Two 'Quiet Revolutions' Drive Aviation Outlook for 2007

Opening the Outlook Summit in Singapore today, Peter Harbison, Executive Chairman of the Centre for Asia Pacific Aviation, stated that two key developments that occurred in 2006 will change the face of Asia Pacific aviation in 2007 and beyond.

“Two quiet revolutions have occurred in the past year which are driving irreversible change. The most important development for the long term has been the quiet revolution in airline strategy among the Asia Pacific flag carriers, as they have been forced to respond with renewed discipline to competition coming from the low cost sector and surging fuel prices,” he said.

“The low cost segment has forced the major airlines to wake up to the need to address costs and restructure their operations. This has led to a noticeable shift in the way airlines – both in the Asia Pacific and outside the region – conduct business.

“This development is accompanied by an almost imperceptible shift in government policy resulting from the entry of new airlines – particularly LCCs – and from liberalisation trends. Suddenly, the LCC evolution has given governments fresh policy options.”

According to Mr Harbison, the headline grabbing developments in the past year, such as the volatile fuel environment and the delays of the A380, have been accompanied by several breakthrough, if less prominent, events. These factors, which may well prove to be equally important in the medium to longer term, include:

- China’s continuing emergence as a dominant aviation power, in both operating and policy terms; India’s traffic explosion and continuing maturation into a major aviation market; Several key liberalisation developments – often stimulated by LCCs – such as further cross border joint venture activity, which are undermining the restrictive effects of protection-motivated regulation.

“2007 will be a key year for the future of multilateral-driven liberalisation. Unless there is accelerated progress, the 2008 target date for ASEAN liberalisation will not be achievable. Two liberal forces – Singapore and Malaysia – could lead the way by opening up their skies, both mutually and with Thailand. Such an initiative could well catalyse the next round of growth in the region”, said Mr Harbison.

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