|
Asian airline industry heading for shakedown
15th November 1997 Back to Asia Pacific Management News Menu | Asia Business News Portal | Asia Business News Feeds | Asia Pacific Management Forum
|
The Asian airline industry, after fast becoming the glamour industry in
the region, is facing some hard decisions in the next year according to
friends of the Rat.
The fast growth in intra-regional business passenger travel, and freight and tourist business from both overseas and internationally, the very forces that predicated recent growth, is expected to be hard hit by recent economy slowdowns in ASEAN. Senior Managers in three regional airlines have confirmed to the Rat that strategies are being quickly revised.. and these include significant cost-cutting, and postponement of pending aircraft orders. Several ASEAN airlines have also been hit by closure of airports due to haze conditions and the drop in tourist travel as a result of over-sensationalistic media reports of the haze. The last Malaysian budget suggests increases in passport fees, and Indonesia continues to charge a $250,000 Rupea (almost $US100) "fiskal" exit tax on any Indonesian leaving the country, regardless of whether you are come from a country Kampung or the number of times you fly annually. But by far the greatest threat is the reduction, already apparent, in freight and intra-regional passenger travel sectors. Meanwhile, the Centre for Asia-Pacific Aviation has released a report predicting that three airlines will collapse by the year 2000. The report's author refused to mention the airlines but Reuters reports comments by an anonymous aviation analyst that 3 likely candidates are Eva-Air (Taiwan), Asiana Airlines (South Korea), and Ansett International (Australian Based and owned by Air New Zealand and NewsCorp). Given the volatility of the aviation industry generally, and the previous fast growth in the region, meaning some existing management and infrastructural systems are still green and developing, the Rat predicts this may well be an underestimation. The commentator also suggested that major players like Singapore Airlines, Malaysia Airlines, Thai and Cathay Pacific would survive although their "profits would come under pressure". Garuda, and Philippine Airlines, two other major ASEAN carriers were not mentioned, along with East Asian and smaller airlines. Growth has been very fast, but competition has been fierce for the last few years, particularly in business travel (a high contributor to profits) and freight. Governments have supported their flagships to compete so far, but this has contributed to the "fat" in some airlines that move comparatively slowly (against industry standards). Whether this government support continues is debatable. Whether management has to move faster to compete than in the last 10 years is not..... As usual, Singapore Airlines, whose existence was a significant factor in the split of Malaysia and Singapore, is well positioned in terms of management to survive, having introduced flatter management structures some time ago, making fast change and response to external threats smoother and easier. Smooth as......??
|
 |
The views expressed here may not necessarily reflect those of Orient Pacific Century or partners of the Asia Pacific Management Forum
| email updates | email this page | discuss | search | today's asian business strategy news | advertise | about |
| daily asian news, research & commentary for the international business strategy, market research & strategic management professional |