Market openness meets economic growth and an energetic middle class
As the end of 2016 arrives, one thing is clear: Asia Pacific is a growth hub. The region is now the world’s largest travel market and is expected to be the source of more than half of all new global air passenger traffic over the next 20 years. This total is expected to reach 7 billion passengers. Strong regional economic growth, a rapidly expanding middle class and market openness will continue to drive the region’s aviation boom in 2017.
APAC is expected to be the source of more than half of global air pax traffic over next 20 yearsShare
But the fact remains that Asia Pacific airlines will face a challenging operating environment — characterised by intense competition, cost pressures, unstable currency markets, resource-constrained infrastructure and volatile weather conditions.
More from the LCCs
We will see LCCs emerging from the fast-growing Southeast Asian markets, in particular, to weather many of these industry challenges and spur major ongoing regional and international expansion, supported by an increasing investment in technology. The formation of partnerships with other carriers will also play an increasingly critical role for airlines as they seek profitability in a challenging long haul market.
Open skies facilitate expanded networks
We expect to see further ratification of the ASEAN open skies agreements allowing airlines here to launch unlimited flights from their home market to any point in the region, subject to airport slot availability.
Loosening of regulations should open the door for principally domestic airlines to become regional players, and it will be a big plus for the budget carriers; while airport hubs like Singapore, which already have a clear expansion plan in place, stand to gain from an increase in air services.
The overall outcome of this market openness for airlines though will be greater competition, putting pressure on airlines to find new ways to create a more competitive airline – from optimising processes and operations to drive efficiencies to using data-driven insights and decision support tools to generate more revenues.
China keeps pace
The same will be true in China, a key market for Sabre’s Airline Solutions business. It is expected that China will displace the US as the world’s largest aviation market around 2024. Here domestic competition is intensifying in Chinese airspace after the lifting of restrictions around the formation of new airlines, and incentives like reduced airport charges and simplified approval processes have already seen more entrants join the market – including the likes of Guangzhou-based Jiuyuan Airlines and Hainan Airlines subsidiary West Air.
Carriers here will be competing in an increasingly complex environment both domestically as well as against tourism, well established international airline brands.
Technology manages to increase signal over noise
The technology boom means lots of things, but one is for sure: there’s a lot of noise. Cutting through it is a key priority for the Sabre team in the Asia Pacific region. Todd Arthur is the vice president of sales and market development for Sabre Travel Network in APAC. With technology stepping in to increase the signal over noise for more and more suppliers, Todd is looking forward to an energetic 2017 in the region!