News / Asia

Asia’s Aviation Industry Booms

Passengers wait at airline counters at Hong Kong's international airport, Sept. 23, 2013.
Passengers wait at airline counters at Hong Kong's international airport, Sept. 23, 2013.
Ron Corben
— Across Southeast Asia, rising incomes over the last decade have been a boon for the aviation industry, and new low-cost passenger airlines are experiencing record growth. Bangkok is experiencing growing pains as it races to build airports and aviation infrastructure, train tens of thousands of new pilots, while keeping safety standards high.
 
In the first eight months of 2013 industry trade groups say more than 138 million passengers were carried by Asia Pacific airlines in the region - a rise of five percent over the last year.
 
Sydney-based Center for Asia Pacific Aviation said this growth is being driven by low cost air carrier companies, which accounted for more than half of all seats in 2012. A decade ago, there were none.
 
Martin Craig, chief executive officer for the Pacific Asia Travel Association (PATA), said Asia's growing middle class is pushing the demand for travel. 

"This massive increase in intra-Asian tourism and air travel is simply driven by the fact that so many more people are going into the so-called 'middle-class' status with discretionary income and one of the first things they want to spend their hard earned spare cash is on going overseas," said Craig.
 
South East Asia's middle class, now estimated at around 500 million people, is expected to reach as many as 1.7 billion by 2030. But Craig said even these projections may be too conservative.
 
To fly all of those passengers, industry analysts say they will need to train nearly 200,000 pilots.
 
Analysts say the main maturing domestic air travel markets are Indonesia, Philippines, Malaysia and Thailand which collectively have 25 low cost carriers in operation, and more on the way.
 
Industry analyst Brendan Sobie, said Laos, Burma and Vietnam are considered "frontier markets" with huge potential for growth. He said in Vietnam, passenger growth is running in the double digits.
 
"Being a frontier emerging market and having a lot of economic activity in Vietnam - so it has some catch up to do in order to approach some of the other markets in South East Asia - from a growth and low cost penetration standpoint we're starting to see that catching up now taking place and IATA sees Vietnam as one of the three largest growing markets in the world in next few years," Sobie said.
 
In Burma, the number of available seats on passenger planes out of the main airport in Rangoon has roughly doubled in the past two years.
 
As airlines rush to meet the rising demand, analysts say safety needs to be at the heart of the industry. But safety standards across the region remain uneven.
 
Earlier this month a Lao Airlines plane crashed into the Mekong river during a heavy rain storm, killing all 49 people aboard.
 
The passengers and crew hailed from 10 nations, and the crash was the deadliest air disaster for Lao Air since 1954.
 
In Burma in 2012, four aircraft were involved in major accidents. As the country experiences a surge in tourists eager to visit the once-closed nation, some groups are raising alarm that the industry is expanding too quickly. The U.S. State Department has warned travelers to Burma that the air industry’s safety record and oversight remains closed to outside scrutiny.
 
Industry analysts such as credit ratings agency Standard and Poors says there are uneven infrastructure and training standards across the region. In some cases, the pace of development may be outstripping the ability of officials to ensure safety standards and adequate infrastructure.
 
For Center for Asia Pacific Aviation's Brendan Sobie,  the challenge lies in countries ensuring sufficient infrastructure to cope with the rising demand and passenger arrivals. 

"The country and airports that don't invest basically lose out on the traffic to other airports and countries. That of course creates an incentive to invest," he said. "Unfortunately, there's a huge lag; it takes a long time to build an airport and build a runway and build a terminal and what happens is that sometimes the growth is just very rapid, they just get behind the curve and we're seeing some of the governments now racing to catch up to that."
 
With tourism and trade surging in developing countries of Southeast Asia, much is at stake in how governments handle the growth and respond to concerns about safety.

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