The 21st century will undoubtedly be Asia's century. And its air transport is already reflecting this incredible rise. Just two decades ago, Japan was the only country to feature among the world's major markets. As recently as 2000, only five Asian hubs made it into the world's top 30 airports, according to figures from Airports Council International (ACI): Tokyo Haneda, Seoul, Hong Kong, Bangkok and Singapore. Not a single Chinese airport, for example. A complete change of scenery in 2013: in the same ACI rankings, there were ten Asian hubs, including three from China alone. Better still, Beijing Capital airport, with 83.7 million passengers last year, is now hot on the heels of Atlanta, the world's leading airport with 94 million passengers. Before the decade is out, it's a safe bet that Beijing will have succeeded in snatching the title from Atlanta...
Across the continent, the economic boom has increased the middle classes' desire to travel. In 2012, Asia generated more than 780 million air travellers, 100 million more than Europe. The trend is set to continue, with forecasts from aircraft manufacturers reflecting the prevailing optimism. EADS, which produces the Airbus, is forecasting a five-fold increase in the number of middle-class Asian passengers, from 748 million in 2011 to 3.38 billion in 2031. This is sure to whet appetites, especially as its American rival Boeing estimates that Asia's share of world GDP will rise from 28% to 36% over the period 2013-2032.
View of the slopes, daylight and contemporary design by Foster & Partners: in Hong Kong, the renovation of Cathay Pacific's The Wing lounge was completed in 2013. Passengers can now enjoy the same high standards of excellence that Asian airlines are aiming for.
And I, and I, and I
Already, by the end of this year, the number of Chinese travelling abroad should have passed the symbolic 100 million mark. This compares with just over 10 million in 2000! And it's not just China that's travelling... 17.5 million Japanese, 15 million Indians, 13.5 million Koreans and 11 million Taiwanese ventured outside their homeland last year. New source markets are emerging, such as Indonesia and the Philippines, with Vietnam expected in the longer term. The creation of a single market in ASEAN, the association of South-East Asian countries, is likely to give a further boost to these flows of travellers. The disappearance of economic borders between the ten member countries - Burma, Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam - will create a market of over 600 million people.
Asia is the Eldorado of business dreams, the continent to be courted as a priority. "We are indeed in a favourable economic climate once again, particularly in India with the installation of a more dynamic government following last May's elections."says Emmanuel Menu, Vice President Continental Europe and Americas at Jet Airways.
But make no mistake about it. Asia's growth is far from the "long, quiet river" that we tend to imagine from the outside. Tensions do exist, first and foremost political, with knock-on economic consequences. The International Air Transport Association (IATA) is forecasting a slowdown in the growth of air travel demand in this part of the world. The figures bear this out: in 2013, traffic growth expressed in revenue/passenger/km amounted to 5.3%. Between January and April 2014, it was just 4.9%.
Why are things not working so well? The maturity of the Chinese economy is reflected in a slowdown in its growth rate to below 8%, which is no longer offset by stimulus plans. 8%: that's a dream for many European economies, but China has been used to double-digit growth rates in recent years. Recurring political tensions between the country and its neighbours - Japan, the Philippines and Vietnam to name but a few - can also have a negative impact on the number of trips to the region. These discordances also exist outside China: in South-East Asia, Thailand's instability remains a risk factor for the entire Indochinese peninsula. As for Japan, it could experience a slowdown in consumption following the increase in VAT, which rose last April from 5% to 8% before probably climbing to 10% in October 2015.
All these factors could therefore have an impact on demand in the region, but only in the short term. On the other hand, these regional tensions are unlikely to affect demand on long-haul routes, judging by the increasing number of routes offered by airlines. In Europe alone, for example, a dozen new connections between the two continents have been inaugurated in the space of a year.
1 - Jet Airwaysr gets new impetus thanks to the acquisition of a stake in its capital by Etihad. With the "travel smart" concept, the Indian airline is offering a single fare that allows all combinations of travel to India from Europe, whether on direct flights or with stopovers in Paris, Brussels, London, Bombay and Abu Dhabi.
