The airline industry in asiaAsia’s

The airline industry in asia
Asia’s large population, rapid economic growth, and burgeoning middle class had fuelled the growth of air travel in the continent since the 1980s. This growth in air travel was also due to the region having geographically dispersed countries with large populations, a rapid increase in trade and tourism both within and into Asia, and government investment in airports, airlines, and travel infrastructure. Projections by industry analysts placed Asia at the top of global growth charts for both passenger and cargo traffic for the coming years.
In 2004, the airline industry flew 1.8 billion passengers, of which about 30 percent were in Asia. Airline traffic in Asia was projected to grow at 7.1 percent annually for the next five years, and to more than triple in size in the next 20 years. The most rapid growth was expected in Northeast and Southeast Asia, although there were predictions of equally rapid growth in South Asia. Ninety percent of passengers on Asian airlines in 2005 were residents of Asia, resulting in a high proportion of intraregional travel.

Governments were important drivers of airline
success in Asia. Most governments viewed a national
airline as a source of national prestige and as useful
for economic growth. Most airlines based in East and
Southeast Asian countries had full or substantial state
ownership, management, and control. However, state
control often led to the pursuit of non-business goals,
and the sacrifice of profits for national objectives For
example, many national carriers flew domestic routes
that were uneconomical, bad overly diverse fleets,
- were overstaffed, and paid salaries above market rates.
Governments subsidized their national flag carriers,
Gave them priority on lucrative international routes,
and often protected them from competition.
In the 1980s and 1990s, the airline industries in
North America and Europe underwent substantial
deregulation, which led to the entry of new private
airlines and the emergence of a new class of airline,
the low-cost or budget carrier. In the late 1990s, privatization and deregulation increased in the airline
industry in Asia, and some Asian countries established open-skies agreements, while others allowed
the entry of private airlines or reduced constraints for
international airlines. However, in 2006, government
intervention and regulation remained substantial.
Deregulation had two possible outcomes for the
- airline industry in Asia. The first was a repeat of the
experience in North America and Europe, where
the entry- of low-cost airlines had dramatically in
creased competition; expanded the travel market;
caused prices, margins and profitability to fall; and
led to the rapid entry and exit of many airlines. ‘The
other possible outcome was the continuation of the
status quo, with full-service airlines continuing to
dominate, prices remaining relatively stable, and low-
cost airlines consigned to niche segments. In 2006,
both outcomes were possible, and which would
become a reality depended in part on how low-cost future expansion. in 2004, Fernandes indicated his readiness: “We do not want to go beyond ASEAN for the next couple of years, but if o1ipörtunities’strike’ us, we might just go to China first, and then India’
By 2005, Fernandes had articulated his China and India strategy:
We are ‘already operating to Xianen. We want to be in Guangzhow Shenzhen, Kunming, Chongqing, guiling, Nanjing, Wuhan, and secondary cities that are within ci three-arid-ct-half-hour distance. India will be act interesting market, but operating out of Singapore, guys like Tiger, Jetstar Asia, and Value Air are all going to get their asses kicked, because Indian routes Will pressure their business models. We are ourselves looking at Indian routes, but only from Bangkok. because of our religious adherence to the three-and-a-half-hour flying time model.
In expanding, Air Asia emphasized the importance of maintaining cost discipline, even as it undertook significant expansionary investments. Air Asia would not move up the airline value chain, as some low-cost carriers had attempted to do. Value Air, for example, had adopted a “mid-frills” model in which it offered close to full service at close to budget prices. Fernandes was clear: “Competition is not our enemy, cost is our enemy.”
In early 2006, there were contrasting views on the future of Air Asia. Some believed tFat the upstart airline, run by its flamboyant founder, was firmly established as the, leading budget carrier in an area desperate or low-cost air travel. The large, untapped market and Air Asia’s budget model would ensure its future success.’
But others believed that Air Asia had already fully exploited its potential and its good fortune, and would soon run into the challenges of growing against many new entrants and desperate incumbents. The tripling of its capacity with 100 new planes would saddle Air Asia with high costs, and if there were not enough new routes to utilize the new aircraft, profitability would collapse. With most markets close to its home base fully exploited, government restraints on expansion, and global uncertainty, Air Asia could easily go the way of most airline startups—into bankruptcy. The only unifying point among these contrasting views was that Air Asia was in for interesting times.
