Asian Airline Industry As Number One

Asian airlines, already the best in the world in terms of service level, are forging ahead on the back of the continent's growth which would make the civil aviation industry a formidable part of the rise of Asia, according to Malaysia Airlines Chairman Tan Sri Dr. Munir Majid.

Dr. Munir said this at the China Daily Asia Leadership Roundtable attended by political, business and academic leaders in Asia at the inaugural ceremony in Hong Kong today. "The base figures and trends," he said, "point clearly to a new dominance reflective of the wider global shift that is taking place today."

Dr. Munir also pointed out Asia is starting out from a low base. With 10 times the US population size, if Asia was seen as a domestic market its passenger size was only 1.2 times that of the US. In terms of international travel, while twice the 79 million of the US, this was still behind Europe's 3.8 times. Indeed overall only 10 per cent of Asia's population travel "domestically" (US:91 per cent; Europe:21 per cent) while international travel is limited to 4 per cent of the population (US 22 and Europe 41 per cent).

"On the other hand," Dr. Munir said, "it is emerging that Asia has a high propensity to spend. Figures from Airbus (Global Insight, October 2009) extrapolate for the period 2009-2014 real consumer spending growth of close to and over 8 per cent against projected GDP growth of 8 and 10 per cent respectively."

Already on the number of seats per annum basis, 9 of the top 20 airports in the world are in Asia. China alone has 158 airports and plans to build 86 more. There are also more wide-body aircraft operated by Asian airlines, and 50 per cent of global wide-body deliveries up to the end of 2012 will be made to them.

While it is all-systems-go for the airline industry in Asia, Dr. Munir warned of the still uncertain global political economy, which could move in unhealthy directions whether or not driven by geopolitical considerations. There were also industry-specific challenges.

Dr. Munir wanted to see no let-up in safety standards as well as environmental standards and further opening up of markets. The industry, he reminded the audience, was volatile and highly competitive. Management cannot afford to let its guard down and there was plenty of room for cooperative arrangements and consolidation. He also pointed to the need to develop civil aircraft manufacturing, with only China presently making any great effort in the region. Another area of business offering a huge opportunity is the MRO (Maintenance, repair and overhaul) business where Asia's cost structure is competitive and talent pool strong. There are vast opportunities as the Asian airline industry forges ahead, Dr. Munir concluded.