Annual Asia Pacific and Middle East Aviation Outlook 2006 Summit opens in Kuala Lumpur

Major structural changes loom on the horizon for the airline industry in the region, the Centre for Asia Pacific Aviation’s Executive Chairman, Peter Harbison, has warned.

Opening the 2nd Annual Asia Pacific and Middle East Aviation Outlook 2006 Summit in Kuala Lumpur, Mr Harbison predicted that point-to-point services would progress to long-haul routes and there would be more merger activity and market exits in the next five years.

“We are about to see fundamental change,” he told industry leaders attending the conference. “Sixty years of predictable regulatory control have not prepared the industry for what will happen next.”

The heads of airlines, airports and Government regulatory agencies were among the 250 delegates and media attending Outlook 2006, organised by the Centre, which is reviewing prospects for the Asia Pacific and Middle East industry in the year ahead. This year’s event focuses on the issues of revenue maximisation and cost reduction, with a special section examining the role of Government.

In his address, Mr Harbison pointed to the changes wrought by the advent of new, longer-range aircraft, new traffic and capacity in the Gulf region and the steadily declining yields through intense competition.

He said the future of the industry includes more point-to-point services, on both short and long-haul routes, fostered by the introduction of new aircraft types and demand from the premium market. Mr Harbison also notes that, although the short-term will probably not see dramatic consolidation between airlines, the increasingly liberalised environment that is being created will result in both merger activity and market exits in the period to 2010.

He added that forecast growth will take place against a backdrop of heightened uncertainty, “Anyone planning long term today without recognising what is happening will get some nasty shocks in the next few years.”

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