This view was supported by the merger of 1oss making Value Air and Jet star in late-2005, about a year after they began flying. These airlines achieved load factors of 50 percent, much lower than Air Asia’s 75 percent and industry-leading standards of 80 percent. They were also unable to match Air Asia’s efficiency, for example, with Value Air requiring 45 minutes to turn around a plane on the ground, almost double of Air Asia’s 25 minutes. In another sign of Air Asia’s more sophisticated approach, it had hedged fuel prices at US$42 a barrel for the first half of 2005, which was substantially lower than the price per barrel of US$70 in late-2005. In contrast, Jimmy Lau, Executive Director of Value Air explained that
for a small carrier like us with few flights, [oil prices] are not a big problem.

Despite the strong growth of air travel in Southeast Asia, many airlines continued to suffer losses. Air Asia was perhaps the only profitable low-cost carrier in the region, as the other airlines suffered from overcapacity, high fuel prices, low ticket prices, and government restrictions. Despite being among the best capitalized and managed of the new low-cost carriers, the three Singapore-based budget airlines had only approached break-even point. One reason was that their cost structures were believed to be only 20 percent below those of full-service airlines, in contrast to their counterparts in Europe, which had costs about 60 percent lower. Many full-service airlines also suffered losses but continued to operate with government support

Results (Indonesian) 1:

Industri penerbangan di asiaPopulasi besar, pertumbuhan ekonomi yang cepat dan berkembang kelas menengah di Asia telah dipicu pertumbuhan perjalanan udara di benua sejak 1980-an. Pertumbuhan ini perjalanan udara ini wilayah geografis kesulitan negara dengan populasi yang besar, peningkatan pesat dalam perdagangan dan pariwisata baik di dalam maupun ke Asia, dan investasi pemerintah di Bandara, maskapai penerbangan dan infrastruktur perjalanan. Proyeksi oleh analis industri ditempatkan Asia di atas grafik pertumbuhan global untuk lalu lintas penumpang dan kargo untuk tahun-tahun mendatang.Pada tahun 2004, industri penerbangan terbang penumpang 1,8 miliar, yang sekitar 30 persen berada di Asia. Lalu-lintas maskapai penerbangan di Asia diproyeksikan tumbuh di 7.1 persen setiap tahunnya untuk lima tahun ke depan, dan untuk lebih dari tiga kali lipat dalam ukuran 20 tahun berikutnya. Pertumbuhan paling cepat dijadwalkan di timur laut dan Asia Tenggara, walaupun ada prediksi sama pertumbuhan yang pesat di Asia Selatan. Sembilan puluh persen penumpang di Asia airlines tahun 2005 adalah penduduk Asia, yang menghasilkan proporsi yang tinggi intraregional perjalanan.Pemerintah itu penting driver maskapai penerbangansukses di Asia. Sebagian besar pemerintah melihat NasionalMaskapai penerbangan sebagai sumber prestise nasional dan bergunapertumbuhan ekonomi. Kebanyakan maskapai penerbangan yang berbasis di Timur danNegara-negara Asia Tenggara memiliki penuh atau substansial negarakepemilikan, pengelolaan, dan kontrol. Namun, negaracontrol often led to the pursuit of non-business goals,and the sacrifice of profits for national objectives Forexample, many national carriers flew domestic routesthat were uneconomical, bad overly diverse fleets,- were overstaffed, and paid salaries above market rates.Governments subsidized their national flag carriers,Gave them priority on lucrative international routes,and often protected them from competition.In the 1980s and 1990s, the airline industries inNorth America and Europe underwent substantialderegulation, which led to the entry of new privateairlines and the emergence of a new class of airline,the low-cost or budget carrier. In the late 1990s, privatization and deregulation increased in the airlineindustry in Asia, and some Asian countries established open-skies agreements, while others allowedthe entry of private airlines or reduced constraints forinternational airlines. However, in 2006, governmentintervention and regulation remained substantial.Deregulation had two possible outcomes for the- airline industry in Asia. The first was a repeat of theexperience in North America and Europe, wherethe entry- of low-cost airlines had dramatically increased competition; expanded the travel market;caused prices, margins and profitability to fall; andled to the rapid entry and exit of many airlines. ‘Theother possible outcome was the continuation of thestatus quo, with full-service airlines continuing todominate, prices remaining relatively stable, and low-cost