Passenger Numbers Flying Up in Asia Pacific - Frost & Sullivan Sees Potential Sky-High Growth Prospects

IATA halved its loss forecast for 2010 and lowered its 2009 loss estimate stating that the improvements seen were mainly due to economic recovery driving much stronger demand – especially in emerging markets such as Latin America and Asia Pacific.

Kunal Sinha, Consultant in the Aerospace and Defense Practice, Frost & Sullivan notes, "Asia Pacific's aviation prospects are improving much faster than other regions and within Asia Pacific, 217 million more passengers are expected to take to the skies by 2013."

As with the industry in the US, the global economic downturn took its toll on air travel in Asia as well. However, the APAC region is rebounding quicker than many parts of the world, largely attributed to its relatively healthy economy and rising incomes that make it affordable for people to fly more frequently. The region's two biggest markets, China and India, are expected to expand by 9% annually for the next few years. To accommodate this growth, airlines will buy nearly 9,000 new aircraft for service in the Asia-Pacific market over the next 20 years. The relatively fast recovery and encouraging signs have made the people in the region more confident about flying.

Sinha says that beleaguered US and European airlines are increasingly looking to Asia to bolster their fortunes. For US carriers, Asia represents a way to diversify overseas as their domestic market share continues to be whittled away by low-cost carriers such as Southwest Airlines. "They are forging new alliances with Asian Airlines, increasing flights to major cities and are competing to launch services in fast growing markets in the region, like Malaysia," he explains.

The recent figures released by the Malaysian Airports Holding Berhad (MAHB) indicate a gradual restoration in consumer sentiments and early signs of aviation recovery.

MAHB said total passenger movements at airports operated by them increased by 15% to 4.36 million in January 2010 compared with 3.79 million in January 2009. The KL International Airport's (KLIA) passenger movements rose by 19.7% to 2.60 million from 2.17 million. International passenger movement went up by 26.4% to 1.82 million, while domestic passengers rose 6.6% to 781,474. In other airports, international passenger movements rose 25% to 317,051 while domestic passenger movements rose by 5.5% to 1.44 million. MAHB said overall, the other airports posted 8.6% growth with 1.75 million passengers recorded in January 2010.

In FY 2009, MAHB announced total passenger volume growth of 8.19%, surpassing the 50 million passenger mark to reach 51.34 million passengers across MAHB's 39 airports. International traffic grew 9.57% to 23.07 million passengers, while the domestic sector grew 7.10% to 28.27 million passengers.

Besides tourism, competitive ticket pricing, aggressive promotions and innovative practices adopted by the LCC (Low Cost Carriers) contributed to the surge in passenger traffic. In Malaysia, significant contribution has come from low cost travel as evident by the respectable 47.49% growth in LCCT (Low Cost Carrier Terminal) against the 6.53% decline in Main Terminal Building. Growing network expansion, commencement of new international routes and increased flight frequency by LCCs like AirAsia, Firefly, Silk Air, Tiger and JetStar have played a major role in the surge of passenger growth.

"The Low Cost movement, which has now become an integral part of the mainstream of the industry in Asia, has completely changed the Asian aviation dynamics. Considering the benign regulatory stance, the LCC movement will prosper, driving economic integration and a more widespread network of air transport services throughout Asia. In the future, the interests of economic development and the region's growing tourism sector are expected to be better served by the LCC's than FSC's (Full Service Carriers)," says Sinha.

"Achieving Asia Pacific's tremendous potential is contingent upon short-term efforts to battle the impacts of the economic downturn with cost reductions and efficiency gains. Promoting open skies and liberalization of market access, pricing and ownership remains major challenges for solidifying future growth," Sinha emphasises.

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