Air Transport World



The rise and rise of AirAsia continued through 2007. In the second fiscal quarter to Dec. 31 it posted a 73% leap in net profit to MYR245.7 million ($76.7 million). CEO Tony Fernandes points out that it has had 24 consecutive profitable quarters and is "now the highest profit margin [38.8%] airline in the world." Importantly, the results come from positive trends across the board such as, in the second quarter, 21% growth in passenger volume, 17% higher average ticket prices and a 49% increase in ancillary income.


In the first half of 2008, AirAsia launched flights to Ho Chi Minh City from Kuala Lumpur and Bangkok and a daily KUL-Kuantan service. Along with Tiger Airways and Jetstar Asia it started services on the previously highly protected Singapore-Kuala Lumpur route, propelling the region's commercial aviation industry into a new era of liberalization.

Last December it signed up for 25 A320s and holds options for 25 more. It placed its original A320 order for 60 aircraft in March 2005 with an additional 40-aircraft buy announced in 2006 and another 50 in January 2007. During 2008 AirAsia Group will become an A320-only operator as the 737-300s used in Thailand and Indonesia are retired.

Associate carrier AirAsia X signed for an additional 10 392-seat A330-300s earlier this year, bringing its commitment to the type to 25. They will be delivered to the long-haul LCC progressively over the next five years. In February it sold 10% stakes to private equity funds in Japan (Orix Group) and Bahrain (Perigon Capital) for a combined $75 million to support the purchase of the additional A330s. Virgin Group acquired a 20% stake in August last year.

The first A330, leased from AWAS, arrived in Kuala Lumpur in October 2007 and started services between KL and Gold Coast in Australia. The next destination is Perth from Nov. 2. European services, possibly via Dubai, may follow later this year when its own A330s arrive.

Thai AirAsia is a JV between AirAsia and Thailand's Asia Aviation. It operates 17 737-300s and four A320s to 23 domestic and regional destinations. Another affiliate, Indonesia AirAsia, has 10 737-300s and A320s and serves 17 destinations, most of them in Indonesia. It is recording robust growth with passengers for FY07 ended June 30 up 21% to 611,050 with 83% load factors.


Like other Chinese carriers, Air China is riding a massive boom in the economy combined with accelerated yuan appreciation and formal entry into Star Alliance last fall. For the 2007 year, Air China and Air Macau parent Air China Ltd. posted a net profit of CNY4.23 billion ($595.5 million), up 57% on 2006, on a 14% lift in operating revenue to CNY51.33 billion. It was the company's seventh consecutive profitable year. It maintained its momentum in the first quarter of 2008 as it earned CNY1.04 billion, up 147% from the year-ago quarter, on a 21% lift in operating revenue to CNY12.76 billion.

Certainly one reason for CA's success is its strong international network, which accounts for 40% of revenue and generates an estimated 80% of profit. The Beijing-based carrier added five new international routes during the year as well as a handful of domestic services, where its primary focus is the business routes linking Beijing, Shanghai, Shenzhen and Guangzhou. Passenger boardings increased 11% to 34.8 million.

In April, the Chinese government named Kong Dong as CA's new chairman. He had been acting chairman since predecessor Li Jiaxiang was appointed CAAC minister in December.

Chinese mainland carriers now are preparing for commercial flights across the Taiwan Strait to be permitted before year end after newly elected Taiwan President Ma Yingjiu promised a new era in crossstraits relationships.

Air China didn't get everything its own way as its bid to buy a stake in China Eastern failed in February 2008, although it continues to pursue CEA and has enlisted Cathay Pacific to strengthen its bid. It also is eyeing Shanghai Airlines and plans to deepen cooperation with its Star Alliance partner.


The long-discussed merger between Air India and Indian Airlines finally occurred last year under the National Aviation Co. of India Ltd. banner, with the Air India brand being retained and the Indian brand set to disappear (ATW, 10/07, p. 48). The combination, it is hoped, will help Air India face off against Jet Airways and Kingfisher, both of which enjoy stronger service brands. Air India's share of the international market has dipped to 16% while Indian has fallen to No. 3 domestically. Partial privatization long has been on the drawing board, but for the present the carrier remains in state hands.

Dow Jones reported that Indian Airlines recorded a fiscal-year loss of INR2.75 billion following three straight years of profit, including a INR495 million surplus in 2005-06. Results for Air India were not available at press time but it experienced a loss of INR4.48 billion ($112.5 million) for the fiscal year ended March 31, 2007, a result reversed from a INR149.4 million profit in the prior year.

In February Air India launched a daily Delhi-New York JFK service with one of its new 777-200LRs. It will have six -200LRs this year and three more in 2009. Its traffic to the US has grown by 20% each year since 2005. It is hoping that its membership in Star Alliance will bring significant benefits and more business.


The program launch order for 15 Mitsubishi Regional Jets plus 10 options at the end of March capped a busy fiscal year for ANA during which it posted a record [yen]64.1 billion ($616 million) net profit on the back of hotel asset sales while most other indicators were approximately level and operating profit fell. It reported a [yen]32.6 billion profit in FY07.

The company credited "a strong performance by airlines within the group" for offsetting the lost hotel revenue. Group turnover slipped just 0.1% to [yen]1.49 trillion. The Air Transport segment reported operating income of [yen]77.9 billion, down 2%, on revenue of [yen]1.3 trillion, up 4%.

ANA's mid-term corporate plan calls for continued streamlining and optimization of the operation with a focus on international growth areas. It aims to boost ASKs to North America and Europe by 26% from 2011 and by 11% to China and the rest of Asia. Domestically it is targeting high-yield routes from Tokyo Haneda. It has adopted a multiprong cargo strategy including making Okinawa a cargo hub, introducing international express delivery service and adding widebody freighters. In April it exercised options for two additional 767-300BCFs, bringing its firm orders to seven. …

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