2 - Korean Air is operating new A380 routes, including Paris since last March. In addition to its lounge at Seoul Incheon (pictured here), the Korean airline has just opened a lounge in Los Angeles, connected to Seoul by the airline giant with two daily flights.
To secondary towns
The Air France-KLM partnership, for example, has been particularly active, inaugurating routes from Amsterdam and Paris to Fukuoka, Kuala Lumpur and Jakarta in 2013. Air France has also introduced the A380 to Shanghai and, since this summer, to Hong Kong. Competitors are not to be outdone: Lufthansa has just made a comeback to Jakarta, while its subsidiary Swiss reopened its Zurich-Singapore route last year. After several years of inaction on Asia, British Airways is going back on the offensive with the arrival of the Boeing 787 Dreamliner and the Airbus A380 in its fleet. Last year, the British airline inaugurated two routes from London Heathrow to Chengdu and Seoul. At the end of 2013, Andrew Crawley, Chief Commercial Officer of British Airways, told the newspaper Wall Street Journal that "the 787 would enable the airline to serve more secondary cities, particularly in China and India."
However, after this huge growth in air routes between Europe and secondary Chinese destinations - Chengdu and Chongqing in particular, but also Hangzhou, Wuhan and X'ian - demand is tending to ease somewhat. This saturation phenomenon is far from illogical, given the exponential growth in the market between Europe and China over the last five years. Between July 2010 and July 2014, monthly capacity between the two continents rose from 39,4219 to 600,744 seats. In July 2010, 21 European cities were linked to 8 Chinese cities. In July 2014, 23 European cities are linked to 15 Chinese cities, including some destinations that were virtually unknown on the Old Continent just a few years ago: Changsha, Xiamen and Wuhan to name but a few!
The only notable exception to this relative slowdown is Air China, which enjoys the support of the central government and continues to inaugurate new routes, particularly to "secondary" European cities. In 2013, the airline opened a Beijing-Geneva route, followed this year by a Beijing-Vienna route and a Shanghai-Munich route.
1 - Eva Air takes Hello Kitty around the world. After Los Angeles, Paris is the second long-haul route to be served by the Hello Kitty Hand-in-Hand Jet, a Boeing B777-300ER in the colours of this Asian icon celebrating its 40th anniversary.
2 - Based in Shanghai, China Eastern is a key partner of the SkyTeam alliance on the Chinese market.
In the game of alliances
In fact, we are witnessing a classic rebalancing of supply and demand. Asia's potential is still there, but it's simply moving elsewhere in the region. And it is the Indian subcontinent and Indonesia that are the star destinations of 2014. India, in particular, made a remarkable comeback on the international aviation scene, starting with the integration of Air India into the Star Alliance at the beginning of the summer. The event was all the more eagerly awaited given that Air India had had to abandon its first attempt to join Star in 2011, after three and a half years of twists and turns.
At the time, the airline finally threw in the towel for internal reasons - notably its merger with domestic carrier Indian Airlines - and its inability to make its reservation and management systems compatible with the other members of the alliance. All that is forgotten now: since 11 July, Air India has been a full member of the alliance, giving Star an undeniable advantage in this part of the world. The alliance covers 35 new destinations in India, with market share on the sub-continent set to rise from 13% to 30%. At the same time, the CEO of Air India estimates that joining Star will enable his airline to gain four to five points in high-contribution traffic.
Air India's entry into Star almost overshadowed the integration of Sri Lankan into oneworld at the beginning of May. Replacing the moribund Kingfisher Airlines - which was due to join oneworld, but went bankrupt in 2013 - the Sri Lankan national airline is therefore the first carrier from the Indian subcontinent to have joined a global alliance. "This is a very good opportunity, because Sri Lankan offers not only an excellent service, but also an important regional network, particularly throughout southern India", says Bruce Ashby, oneworld's managing director, who also rules out any integration of another carrier in the region. Kapila Chandrasena, CEO of Sri Lankan, has already announced that he wants to boost his offer from Colombo with the opening of new regional routes, which could include Kathmandu, Calcutta, Rangoon and Vietnam. "We are aiming for 50% of transit passengers, compared with 40% at present."says the CEO.