airlines consigned to niche segments. In 2006,both outcomes were possible, and which wouldbecome a reality depended in part on how low-cost future expansion. in 2004, Fernandes indicated his readiness: “We do not want to go beyond ASEAN for the next couple of years, but if o1ipörtunities’strike’ us, we might just go to China first, and then India’By 2005, Fernandes had articulated his China and India strategy:We are ‘already operating to Xianen. We want to be in Guangzhow Shenzhen, Kunming, Chongqing, guiling, Nanjing, Wuhan, and secondary cities that are within ci three-arid-ct-half-hour distance. India will be act interesting market, but operating out of Singapore, guys like Tiger, Jetstar Asia, and Value Air are all going to get their asses kicked, because Indian routes Will pressure their business models. We are ourselves looking at Indian routes, but only from Bangkok. because of our religious adherence to the three-and-a-half-hour flying time model.In expanding, Air Asia emphasized the importance of maintaining cost discipline, even as it undertook significant expansionary investments. Air Asia would not move up the airline value chain, as some low-cost carriers had attempted to do. Value Air, for example, had adopted a “mid-frills” model in which it offered close to full service at close to budget prices. Fernandes was clear: “Competition is not our enemy, cost is our enemy.” In early 2006, there were contrasting views on the future of Air Asia. Some believed tFat the upstart airline, run by its flamboyant founder, was firmly established as the, leading budget carrier in an area desperate or low-cost air travel. The large, untapped market and Air Asia’s budget model would ensure its future success.’But others believed that Air Asia had already fully exploited its potential and its good fortune, and would soon run into the challenges of growing against many new entrants and desperate incumbents. The tripling of its capacity with 100 new planes would saddle Air Asia with high costs, and if there were not enough new routes to utilize the new aircraft, profitability would collapse. With most markets close to its home base fully exploited, government restraints on expansion, and global uncertainty, Air Asia could easily go the way of most airline startups—into bankruptcy. The only unifying point among these contrasting views was that Air Asia was in for interesting times.This view was supported by the merger of 1oss making Value Air and Jet star in late-2005, about a year after they began flying. These airlines achieved load factors of 50 percent, much lower than Air Asia’s 75 percent and industry-leading standards of 80 percent. They were also unable to match Air Asia’s efficiency, for example, with Value Air requiring 45 minutes to turn around a plane on the ground, almost double of Air Asia’s 25 minutes. In another sign of Air Asia’s more sophisticated approach, it had hedged fuel prices at US$42 a barrel for the first half of 2005, which was substantially lower than the price per barrel of US$70 in late-2005. In contrast, Jimmy Lau, Executive Director of Value Air explained thatfor a small carrier like us with few flights, [oil prices] are not a big problem.Despite the strong growth of air travel in Southeast Asia, many airlines continued to suffer losses. Air Asia was perhaps the only profitable low-cost carrier in the region, as the other airlines suffered from overcapacity, high fuel prices, low ticket prices, and government restrictions. Despite being among the best capitalized and managed of the new low-cost carriers, the three Singapore-based budget airlines had only approached break-even point. One reason was that their cost structures were believed to be only 20 percent below those of full-service airlines, in contrast to their counterparts in Europe, which had costs about 60 percent lower. Many full-service airlines also suffered losses but continued to operate with government support

Results (Indonesian) 2:

Industri penerbangan di asia
populasi besar di Asia, pertumbuhan ekonomi yang cepat, dan berkembang kelas menengah telah memicu pertumbuhan perjalanan udara di benua itu sejak 1980-an. Pertumbuhan ini dalam perjalanan udara juga karena wilayah yang memiliki negara secara geografis dengan populasi yang besar, peningkatan pesat dalam perdagangan dan pariwisata baik di dalam dan ke Asia, dan investasi pemerintah di bandara, penerbangan, dan infrastruktur wisata. Proyeksi oleh analis industri ditempatkan Asia di puncak grafik pertumbuhan global untuk kedua penumpang dan lalu lintas kargo untuk tahun-tahun mendatang.
