part of final discussions “The A350 is a fantastic A350-1000 was the preferred
Project Sunrise flights. No orders with Australia’s Civil Aviation aircraft and the deal on the aircraft for Sunrise routes, Joyce
have been placed, but the airline Safety Authority (CASA) table with Airbus gives us the said: “Can I thank both Airbus
said it would work closely with intended to win approval for the best possible combination and Boeing for the tremendous
Airbus to prepare contract terms ultra-long-haul services. of commercial terms, fuel effort they have put into Project
for up to 12 aircraft ahead of a Qantas is continuing efficiency, operating cost and Sunrise. It was a tough choice
final decision by the board. negotiations with the customer experience. between two very capable
After evaluation of the representatives for the pilots for “The aircraft and engine aircraft, being made even
A350-1000 and Boeing’s yet-to- crewing Project Sunrise flights. combination is next generation harder by innovation from both
fly 777X, Qantas has selected An agreement with the pilots will technology, but is thoroughly manufacturers to improve what
the A350-1000, powered by close the last gap in the Sunrise proven after more than two they already had spent years
Rolls-Royce Trent XWB engines, business case, Qantas said. years in service. This is the right designing.”
as the preferred aircraft for the Based on 60 hours of flying choice for the Sunrise missions Before the final test flight
Sydney to London and New York on the research flights, it has and also the right economics to on December 17, Qantas had
flights if they proceed, the airline become clear dedicated space do other long-haul routes. completed ultra-long-haul test
group said. for stretching and movement, “We have done a lot of work flights with a 787; one from New
Airbus will add a fuel in particular for economy on the economics and we know York to Sydney of 19 hours 16
tank and slightly increase the passengers, was necessary as the last gap we have to close is minutes followed by London to
maximum takeoff weight were the benefits of re-designing some efficiency gains associated Sydney at 19 hours 19 minutes.
of the aircraft to deliver the the service onboard to actively with our pilots. We are offering Joyce said based on media
performance required for shift people to their destination promotions and an increase in coverage of the flights, there
Sunrise routes, Qantas said. The time zones, Qantas said. pay but we are asking for some was “huge demand” for the new
Toulouse manufacturer also “Between the research flexibility in return, which will services. He expected the airline
agreed to extend the deadline to flights and what we have learned help lower our operating costs. could earn a 30% price premium
confirm delivery slots to March from two years of flying Perth “Airbus has given us an over other airlines for tickets on
next year. to London, we have a lot of extra month to lock in an aircraft the non-stop routes. ■
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Major Asia-Pacific
leadership shifts in 2019
C
hange at the top of regulators and a public that has
the region’s airlines to be persuaded the 737 MAX is
is a given and 2019 safe to fly.
was no exception. At Air New Zealand, after a
Some appointments global executive search, Greg
represented generational change. Foran, the former CEO of retail
Some were the result of politics giant Walmart’s enormous North
and others lost their jobs because American business, was chosen to
of wrongdoing. succeed Christopher Luxon as
Resignations were suddenly CEO of the carrier. He will start his
submitted at Cathay Pacific new job next month. The airline’s
Airways in August as the airline chairman, Therese Walsh, said
was progressing towards success the airline was “thrilled to have
in its three-year transformation attracted a world-class Kiwi back
program. Popular CEO, Rupert Mandy Ng succeeded Lam as At Boeing Commercial home”.
Hogg, and chief commercial CEO of HK Express. Airplanes (BCA), the change of At Guangzhou-based China
officer, Paul Loo, abruptly Managing director of Swire CEO was not so civilized. Kevin Southern Airlines (CSA), the
resigned after Beijing made it Coca-Cola Limited, a director of McAllister, only appointed 54-year-old president of the
clear it was unhappy with some John Swire & Sons (H.K.) Ltd and CEO at the manufacturer 18 carrier, Tan Wangeng, departed
of the airline’s staff participating a non-executive director of Swire months earlier, exited the for aerospace manufacturer,
in anti-government protests. The Properties Ltd, Patrick Healy, (53) company in October in what the COMAC, where he is tasked with
carrier also lost a pivotal leader of is the new chairman of the airline company called “a separation”. adding marketing expertise to the
the airline group, chairman John group. In November, the top two BCA aviation conglomerate.
