Sunday, November 23, 2014

Asian Airlines Struggle with Low Yields Despite Growth

 - November 18, 2014, 9:23 AM
Association of Asia Pacific Airlines members hope to see some relief from downward yield pressures next year. (Photo: Flickr: Creative Commons (BY-NC) by Pieter v Marion)
Profitability remains elusive for Asian carriers facing challenges of surplus capacity even though most economies across the Asia-Pacific region continue to grow. “This is likely to continue in 2015…We hope it will stabilize next year,” said Association of Asia Pacific Airlines (AAPA) director general Andrew Herdman in Tokyo at a press briefing on the first day of group’s November 18 to 19 annual Assembly of Presidents. 
Already, anecdotal evidence suggests deferment of delivery and reduction in staff as aggressive pricing intensifies, Herdman added. 
However, after years of no growth, air cargo volumes have accelerated, a positive note for Asian airlines that account for 38 percent of the global air cargo market.
U.S. carriers now considering expansion of international markets might soon present yet further competition to Asian airlines, Herdman said. “U.S.[airlines] have a strong frequent flier program proposition,” he noted. “They will, however, have to tailor [their offerings] to needs of Chinese travelers.”
AAPA has expressed concerns about the need for corresponding long-term investments in related aviation infrastructure, including airport terminals, runways and air navigation services. “Governments have key roles to play in coordinating such investments and ensuring that the necessary regulatory oversight of the industry keeps pace with growth,” said Herdman.
But there can be no question that airline leaders gathering in Tokyo this week are under pressure to make decisions that ensure that this optimistic outlook becomes a reality,” he concluded

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