Pada tahun 2004, industri penerbangan terbang 1,8 miliar penumpang, dimana sekitar 30 persen berada di Asia. Lalu lintas penerbangan di Asia diproyeksikan tumbuh sebesar 7,1 persen per tahun selama lima tahun ke depan, dan lebih dari tiga kali lipat dalam ukuran dalam 20 tahun ke depan. Pertumbuhan paling cepat diharapkan di Timur Laut dan Asia Tenggara, meskipun ada prediksi pertumbuhan sama cepat di Asia Selatan. Sembilan puluh persen dari penumpang penerbangan Asia pada tahun 2005 adalah warga Asia, sehingga proporsi tinggi perjalanan intraregional. Pemerintah adalah driver penting maskapai sukses di Asia. Sebagian besar pemerintah dilihat nasional maskapai sebagai sumber prestise nasional dan berguna untuk pertumbuhan ekonomi. Kebanyakan maskapai penerbangan yang berbasis di Timur dan negara-negara Asia Tenggara telah penuh atau substansial negara kepemilikan, manajemen, dan pengendalian. Namun, negara control sering menyebabkan mengejar tujuan non-bisnis, dan pengorbanan keuntungan untuk tujuan nasional Sebagai contoh, banyak operator nasional terbang rute domestik yang tidak ekonomis, armada terlalu beragam buruk, - yang terlalu besar, dan membayar gaji di atas pasar tarif. Pemerintah bersubsidi operator bendera nasional mereka, Memberi mereka prioritas pada rute internasional yang menguntungkan, dan sering melindungi mereka dari kompetisi. Pada 1980-an dan 1990-an, industri penerbangan di Amerika Utara dan Eropa mengalami substansial deregulasi, yang menyebabkan masuknya swasta baru Maskapai penerbangan dan munculnya kelas baru maskapai penerbangan, biaya-rendah atau operator anggaran. Pada akhir 1990-an, privatisasi dan deregulasi meningkat pada maskapai industri di Asia, dan beberapa negara Asia didirikan perjanjian langit terbuka, sementara yang lain memungkinkan masuknya penerbangan swasta atau dikurangi kendala untuk penerbangan internasional. Namun, pada tahun 2006, pemerintah intervensi dan regulasi tetap substansial. Deregulasi memiliki dua hasil yang mungkin untuk - industri penerbangan di Asia. Yang pertama adalah pengulangan pengalaman di Amerika Utara dan Eropa, di mana para entry maskapai penerbangan murah telah secara dramatis dalam persaingan berkerut; memperluas pasar wisata, menyebabkan harga, margin dan profitabilitas jatuh; dan menyebabkan masuk cepat dan keluar dari banyak perusahaan penerbangan. 'The Hasil lain yang mungkin adalah kelanjutan dari status quo, dengan penerbangan layanan penuh terus mendominasi, harga yang tersisa relatif stabil, dan rendah biaya penerbangan konsinyasi kepada segmen niche. Pada tahun 2006, kedua hasil yang mungkin, dan yang akan menjadi kenyataan tergantung sebagian pada bagaimana murah ekspansi di masa datang. pada tahun 2004, Fernandes menyatakan kesiapannya: "Kami tidak ingin melampaui ASEAN selama beberapa tahun, tetapi jika o1ipörtunities'strike 'kita, kita mungkin hanya pergi ke Cina pertama, dan kemudian India' Pada tahun 2005, Fernandes telah diartikulasikan nya strategi Cina dan India: Kita 'sudah beroperasi ke Xianen. Kami ingin berada di Guangzhow Shenzhen, Kunming, Chongqing, Guiling, Nanjing, Wuhan, dan kota-kota sekunder yang berada dalam ci tiga gersang-ct-setengah jam jarak. India akan bertindak pasar yang menarik, tetapi beroperasi dari Singapura, orang-orang seperti Tiger, Jetstar Asia, dan Nilai Air semua akan mendapatkan pantat mereka ditendang, karena India rute Akan menekan model bisnis mereka. Kami diri melihat