Another carrier to watch closely: Jet Airways, which has been extremely courted since Etihad, Abu Dhabi's national carrier, acquired a 24% stake in its capital. "This has enabled us to reformulate our strategy with two main hubs for our development, Abu Dhabi and Bombay. With the first, we are going to connect all of Europe and the Americas with India. With the second, we want to offer a hub to match our ambitions in Asia."says Emmanuel Menu. The company has signed a codeshare agreement with Air France, enabling it to to offer two daily flights to Paris-Bombay, one operated by the French airline, the other by Jet Airways. "Our arrival in Paris makes us the third carrier on the India route in Europe, after Air India and Lufthansa, and now ahead of British Airways. Thanks to existing connections at Paris, Brussels, London and Abu Dhabi airports, we can offer up to seven daily flights between Europe and Bombay as well as the rest of India. This allows us to offer a premium fare to passengers who can combine any flight with a stopover between Europe and India at no extra cost."says Emmanuel Menu.
Asia's main passenger markets in 2012
* Fiscal year 2012-13 in Japan (Sources: civil aviation authorities, ministries of transport and airport authorities).
New markets
Further east, the Indonesian archipelago is the other major market on which airlines are setting their sights. Air traffic has tripled in the space of a decade, with growth driven in part by Indonesia's national carrier Garuda, which has high ambitions following its successful financial turnaround. The airline has renewed a large part of its fleet, notably with new Boeing 777-300s.
Its membership of the SkyTeam alliance since last March has enabled it to strengthen its position in Europe. Garuda has launched the first non-stop flights between Jakarta and Europe to Amsterdam, a flight that will be extended to London in September. "We need to maximise our presence at the Amsterdam SkyTeam hub by offering connections to a hundred or so cities in Europe, America and Africa", explains Emirsyah Satar, CEO of Garuda, who has also announced his interest in other European routes. After Amsterdam and London, the priority is Paris - probably in 2015 - followed by Germany and Italy.
Among the other Asian carriers looking to Europe with interest is Philippines Airlines' desire to return to Frankfurt and Paris after the European Union lifted its flight ban. Japan is also showing more dynamism after several years of stagnation in its air traffic. This development can be attributed to the opening up of Greater Tokyo airports to competition. Closer to the city centre than Narita, Tokyo Haneda, previously dedicated to domestic routes, is gaining in strength on international routes. Last March, All Nippon Airways (ANA) launched a route to Paris in competition with those offered by Air France and Japan Airlines.
Creativity and flexibility
Competition is intensifying throughout Asia, but not just between the major Asian and European airlines. Competition between the continent's short- and long-haul low-cost carriers is intense. Added to this are the ambitions of the Gulf carriers, which account for a growing share of transfer traffic between Europe and Asia. This is forcing the continent's leading airlines to review their plans and demonstrate creativity and flexibility. In this context, two elements in particular stand out in the strategy to (re)win passengers.
The first is technological: these carriers continue to invest massively both in new aircraft and in on-board comfort. Of the 21,000 aircraft in service worldwide, 5,100 are in Asia-Pacific, according to Boeing. This fleet is set to almost triple by 2032, according to the American manufacturer, to almost 13,000 aircraft. Asia already has the largest number of airlines - seven in all - using the Airbus A380. The latest to do so is Korea's Asiana, which took delivery of its first aircraft at the end of May, becoming the world's 11th operator of the giant aircraft.
With a classic three-class configuration and equipped with a high-tech in-flight entertainment system in all cabins, Asiana's A380 will first be put through its paces on Hong Kong, Bangkok and Tokyo, before starting its first intercontinental routes to Los Angeles.
