Routes Asia: Intra-Asian Traffic remains strong, IATA says

Intra-asian traffic is showing strong signs of growth, despite a shortfall in premium traffic and a mixed recovery picture, IATA’s Mayur Patel, business analyst told a packed audience at the Routes Asia Strategy Forum on Sunday (18^th April 2010).

At the riverside location of Adelaide’s Convention Centre, Mayur told delegates that not all of the region is bouncing back: “Overall, the mid-atlantic and north transpacific routes [which have too much capacity] are problematic areas as the industry recovers. In this region at large, the low-cost carriers have taken a lot of business traffic as a lot of passengers have downtraded. It’s a question of how legacy carriers can reinvent themselves against low-cost carriers given that the traffic is very strong?”

Other key discussion points including stumbling blocks to asian carrier consolidation; a sentiment shared by the panelists, including Peter Wiesner, senior vice president, network management, Bangkok Airways: “I think consolidation here is the way to go where it makes sense, but with government ownership regulations here - where they can own 25%, or even up to 49% of their flag carrier – consolidation can only happen if this rule is relaxed. There has to be a willingness from regulators and from airlines to adapt to change.”

Gordon Bevan, ASM’s vice president, consulting (Asia-Pacific) who moderated the afternoon sessions, said that the consensus among the panel was one of “optimism and opportunity, but also frustration.”

Other obstacles to consolidation among Asian carriers include cultural differences that can often exist between airlines, says Gemal Khera, general manager, government and international relations, Malaysia airlines. “There are cultural differences in Asia. Mergers not always a happy marriage and you might find yourselves getting divorced.”

The theme of codesharing gave rise to much optimism among those speaking on the panel - including Bangkok Airways and Emirates, however, they urged taking a ‘cautious approach’ to joining alliances off the back of successful codesharing arrangements. Where the number of carriers joining alliances continues to be a recurring theme, the message playing out was that there is still a role for carefully managed independence, which doesn’t have to be under the umbrella of an alliance.

Reporter: Louise Driscoll, Adelaide