Slosar, who stepped down on “Being chairman of Cathay communications executives also He arrived at COMAC in late
November 6. Pacific has been a singular honor left the company. 2018, but as is common in China,
Former HAECO boss, for me and working together with New BCA boss, Stan Deal, the change went unreported for
Augustus Tang, is Cathay all of you a singular pleasure. I who was head of Boeing Global two months. His successor is Ma
Pacific’s new CEO. Ronald Lam, would like to thank each and every Services until the leadership Xulun, until recently vice chairman
who only a few months earlier one of you for your support, your change, has the enormous of SkyTeam member, China
had been appointed CEO of the dedication and your friendship. All task of placating the families of Eastern Airlines (CEA). Before
Swire Group’s newly acquired LCC, of those have meant a great deal passengers lost in the MAX Lion moving to CSA, Ma served for
HK Express, replaced Loo as chief to me,” Slosar said in November in Air and Ethiopian Airlines crashes several years with the Civil Aviation
customer and commercial officer. his final message as chairman. as well as airline customers, Administration of China (CAAC)
12 / ORIENT AVIATION / DECEMBER 2019-JANUARY 2020and Beijing-based Air China. at senior levels at the flag carrier - Air New Zealand. carrier’s air operator’s certificate.
In Thailand, Captain when tragedy struck in November. Borghetti’s replacement is The start-up’s first flight is planned
Puttipong Prasarttong-Osoth Athletic Lucio “Bong” Paul Scurrah, most recently the for January 23.
added the position of chief Tan Jnr, who recently had been chief executive of stevedore, DP And making history in
executive and vice chairman of handed oversight of PAL, died World Australia. He has worked Indonesia is Veranita Yosephine
Bangkok Airways to his existing three days after he was injured for Australian Airlines, the Sinaga, the former deputy CEO
responsibilities as president playing basketball. In the same government-owned domestic of Indonesia Air Asia who has
following the resignation of his week, Cebu Pacific lost its founder, carrier that merged with Qantas, succeeded Dendy Kurniawan
father, 85-year-old Dr Prasert legendary businessman John Ansett Airlines and was a founding as boss of the joint venture
Prasartthong-Osoth, from Gokongwei, at age 93. director of Australian regional LCC. Before she joined the
the company. The change was Credited with breaking up airline, Regional Express (REX). airline in mid-year, she was the
announced after Dr Prasert local business monopolies in the At the Qantas Group, the sales director for multi-national
was charged with manipulating retail and property industries, former CEO of the international consumer company, Kraft Heinz,
the share register of the airline. he famously told his only son, unit, Alison Webster, abruptly Indonesia.■
Thailand’s Securities and Exchange Lance, to go run an airline after left the airline in April. Her
Commission (SEC) forced him to he launched Cebu Pacific in 1996 replacement is the group’s former
relinquish all involvement with the with four secondhand commuter chief financial Officer, Tino La
Bangkok Airways. airplanes. The LCC broke up the Spino, who started in his new job
In late November, Garuda monopoly of Philippine Airlines in October.
Indonesia boss, Ari Askhara, was and is now the biggest carrier in As the year drew to a close,
accused of evading excise taxes the Philippines. the convulsions of indebted
on a Harley Davidson motor bike The trailblazing career of HNA Group continued. In the
and a folding bike. He was alleged India’s Jet Airway’s chairman, months following the accidental
to have authorized the payment Naresh Goyal, came to a sudden death of the group’s co-founder,
and then the transfer of the goods halt in March when he and his Wang Jian, in France in July,
on a delivery flight from Toulouse wife were forced off the board of fellow co-founder, Chen The International Air
of a new Garuda jet. Garuda the airline he founded. A month Feng, appointed his son, Chen Transport Association (IATA)
has a new boss of North
Indonesia is a listed company. An later, floundering in an ocean of Xiaofeng, president of the
Asia operations. Ma Tao
extraordinary general meeting debt and unable to pay staff, the group, pushing aside the group’s
was appointed regional vice
must be held to vote on a motion airline stopped flying. leadership team to make way for president earlier in the year
to dismiss Askhara. In Australia, John Borghetti Chen Jnr. after Baojian Zhang, who
In June, Philippine Airlines retired as CEO of Virgin Australia Further north, weeks before was the founding head of
announced the surprise retirement (VA) after nine years at the helm. his April 8 death in a California IATA’s China operations and
of widely liked president and He had led the carrier through hospital aged 70, Y K Cho, was held the role for 24 years,
chief operating officer, Jaime its transformation from low-cost voted off the board of Korean retired. Ma has spent a third
Bautista. JJB, as he was known in Virgin Blue to a full-service Air. A few months later, Asiana of his career representing
the group, served as PAL president operator bent of competing with a Airlines chairman, Park Sam-koo, China at the International
Civil Aviation Organization
from 2004 to 2012. He returned dominant Qantas Airways. But the resigned from the airline’s board.
