Thursday, January 28, 2010

Asia’s Airports Vie For Service From Burgeoning Budget Carriers

Asia’s Airports Vie For Service From Burgeoning Budget Carriers
Aviation Daily Jan 28 , 2010 , p. 09
Neelam Mathews

Asia’s regional airports are exploring new ways to attract budget carriers that are on the road to expansion as legacy carriers continue to limp back to normalcy.

While each airport has a different approach, Viva Macau Acting CEO Reginald Macdonald said at the Regional Airports World Conference in Singapore this week that “landing charges are the key. It is flexibility of the airport team and a mindset to route development that is important.”

Given that budget carriers are volatile, the Civil Aviation Authority in Macau signed 10-year agreements with budget carriers in 2004, but is no longer signing any long-term agreements. Macau has five budget carriers flying to it and has plans to announce another one soon. “Our incentives are good,” said Antonio Rato, director of marketing at Macau International Airport.

Macdonald praised Melbourne Airport for its flexibility and coordination for “developing a good service package,” one that should be emulated. Viva Macau started services to Melbourne using its 767 last year and is planning to start flights to Hanoi and then Delhi in April.

While things are slowly changing, challenges remain in India. “While we are seeing development in ground handling, there is no advantage in landing and navigation charges,” added Sanjay Kumar, chief commercial officer of IndiGo.

However, with budget airlines increasing market share, airports in India are beginning to realize the business being brought in. “When we launched three years ago, slots were controlled by legacy carriers. Now we are being given peak timings, which gives us space to grow,” says Kumar.

The Malaysian airports operator that was recently under fire by Air Asia for not offering enough, clarified its position. “We intentionally keep our charges low. We gave a 50% incentive to Air Asia on landing when they started, now they are on a growth track,” said Bashir Ahmad, managing director, Malaysia Airports Holdings. “We believe their low-cost operations are successful because of us,” he added.

“We gave them choice for designing the budget terminal…now they have outgrown it,” said Ahmad. “Moving forward, the low cost is where the growth will be. The gap between budget and legacy will narrow,” added Ahmad.

Thailand’s Suvarnabhumi Airport in Bangkok that had incentives last year has this year introduced new incentives for all carriers. Airlines that increase passengers from new destinations can get incentives by way of discounts from 5% to 20%, said Vilaiwan Nadvilai, deputy general manager of Suvarnabhumi Airport, Airports of Thailand Public Company Ltd. The offer starts in April and lasts through the end of the year.

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