Indian rute, tapi hanya dari Bangkok. karena kepatuhan agama untuk model waktu terbang tiga-dan-a-setengah jam. Dalam memperluas, Air Asia menekankan pentingnya menjaga disiplin biaya, bahkan seperti melakukan investasi ekspansi yang signifikan. Air Asia tidak akan bergerak ke atas rantai nilai maskapai, karena beberapa operator penerbangan murah telah berusaha untuk melakukan. Nilai Air, misalnya, telah mengadopsi "mid-embel-embel" model yang ditawarkan dekat dengan layanan penuh di dekat harga anggaran. Fernandes jelas: "Persaingan bukan musuh kita, biaya adalah musuh kita." Pada awal tahun 2006, ada kontras pandangan tentang masa depan Air Asia. Beberapa percaya tFat maskapai pemula, yang dijalankan oleh pendiri flamboyan, tegas didirikan sebagai, terkemuka pembawa anggaran di daerah putus asa atau perjalanan murah udara. Besar, pasar yang belum dimanfaatkan dan Model anggaran Air Asia akan memastikan keberhasilan masa depan. " Tetapi yang lain percaya bahwa Air Asia telah sepenuhnya dieksploitasi potensi dan keberuntungan yang baik, dan akan segera mengalami tantangan yang berkembang terhadap banyak pendatang baru dan pemain lama putus asa . Tiga kali lipat dari kapasitas dengan 100 pesawat baru akan membebani Air Asia dengan biaya tinggi, dan jika tidak ada rute baru cukup untuk memanfaatkan pesawat baru, profitabilitas akan runtuh. Dengan sebagian besar pasar dekat dengan basis rumah sepenuhnya dieksploitasi, pembatasan pemerintah pada ekspansi, dan ketidakpastian global, Air Asia bisa dengan mudah pergi jalan yang paling startups-ke maskapai kebangkrutan. Satu-satunya titik pemersatu di antara pandangan kontras adalah bahwa Air Asia berada di untuk waktu yang menarik. Pandangan ini didukung oleh penggabungan 1oss membuat Nilai Air dan bintang Jet pada akhir-2005, sekitar setahun setelah mereka mulai terbang. Maskapai penerbangan ini mencapai load factor 50 persen, jauh lebih rendah dari 75 persen Air Asia dan standar industri terkemuka dari 80 persen. Mereka juga tidak dapat mencocokkan efisiensi Air Asia, misalnya, dengan Nilai Air membutuhkan 45 menit untuk berbalik pesawat di tanah, hampir dua kali lipat dari Air Asia 25 menit. Dalam tanda lain dari pendekatan yang lebih canggih Air Asia, telah melakukan lindung nilai harga bahan bakar di US $ 42 per barel untuk paruh pertama tahun 2005, yang secara substansial lebih rendah dari harga per barel US $ 70 pada akhir-2005. Sebaliknya, Jimmy Lau, Direktur Eksekutif Nilai Air menjelaskan bahwa untuk pembawa kecil seperti kami dengan beberapa penerbangan, [harga minyak] bukan masalah besar. Meskipun pertumbuhan yang kuat dari perjalanan udara di Asia Tenggara, banyak perusahaan penerbangan terus menderita kerugian . Air Asia adalah mungkin satu-satunya yang menguntungkan low cost carrier di wilayah tersebut, seperti penerbangan lainnya menderita kelebihan kapasitas, harga bahan bakar yang tinggi, harga tiket yang rendah, dan pembatasan pemerintah. Meskipun di antara yang terbaik dikapitalisasi dan dikelola dari operator murah baru, tiga penerbangan anggaran berbasis di Singapura hanya mendekati titik impas. Salah satu alasan adalah bahwa struktur biaya mereka diyakini hanya 20 persen di bawah orang-orang dari maskapai layanan penuh, berbeda dengan rekan-rekan mereka di Eropa, yang memiliki biaya sekitar 60 persen lebih rendah. Banyak maskapai penerbangan layanan penuh juga menderita kerugian tapi terus beroperasi dengan dukungan pemerintah