(ICAO). Before accepting the
to the airline in 2014 after Lucio new VA did not produce profits In December, EVA Air scion
IATA post he was head of the
Tan Snr. bought back the airline for its shareholders, including and former chairman of the carrier, Airworthiness Certification
from San Miguel. The tobacco Singapore Airlines, Etihad Chang kuo-wei, moved closer Centre of the Civil Aviation
and brewer tycoon was increasing Airways - and until the sale of its to launching his revenge carrier, Administration of China.
the presence of family members shareholding to Chinese investors Starlux, with the granting of the
DECEMBER 2019-JANUARY 2020 / ORIENT AVIATION / 13ASIA-PACIFIC COMMERCIAL AVIATION YEAR IN REVIEW
Significant Asia-Pacific
airline decisions of the year
A
sia’s airline industry airlines which are expanding their
took some presence in Malaysia. In return,
unexpected turns MAS can boost revenue by selling
in 2019 and did long-haul SIA flights.
so without much The partnership will shore up
influence from governments or in cash flow while the government
reaction to external shocks. deliberates the future of MAS.
A partnership, including a The Malaysian carrier could argue
code-share, announced between the SIA code-share, along with
Singapore Airlines (SIA) and other partnerships such as the
Malaysia Airlines (MAS) in the proposed joint-venture with Japan
final quarter of the year was Airlines (JAL) could give MAS the
one of the under-estimated option of a future independent of
achievements of 2019. the investors the government is against new airline entrants in of its planes. In late November,
Its significance is shaped evaluating as MAS equity holders. Korea. They believe there is over- a consortium of Mainland banks
to a degree by the history of The Malaysian government’s competition in a market served cobbled together the funds to
Singapore, both country and decision to sell MAS is an by two major airlines and six pay the airline’s staff salaries
airline, which separated from exception to a year of relatively LCCs. But the country’s Fair Trade and operating expenses for the
Malaysia several decades ago and light government involvement in Commission favoured the benefits month.
has gone on to astonishing global the region. Government activity of competition when granting Civil unrest in Hong Kong
economic and airline success. in aviation is often considered to the business licences even if the has had a huge impact on HKA,
But the partnership’s be interference to the detriment decision could put some existing which relied largely on Mainland
significance stands on its own in of the public and an open market, airlines out of business. traffic feed from HNA Group
2019 and in the years ahead as but the Malaysian government Some strategic developments carriers to fill its regional and
a value proposition. Under the decision to sell MAS was for ruffled regulators. Air China (AC) international flights, a network
terms of the tie-up, SIA receives market-driven outcomes and and China Eastern Airlines (CEA) that is shrinking by the month.
more access to the market in public benefit. brokered a deal to swap Beijing In Indonesia, the
Malaysia, effectively a home An open market prevailed slots so AC could have a small government’s orchestration of
market for SIA. Gains will be in in Korea. Business licenses were presence at new airport, Daxing, Garuda- Sriwijaya cooperation
their own right and in a larger issued to three start-up airlines in and CEA could keep its Shanghai unwound. An independent
competitive environment. 2019. One successful candidate, flights at Beijing’s Capital Airport. Sriwijaya is too small to compete
If SIA did not carry the Fly Gangwon, has commenced Previously, China had an orderly with Garuda and Lion Air,
additional passengers, they flights. Korea’s aviation authorities plan for only AC to operate from which have dominated the
would likely travel on the Gulf and the sector itself have argued the older airport. large domestic market after
In Hong Kong, Cathay Pacific consolidation.
