Intense competition in the Asian aviation sector is driving innovation among airlines, with an increasing variety of business models and product offerings, the AAPA Assembly of Presidents has heard.
Addressing delegates at the event in Bali, AAPA director-general Andrew Herdman cited the fact that “up to a dozen airlines” now compete on some international routes in Asia as an example of how crowded the marketplace has become. “That’s what I mean by fierce competition!” he said.
Asia is home to the world’s 10 busiest international air routes, and nine out of the 10 busiest domestic sectors, and many of these routes are served by a combination of low-cost and full-service airlines, using both wide- and narrow-body aircraft with a range of different cabin products,
“This is great for customers but tough for operators,” Herdman said. “[For airlines] it’s not enough to choose the winning business model, you’ve got to implement it [successfully].”
In terms of strategy innovation, full-service airlines are now developing multi-brand strategies (such as Singapore Airlines with Scoot, SilkAir and Tigerair), while LCCs are experimenting with codeshares, connections and frequent flyer programmes. All of which is leading to a blurring of the boundaries between full-service and low-cost carriers.
And Herdman stressed that such innovation is a good thing for the industry.
“The intense competition spurs airlines to change their ways of doing business in response to customer needs, delivering even greater choice and better service standards, whilst keeping costs low and maintaining profitability. We celebrate this diversity, and at the same time, we aspire to reach greater heights,” he stated.