Report: Airlines Look to Thrive in Asia

  • All Nippon Airways is the world's first carrier to take delivery of the Boeing 787 Dreamliner, shown above on the tarmac in Tokyo,

    All Nippon Airways is the world's first carrier to take delivery of the Boeing 787 Dreamliner, shown above on the tarmac in Tokyo,

  • Premium cabin interiors on All Nippon Airways' long-haul Boeing 787

    Premium cabin interiors on All Nippon Airways' long-haul Boeing 787

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Booming as never before, air travel in the region is set to soar as new planes, routes, and services come on line

By Gabriel Leigh

There’s a lot to talk about in the world of commercial aviation these days, and Asia-based carriers are at the center of most conversations. At the recent Paris Air Show, traditionally an event at which many airlines announce orders, a huge percentage of business came from Asian carriers. AirAsia alone signed a record-breaking US$18 billion deal for 200 Airbus A320neo jets, while India’s IndiGo ordered US$16 billion-worth of new aircraft for its fast-expanding fleet. It makes sense: the state of the air travel industry, though occasionally counterintuitive–even mystifying from a business standpoint–tends to mirror the state of the economies in which it operates. And compared with much of the world, Asia is booming. So too are most of its airlines. Analysts foresee rapid growth in the region in the years to come, and expect that Asia will eventually end up with the lar-gest share of the world market for air travel.

What makes this particularly interesting today is the launch of a new generation of wide-body aircraft–the Boeing 787 Dreamliner, and Airbus’s answer to it, the A350, which is expected to debut in late 2013. These are revolutionary airplanes. They’re not as big as the eye-catching A380 or the venerable Boeing 747, but they do promise to change how carriers can operate, and to improve passengers’ on-board experience. And Asia is the stage for this debut: the first 787 is slated to enter service with All Nippon Airways (ANA) in the third quarter of this year.

Premium cabin interiors on All Nippon Airways' long-haul Boeing 787

Premium cabin interiors on All Nippon Airways' long-haul Boeing 787

The Boeing 787 is bound to prove popular with travelers. It features larger windows than in any modern jetliner, and higher cabin humidity, so passengers should feel less worn out after a long flight. For airlines, the plane’s overriding attraction is its fuel economy. Made of carbon composites, it’s lighter than similarly sized aircraft, and is expected to consume about 20 percent less fuel. Slightly smaller than the majority of large aircraft currently on intercontinental routes, but with a range that beats other wide-bodies of similar size, it also opens up the possibility of new routes from major hubs to distant secondary cities that wouldn’t have been viable before. “The 787 and A350 will enable long-haul markets too small for 777s to be served, as well as those beyond the range capability of the A330-200 and 767,” says George Hamlin of Hamlin Transportation Consulting. “This will appeal to business passengers, who, of course, prefer nonstop services to connections.”

That will be welcome news to leisure travelers, too. Among the upcoming 787 routes already announced is Japan Airlines’ Tokyo-Boston service, an oft-discussed but never realized route, until now. Ethiopian Airlines plans to fly between Guangzhou and Addis Ababa nonstop, while United will connect Auckland with its hub in Houston.

In China, the effects should be particularly noticeable. Richard Aboulafia, vice president of analysis at U.S. aerospace consultancy the Teal Group, expects that as mainland China expands its air connections to the rest of the world, these new jetliners will play a vital role. “We’ll see greater use of the 787 to fly direct to secondary Chinese markets, or from primary Chinese markets to secondary Western markets,” he says.

We’re yet to see exactly what the A350 will do for air travel, but it promises economic leaps on par with the 787, and the fact that it’s a slightly larger plane than the Boeing might mean it’s utilized in different ways. It’s clear from its order book, in any case, that airlines can’t wait to get their hands on them.

What this means for the passenger is more options and less hassle, cutting out connections in major hubs and all the head-aches associated with them. And importantly, airlines look to be getting a little more creative with their route planning, which is a welcome change in a conservative industry. They’re taking chances, stimulating the flow of people on less-traveled routes, and that will likely mean fare sales as well, at least initially.

And let’s not forget about what the A380–the now-famous Airbus double-decker–will keep doing for air travel. The superjumbo is still only operated by a handful of airlines, but that number is set to grow. This is, after all, a plane that was designed with Asia in mind. Because of its sheer size and novelty, it’s also a prestige aircraft, and the flagship of any carrier whose livery it carries. So airlines see value in appointing A380 cabins with the latest fittings out of Europe–new seats, higher-quality entertainment systems, and more.

For the economy-class passenger, this has meant at least a slightly more civilized experience: mood lighting instead of garish fluorescents, or bigger seatback screens. For the premium passenger, it has tended to translate to all-new seats, designed to overshadow the competition and everything that came before. Lie-flat suites in first class come standard, each airline with their own take on the best design. Singapore Airlines even made up a new class for the A380, a notch above first class, called Suites, which features enormous seats flanked by closing doors. So as A380s enter service–Korean Airlines started flying 407-seat superjumbos on intra-Asia routes in June, and China Southern will shortly follow suit–that means only good news for the traveler.

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It’s not just about new seats and new city pairs in Asia, though. New airlines are another part of the picture, especially those aiming to move into the low-fare arena.

Low-cost air service already exists in Asia; see the meteoric rise of AirAsia as an example. But it’s that company’s recent venture into long-haul discount flying (with flights from Kuala Lumpur to London) that is most intriguing. And it seems that other airlines are taking note. Singapore Airlines, long a poster child for premium airline service, recently announced its intention to start a low-cost spinoff to serve medium-and long-haul routes. “There’s an increasing appetite among consumers for low-cost, no-frills travel on longer routes,” says Singapore Airlines spokesman Nicholas Ionides. “SIA is seizing the opportunity to tap the market. We’re confident that it will stimulate new demand.”

ANA and Thai Airways are also talking about launching low-cost spinoffs, but with different ideas on how to go about it. ANA is proposing a basic, low-cost carrier, cutely named Peach, to appeal to the bottom end of the leisure market. Thai, which flies mostly larger planes even on domestic routes, wants to dedicate a fleet of smaller aircraft to shorter routes with less demand, but maintain service levels above that of its current low-cost affiliate Nok Air. It’s a tricky proposition: airlines within airlines have a history of failure. But for a carrier like Singapore or ANA, it may be the only choice if they see this as a significant market. “Given the importance of service and branding , separate operations may be the only way for these airlines to reconcile their desire to keep their reputation with their desire to stimulate traffic with low fares,” Aboulafia says.

If these ventures succeed early on, the landscape of commercial air travel in Asia could shift dramatically. But the region is uniquely poised to accept a range of different models that suit different markets. So, it’s interesting times ahead. New routes will be tested, new airplanes will grace the skies, and new models for air service will either take hold or die quick deaths. There’s a lot of change coming to air travel in Asia, and change in this case is almost definitely a good thing.

Originally appeared in the August/September 2011 print issue of DestinAsian magazine (“Asia Takes Flight”). Photos courtesy of Boeing

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