Airways cemented its hold on External shocks to the
Hong Kong with the acquisition region’s industry included
of LCC, HK Express, from its plummeting traffic between
financially stretched parent, Japan and Korea after a political
ultimately the HNA Group. At fallout and China forcing the
press time, Hong Kong Airlines resignation of the Cathay Pacific
(HKA) was threatened with Airways leadership in August.
cessation of operations as it was Now in its seventh month of
reported to owe millions in airport anti-government protests, the
landing charges and fees to civil unrest has severely dented
Airport Authority Hong Kong that demand for all airlines in Hong
has forced the parking of seven Kong. ■
14 / ORIENT AVIATION / DECEMBER 2019-JANUARY 2020Mixed fortunes in Asia’s
fast growing airline markets
T
he return to service scrutinising a sixth proposed and the Hainan Airlines Group. in their markets. IndiGo is
of the 737 MAX may carrier, Kite Air. Regulators are There could be pressure on sticking to its core operations,
provide accelerated concerned about over-capacity their bottom lines if capacity but a recently agreed code-share
capacity growth in in the market and forecast losses imbalances arise from fleets with Qatar Airways could result
the region but also that could push working capital expanding faster than the slowing in the Delhi-headquartered
resulting yield declines at Chinese below minimum requirements. economy can absorb. LCC increasing flights to Doha.
and Indian airlines who have Unlike Vietnam, major Most of the domestic SpiceJet is partnering with
MAXs grounded, ordered or both. entrants into the market in China Chinese market is held by LCCs. Emirates and VietJet with Japan
In Vietnam, fast growth and India are unlikely. A year ago, In 2020, China will introduce Airlines.
will continue for LCC, VietJet, consolidation was a common legislation favourable to budget Bamboo Airways will
and new hybrid carrier, Bamboo topic in Indian aviation, but the carriers to assist their expansion. need to enter the partnership
Airways. The two privately held exit of Jet Airways earlier this year Existing legislation has made arena, especially for its planned
airlines are eclipsing Vietnam has improved market conditions. unbundling and ancillary long-haul network to be serviced
Airlines and its low-cost joint Arguments for consolidation revenue opportunities difficult to by 787s. Possible destinations
venture subsidiary, Jetstar Pacific. are gaining ground in China, implement even for full-service are Prague, Melbourne and
The Qantas Group, whose where the regulator is scrutinising airlines. unspecified points in the U.S.
Jetstar unit holds 30% of Jetstar the performance of numerous China’s low LCC penetration VietJet and IndiGo
Pacific, said in a November domestic airlines launched rate contrasts with India and have studied acquisition of
investor presentation Vietnam has in recent years as well as Vietnam. The biggest LCCs in wide-bodies, but have not
“several aggressive, well-funded medium-sized airlines now flying India and Vietnam, IndiGo and committed to purchases. Some
entrants that are unconstrained long-haul. Some domestic airlines VietJet, respectively, are home- destinations may be accessible
by need to protect legacy have grown quickly. Qingdao grown and not foreign brand with long-range narrow-bodies:
businesses”. Qantas said VietJet, Airlines, with 24 A320s, is a case joint ventures. The same is true northern Japan and Australia
with an order backlog of 350 in point, but nationally they are for China’s largest LCC, Spring for VietJet, Europe and coastal
aircraft, and Bamboo, which aims small players in percentage terms. Airlines, but Spring has routinely China for IndiGo. Vistara has a
to triple in size, have a “land grab Medium-sized airlines like been held back in favour of partnership portfolio, including
mentality”. Xiamen Airlines and Sichuan state-owned carriers. In contrast, British Airways and Japan Airlines,
Vinpearl Air, owned by Airlines have large narrow-body VietJet and IndiGo have been which could help the airline if it
Vingroup, is planning to be the fleets, but their long-haul flying allowed to flourish. flies to Britain or Japan.
fifth major airline in Vietnam from is sub-scale. Most Mainland Spring and VietJet have China Southern Airlines (CSA)
next year. Like Bamboo owner domestic capacity is affiliated overseas franchises, Spring is re-establishing its partnership
FLC, Vingroup is a conglomerate with one of the big four airline Airlines Japan and Thai VietJet, platform after exiting SkyTeam
with a large real estate portfolio. groups, Air China, China Eastern but they are small and are not so it could be independent of any
The government is closely Airlines, China Southern Airlines developing into major operators major alliance. Its new partners
DECEMBER 2019-JANUARY 2020 / ORIENT AVIATION / 15ASIA-PACIFIC COMMERCIAL AVIATION YEAR IN REVIEW
are mostly from oneworld. Two Vietnam, but there are shortages
of them, American Airlines and for airlines wanting to expand
Qatar Airways, have made small into India and China. India’s most
investments in CSA. constrained markets tend to be
Air China’s major partnership intermediary hubs.
is a joint venture with Lufthansa. These are typically regional
China Eastern Airlines has the neighbours like the Gulf States
strongest partnership portfolio and Singapore, but also Germany.
