While the rest of world's economies experience some turbulence, the past few years has seen large growth and optimism in the aviation industry in the Asia/Pacific region. Among the brightest spots for aviation today can be found in Southeast Asia, where in the last decade it has established itself as one of the fastest growing aviation markets in the world. The ten countries that make up the ASEAN states have in recent years provided favorable conditions for a strong aviation industry. From the Philippines, Malaysia, and Thailand, the region offers favorable economic growth and an emerging middle class. As it has provided growth for airlines and opportunities for travellers, new challenges for the key stakeholders of Asia's aviation industry have emerged.
Low Cost Carriers Reign Supreme
The last few years has seen low cost carriers such as Air Asia, Cebu Pacific, and Scoot emerge as the key players of growth in the Asian aviation industry. From their early days, low cost carriers offered direct services between key cities and have since expanded to challenge well-established legacy carriers such as Singapore Airlines and Malaysia Airlines. Today, the very same low cost carriers are continuing to connect destinations that may have otherwise never seen air service in the past. With an abundance of routes and lower fares, it has opened up more travel within the region and has helped grow the tourism industry in ASEAN. In 2015, ASEAN saw over 108 million tourists, with 42% of that group travelled within the region.
On the opposite end of the spectrum, it has been a mixed bag of results for the legacy carriers of Asia. Airlines such as Singapore Airlines has faced a bleak reality of possible cost cutting measures. The legacy carriers also continue to experience increased competition from Chinese and other Asia-based carriers challenging longstanding regional hubs for transcontinental travel such as Singapore. While it has been a bit rough for some legacy carriers, things are looking optimistic for some players. Philippine Airlines is adding planes to and upgrading its fleet, and is setting its ambition to become a Skytrax 5-star airline by the year 2020
Increased Demands, Increased Problems
With the rise of low cost carriers and growth, so too have the problems of congestion and air traffic. When we think about great airports in Asia, we usually think about Singapore, Hong Kong, and Seoul. However, Asia's aviation infrastructure is a tale of different experiences, especially for those familiar with Manila, Jakarta, or Bangkok. While airlines such as Air Asia has planned to raise its total fleet to 500 aircraft, the question of how to accommodate the new planes and traffic comes to play in cities already facing heavy air traffic congestion. Along with outdated technology to track planes, some have questioned the overall integrity of the ASEAN aviation infrastructure to handle the anticipated growth.
Another key bottleneck could come with coordinating aviation policies between the different ASEAN nations. Some stakeholders such as Air Asia's CEO Tony Fernandes has continued his calls for improvements and better coordination among countries. Among his main points is a call for ASEAN officials to form a single aviation authority, which he hopes would things easier than dealing with 10 different governments. While several countries have agreed to the ASEAN Open Skies agreement, a few countries are reluctant to open their doors to increased domestic competition. As the region faces the new challenges of growing the region's aviation industry, it will have to contend with varying policies of the ASEAN member states.
The challenges have not dampened the optimism for stakeholders in the aviation industry of ASEAN countries. Airport authorities throughout ASEAN have taken notice of the large spike in demand for air travel, and are planning accordingly. A prime example of this could be seen in Singapore where Changi Airport recently opened its new, state-of-the-art Terminal 4 worth SGD $985 million (USD $742 million). The airport anticipates to raise its capacity to handle 82 million passengers a year. It is also working on construction to build a brand new terminal and runway to raise its maximum designed capacity to 135 million passengers a year.
Among the other countries we can see more infrastructure development is in the Philippines, where President Rodrigo Duterte has designated Clark Airport as an alternative gateway to alleviate the pressure at the congested Ninoy Aquino Airport in Manila. Ground was broken for a new passenger terminal last December at Clark, which is scheduled to open by the year 2020. It will be designed to handle around 8 million passengers, but airlines such as Philippine Airlines and Cebu Pacific have already begun to add new flights out of the airport. This is a plus for the aviation industry in the Philippines, despite Clark being around 100km (62 miles) north of Manila.
Southeast Asia Aviation Outlook
Asia will continue to experience more growth with airlines adding routes, new construction, and the delivery of new planes. With a good economic outlook going forward, we can see some more ambitious plans being initiated among the key players. However, the region will progress with caution as new challenges from outside carriers, varying government policies, and infrastructure needs will have to be addressed.
Get your FREE expo tickets to Aviation Festival Asia now! Join us on 27-28 Feb in Singapore and gain access to 40+ free sessions of content, 50+ exhibitions and network with over 1,000 aviation professionals. Find out more: https://goo.gl/YppDPE #aviationfestivalasia