3 - Boeing B787 launch companyOn these new aircraft, as well as on its B777-300 ERs, All Nippon Airways is offering the new ANA Business Staggered product. This personalised space with individual aisle access and a full-flat bed is gradually being introduced on the Paris-Tokyo routes.
1 - Sky-Team member since 2014, Indonesian carrier Garuda is planning to open new routes to Europe, following the launch of a new route between Jakarta and Amsterdam. Its Boeing B 777-300 ERs feature a new first-class cabin, in keeping with the luxury offered by the major Asian carriers.
2 - The widest bed in all business classes, "Full flat, individual space, high-tech entertainment: Singapore Airlines is equipping its long-haul A380 and B777-300ER aircraft with a new-generation business class.
Luxury in the A380
In Europe, Singapore Airlines, Malaysia Airlines, Thai Airways International and Korean Air also offer Airbus A380 flights, notably to Paris. They all offer the best possible in-flight product: first class suite on Singapore Airlines, luxury business class on Malaysia Airlines and Thai Airways International. Korean Air has joined this prestigious triumvirate this year. The Airbus A380 service on the Paris-Seoul route will boost capacity between the two hubs of the SkyTeam alliance, with seat capacity up by 10%, according to Ludovic Froidure, Managing Director France of Korean Air¡: "We are certain that the A380 will boost our traffic, as this aircraft has a real magnetic effect on the public. All the more so as we offer exceptional on-board comfort, with a private suite in First Class and 94 seat-beds in Prestige Class, for which we have reserved the entire upper deck, including lounge areas. But Economy Class has not been neglected. With 301 seats, it offers a much lower density than any other Airbus A380 operator. This allows us to offer a seat that partially tilts, like a couchette".
Another flagship aircraft in Asia, the new Boeing 787 Dreamliner is in service with seven carriers, five of which operate it on routes to Europe. The launch airline was Japan's All Nippon Airways, which, with 28 aircraft, remains the leading user of this aircraft, revolutionised by its exceptional comfort. ANA has just placed an order for a further 14 ultra-long-range aircraft. Next in line are Japan Airlines and Air India, both of which operate 15 Boeing 787s. The Boeing 787 is also offered on the Paris-Madras route by Air India and by Jal on the Paris-Tokyo route.
Asian low-cost
In terms of innovation, Asian airlines were among the first to adopt the 'Economy Premium' class, in particular Taiwan's Eva Air, which offered this type of product as early as the 1990s. At the beginning of the decade, ANA and Japan Airlines followed suit, followed by Cathay Pacific in 2012. Now it's the turn of Singapore Airlines, which plans to equip its Boeing 777s, Airbus A380s and future Airbus A350s with this new product, due to enter service in mid-2015.
Faced with an erosion of traffic in its own market due to strong competition, Singapore Airlines (SIA) has completely reviewed its strategy, deciding to position itself in all segments of the airline offer. Alongside its flagship carrier, SIA is present in the low-cost market through its regional subsidiary Silk Air, its very low-cost carrier Tiger Air and, finally, Scoot, a long-haul low-cost subsidiary. Other airlines have adopted a similar model to counter the growing presence of short- and long-haul low-cost carriers such as AirAsia, Cebu Pacific and Jet Airways. Thai Airways International operates a regional subsidiary - Thai Smile -, a low-cost carrier - Nok Air - and a long-haul low-cost carrier Nokscoot, operated in cooperation with Singapore Airlines.
Other traditional airlines with a low-cost subsidiary include Garuda, Korean Air, Malaysia Airlines and Philippines Airlines, while China Eastern Airlines is still to come. The airline is considering a low-cost carrier project in Hong Kong, in association with the Australian Jet Star, but opposition from Cathay Pacific is considerably slowing down the establishment of Jet Star Hong Kong. As a result, China Eastern has just converted its China United subsidiary into a low-cost subsidiary, based at a former military airport in Beijing. Playing in all market segments will certainly enable Asian airlines to strengthen their position. With the meteoric rise in the social status of Asian populations, all models are bound to find their audience.