led by Air France-KLM, Delta Air In China the reverse situation
Lines and and Qantas. applies. Short-haul markets are
As for outward investment, mostly open while long-haul
Vietnam Airlines has equity markets have constraints.
of 49% in Cambodian flag to foster a local aviation sector, few traffic rights restrictions, China used to have restricted
carrier, Angkor Air, but it is including failed RAK Airways. while India has some short-haul traffic rights when foreign
contemplating a sale of the In China, HNA has sold its restrictions. Regulators have airlines dominated international
holding because of intense share in South Africa’s Comair, yet to clear AirAsia India for flying. But Chinese airlines have
competition from new market which operates under the British international flights, but progress reversed this situation in many
entrants mostly backed by Airways brand. Most of HNA’s to approval is not only a matter of key markets including to the
investors in China. overseas airline investments traffic rights for the LCC. U.S. Vietnam could experience a
India’s SpiceJet is considering were not planned to have direct Chinese airlines have few similar situation and perhaps one
an airline partnership with the synergies with HNA’s core Greater constraints for short-haul flights, day India.
Ras al Khaimah (RAK) emirate China airline business. One but many restrictions for key This year, Beijing Daxing
in the United Arab Emirates. exception was its investment in long-haul markets like the U.S. airport and Shanghai Pudong’s
The Mumbai-based LCC has Virgin Australia (VA), which it France is adding traffic rights, satellite terminal opened. In 2020,
not decided if the airline would has retained to date. Another VA but only gradually. Demand is Chengdu will have a second
use the SpiceJet brand or a new stakeholder, China’s Nanshan outstripping entitlements. airport in operation. Mumbai’s
one. There are doubts about the group, owns part of Qingdao For foreign airlines traffic second airport, delayed from
viability of the venture, evidenced Airlines. rights are not a common opening in 2020, is expected to
by RAK’s numerous attempts Airlines from Vietnam face restriction for wanting to fly to open its doors in 2023. ■
Breathtaking changes confront MRO
A
viation MRO is of predictive data analytics to streamlining order processing For commercial airlines
experiencing a the cycle of MRO checks, self- and overall operations. looking to predict maintenance
period of rapid learning and virtual reality (VR). RPA is eliminating manual needs across their fleets, aircraft
technological Pratt & Whitney executive input of service orders and engine health monitoring is one
disruption that is director aftermarket operations other administrative tasks and of the most critical activities.
transforming the industry from Asia-Pacific, Brendon McWilliam, removing human error. The By investing in virtual reality
a labour intensive structure to a said the aerospace group is system produces data that technologies and applying them
complex manufacturing space “launching a digital enhancement continues to identify more to customer training tools,
centred around astonishingly of aftermarket services in a potential efficiencies while participants can virtually view
rapid advances in aerospace three-year pilot program that will eliminating waste and bloated a running engine in motion or
technology. transform 15 facilities around the labour costs. examine engine parts separately
The transformation, driven world by 2022”. without having to actually
by demand for aircraft, of New technologies include disassemble the whole engine.
the Asia-Pacific airline and the application of Piece Part Production of large scale
engine aftermarket sector, Inspections based on AI electric aircraft is decades
is being moulded by digital algorithms and advances in laser away, but aerospace companies
transformation and motivated cladding that make inspections are developing hybrid electric
to achieve the ultimate goals for defects more accurate and products to reduce fuel
of electrification and aviation rapid and repairs more precise. consumption by 30% for regional
sustainability. The revolution is reaching sized aircraft; a development of
The leading disruptors are beyond the shop floor to significance as single aisle aircraft
Artificial Intelligence (AI) driven administration where Robotic will make up 65% of the airline
by digital access, application Process Automation (RPA) is market by 2027. ■
16 / ORIENT AVIATION / DECEMBER 2019-JANUARY 2020Augmented
Reality
1 Download
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BUILDING
THE
AMAZON
OF
AVIATION
IN ASIA
Tony Fernandes, who sent Asia’s
budget airline sector into overdrive
eighteen years ago, has taken his first
steps back from leadership of the
Malaysia-headquartered AirAsia Group.
He is building his succession team and
initiating a radical shift in the LCC group’s
business model. The Orient Aviation 2019
Person of the Year and a recipient of its
Lifetime Achievement Award outlined
his vision for the region’s leading LCC
travel company to associate editor and
chief correspondent, Tom Ballantyne.
