How Do You Think the Asian Passenger Air Transport Marketplace Will Shake Out? What Lessons Can Be Drawn from the North American and European Experience?

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The Asian passenger air transport marketplace will stable and growing rapidly. The latest Airbus Global Market Forecast (GMF), released in December 2010, shows that key drivers for the marketplace are the replacement of aircraft for newer more eco-efficient models in mature markets, dynamic growth in new emerging markets, the further growth of low-cost carriers – particularly in Asia-Pacific and Europe, further market liberalisation and capacity growth on existing routes.

In 2010, views on whether low-fare airlines would continue to flourish in Asia varied. Three factors regulation, population demographics, and socioeconomic trends -drove this calculus. Although the target consumer base for AirAsia was enormous -more than 500 million people lived within three hours of AirAsia's hubs in Kuala Lumpur and Bangkok, more than Western Europe's entire population -the failure of Asia's regulatory environment to keep pace and the uncertain demand for low-fare services created uncertainty. Those who sold airplanes, airports or advice tended to be of the opinion that low-fare carriers would redraw Asia's socioeconomic map, offering affordable international travel to millions and thereby fostering the integration of a region divided by water, politics, and poor infrastructure. Analysts who saw a large and growing market predicted that budget airlines would tap pent-up demand among less affluent Asians, who typically travelled by bus and hardly expected attentive service. Since the global economy peaked in the second half of 2006 and even during the recession of 2008-2009, Asian carriers had seen increased success. "We're seeing that people in Asia travel as soon as they have some extra money in their pocket," said Don Birth, president and chief executive officer of Abacus, a distribution services provider") Although average incomes were lower in Asia than in Europe, Timothy Ross, an analyst for UBS, said that the region's lower average incomes should boost rather than...
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