ORIENT AVIATION 2019
PERSON OF THE YEAR AND LIFETIME
ACHIEVEMENT AWARD WINNER
TONY FERNANDES
AirAsia Group co-founder and CEO
18 / ORIENT AVIATION / DECEMBER 2019-JANUARY 2020W
hen AirAsia co-founder and group chief Today, in combination with its joint ventures in Thailand,
executive, Tony Fernandes, tweeted in Indonesia, the Philippines, India and Japan, as well as its
September he planned to step down from long-haul LCC, AirAsia X, the group operates more than 200
his positions at the group’s many business Airbus jets and has another 353 on order.
units, with the exception of AirAsia itself This year the carrier began re-inventing itself. Fernandes
and long-haul budget arm, AirAsia X, it was assumed he was wants the group to become an “Amazon of Travel” and a
on the verge of retirement, particularly as the news was financial platform company. The group intends to utilize the vast
revealed less than a month after details of a major leadership amount of data it amasses every year from its 100 million
reorganization at the group were unveiled. passengers to drive digital development and expand its travel
Not quite. Fernandes will be around for a while yet. The packages, e-commerce and payments systems with its BigPay app.
executive changes were made, he told Orient Aviation, because A digital wallet, launched in Malaysia in 2018, is being
he believed leadership must be refreshed. “Too many leaders rolled out in Singapore, Indonesia, The Philippines and
overstay. If I am a good leader, when I finally retire and the Thailand, with more countries to soon follow. Fernandes
company gets better, then I have done a good job,” he said. estimated the group’s ancillary income would eventually
“It’s important to introduce people to their roles early on contribute up to 70% of total company revenue.
and not retire and dump everything on them without giving As part of its drive to expand its business, the group has
them the limelight or the experience. What I’m doing in the signed a strategic partnership with travel technology firm, Kiwi.
subsidiaries is giving the next in line management exposure so com, which will sell flights on more than 100 global airlines,
when I go they are ready to take on the next role.” giving AirAsia customers access to destinations not served by the
As for his retirement, only he knows the timetable. “There group’s airlines. They include London, Dubai, Madrid and
are many steps of retiring,” he said. “There is a plan there. There Auckland.
is a plan to watch more sport and QPR (English soccer team “We are reinventing ourselves as more than just an airline by
Queens Park Rangers, 55%-owned by Fernandes’ Tune Group) bringing to life our vision for airasia.com to be the region’s
and do some other things.” one-stop travel shop,” said Fernandes. He also is looking to
For Fernandes and the AirAsia Group, success has been partner directly with airlines and companies beyond the
hard won. Industry sceptics said Asian passengers were too Asia-Pacific that complement the group’s airline network and
status conscious to fly on an LCC. How wrong they were. travel services.
Today, red liveried AirAsia jets have global as well as regional “We are in a unique position compared with other airlines,”
recognition as does Fernandes in, until recently, his ever-present explained Fernandes. “Ryanair has talked about it and a few
red cap. others have talked about it, but the beauty of what we have is a
What was to become AirAsia began flying in late 1996 as much bigger digital mindset than any other airline.
small, Malaysian government-owned DRB-HICOM. In 2001, “We were at the forefront of using the internet and at the
former music executive Fernandes and his business partner, forefront of using social media. Many of our staff were not in the
Kamarudin Meranun purchased the airline, with its US$11 airline business. It is an important mindset to have. If you are
million debt, for one Ringgit, or US$0.25, through their not digital, it’s really tough to make a transformation.”
company, Tune Air. The group’s second advantage, he said, is Ryanair is largely
A year later, despite forecasts of doom from several airlines an Irish airline and easyJet dominantly an English one. AirAsia
in the region, Kuala Lumpur- headquartered AirAsia was in is essentially multi-national. “We are a Southeast Asian ASEAN
profit. By 2003, it was flying its first international route, to (Association of South East Asian Nations) airline. It is
Bangkok. recognized widely in each of the ASEAN countries and has
Expansion of the LCC’s fleet and network was rapid, diversity in its workforce and leadership team,” he said.
pioneering not only domestic LCC travel but international “So, to make a transitional step and become an ASEAN
budget travel. In the process, AirAsia became the biggest lifestyle brand is a lot easier from where we are sitting than for
customer of Airbus by placing huge orders for A320 and A330 any other airline. We have a huge platform. We aim to open up
series jets. that platform and do much more.”
DECEMBER 2019-JANUARY 2020 / ORIENT AVIATION / 19You can also read
